Which country is being talked about?

Which country are the Republican candidates speaking about? The one I live in has had 67 consecutive months of private sector job growth, with an unemployment rate of 5.1% and a stock market that has more than doubled since January, 2009. Coupling this with expanded health care opportunities for many who did not have affordable access, increased consumer rights under the Consumer Financial Protection Bureau and fewer Americans fighting abroad, things are better than portrayed by these candidates. And, this is in a world where some countries are struggling.

However, this economy has not benefitted everyone equally, but the demise of the middle class and increase in poverty has been created over the last 35 years with technology improvements, offshoring, outsourcing and lack of infrastructure investment. Data also shows with the tax simplification plan under President Reagan which significantly reduced the upper tax bracket, the disparity between the haves and have-nots got much larger over these 35 years. But, it should be noted both Democrats and Republicans failed to halt this widening chasm.

We need to work together to address these systematic problems, which should be owned by all leaders as it has been a building problem that became more apparent with job losses created during the recession. What troubles me greatly is our desire to look past data focusing on overly simplified and often-wrong campaign slogans. There are things that we could be doing that we are not, due to these kinds of politics.

The easiest measure would be to invest in our infrastructure. Our roads, bridges, ports, railways and railway bridges are in need of repair and maintenance. There is a bipartisan plea by the former Transportation Secretary Ray LaHood and former Pennsylvania Governor Ed Rendell to invest in these needs before a ticking time bomb  explodes like another huge train derailment or bridge collapse. This plea is supported by both the US Chamber of Commerce and the AFL-CIO labor union. The additional reason beside the need to repair and renovate crumbling infrastructure is these initiatives are known job creators. That was supposed to mission one of this Congress.

Congress has kicked the can down the road with short-term funding for 33 consecutive quarters under both Republican and Democrat leadership. I fault Congress and the President for not making this a huge priority. Both parties are to blame for not acting on this issue as we need to be banging on a gong as this so important. Yet, we hear so little about it. The next chance to do something is at month’s end, but with the state of disarray in Congress without a speaker and the existing divisiveness in the majority party, I am not hopeful anything tangible will be done except another short-term funding.

I have written before (and will again) about other issues that will help, but this one truly is a ticking time bomb. We will have another disaster, but we should not let Congress or the President ask why did someone let this happen? Quoting Michael Jackson, they need to start with the “man (and woman) in the mirror.” Our country is not as bad off as it is portrayed, but we have real problems that need to be dealt with. Not investing in our infrastructure is one of them. Please reach out to your Congressional representative, Senators and the President and tell them to make a move before more Americans die or get hurt and let people get to work to fix these problems.

America is one big pothole – stupid is as stupid does

In January, 2014, I wrote the blog “America is one big pothole” after seeing former Pennsylvania Governor Ed Rendell and former Secretary of Transportation Ray LaHood, on PBS Newshour. They have joined together for a bipartisan effort to promote much needed investment in our crumbling infrastructure – roads, bridges, railways, ports, etc. and have been in front of Congress to discuss these needs. Fifteen months later, not much has been done about the growing problems, and at the end of this month, our stop-gap funding of the Highway Trust Fund will expire one more time.

The Amtrak accident has caused people to recognize the need, but to be honest politicians do not need anymore wake-up calls. They are fully informed of the problems, but choose not to do anything about it. Their lack of stewardship is not a surprise, but in this case, people have died and will die from their failure to act. The interesting sidebar to this is any investment in infrastructure will create jobs and, as you may recall, that was supposed to be the number one mission of this and previous Congresses. These jobs will dwarf the jobs that could be created with a Keystone Pipeline, for example, and certainly deserve more attention than many of the items discussed in the chamber of Congress.

As reported on a repeat episode on “60 Minutes” last night, this is one issue that the leaders of the US Chamber of Commerce and AFL-CIO labor union agree on. Both were in front of Congress last fall to plead with them to invest in our crumbling infrastructure. Yet, the leaders of these Congressional Committees refused to be interviewed and will not act. And, fifteen months after the following post and six months following these pleas by the US Chamber and AFL-CIO leaders, not much has happened.

The Speaker of the House has reacted with criticism over linking the Amtrak train derailment with a lack infrastructure investing. He even stated the question as “stupid.” I recognize, as do many, that this accident is likely due to excessive speed. But, one of the investments would have added a breaking system that may have kicked in. One thing is for certain, a question about failing to invest in our infrastructure is not “stupid.” What is “stupid” is failing to act when the information to do so is so compelling and business and labor are pleading for action.

Just a quick example from the “60 Minutes” episode re-aired last night. A key railway bridge has 500 trains per day crossing it, the most heavily used railway bridge in the western hemisphere. This bridge is on the most traveled rail line in the country from Boston to New York to Philadelphia. If this bridge goes, it will not be an accident. It will be an accident waiting to happen that could be prevented.

There are other arguments noted in the attached post. Please join with me and write your Congressional representatives and ask them to act. In fact, we should tell them to act as their lack of stewardship is beyond poor. Using the Speaker’s word, their failure is “stupid” and we will be the ones who pay for their stupidity.

https://musingsofanoldfart.wordpress.com/2014/01/10/america-is-one-big-pothole/

A few workable and impactful jobs initiatives

With the domestic economy doing well with one of the longest growth periods, we have a lot to herald in the US. However, we still have some room to improve on job growth as many are working, but not everyone are in jobs that can provide sustainable living. Many are working multiple part-time jobs as there has been a trend for some time to cut hours in retail, restaurant and service jobs. There is a lot of lip service provided for job creation legislation, but one party believes jobs are created through trickle down economics, so tangible efforts to promote jobs either need to be masked or do not get passed. Yet, there are few things that could be done which will solve other problems and create job growth.

First, I have written many times before about our increasingly obsolete and in need of repair infrastructure. Bridges, roads, ports, airports, internet connectivity, distribution facilities, etc. are all in need of update, improvement or replacement. There is a huge bi-partisan message that this needs to be done and yet it still cannot get funded beyond Band-Aid fundings. These needs are long overdue, so say the US Chamber of Commerce and Department of Transportation, and with interest rates so low, now is the time to borrow. I repeat a theme from earlier, borrowing to build or maintain an asset is different than borrowing to pay for operations. From these investments, jobs will come. Jobs that will impact highly educated folks and blue collar folks. We need to fund the Department of Transportation Trust Fund once again by months end. Congress needs to make a move and do something productive.

Second, I have harped on this issue a great deal, but numerous studies by foundations and universities have reinforced this. Those states who have not expanded Medicaid are missing the boat economically. The impact on the states’ economies who have done this is measurable. The impact on the rural hospitals in those states who expanded Medicaid is measurable. This is includes more healthcare jobs remaining and keeping major employers in an area alive and well. Plus, those who need healthcare and cannot afford it, are being left out in the cold. With healthcare paid for, they will be able to spend more on gas and groceries. The data shows this to be true, but leaders in some states have such a negative perception of the Affordable Care Act, they refuse to consider this option which is economically additive to their states.

Third, in keeping with the infrastructure comments, some states have done a better jobs than others with reinvesting in their communities. Many states have Historic Redevelopment Tax Credits, which have an eye toward taking abandoned factory or housing assets and repurposing them to be community assets. The numbers from redevelopment are staggering over time. To take a liability and turn it into an asset that will draw business, retail, tourists, and jobs, can be an amazing thing to behold. These are examples of blending public and private funding to do targeted things. In North Carolina, our General Assembly wants to let the tax credit expire. That would be a disservice to our state, as we can point to so many developments that make a place more inviting. Of course, not all development is well-conceived, but there are so many things that can be invested in that will pay dividends, if parties do their homework.

Fourth, the renewable energy future is showing up more and more, but there is so much more that could be done. This is also where jobs are, especially as dirty fuel sources wane or are phased out over time. Solar jobs tally 174,000 at year-end and have been growing at a double digit rate for several years. If we invest in wind energy more, we could have over 500,000 jobs by 2030.  Yet, the federal tax credit to incent renewable investments will be cut back in a couple of years and the North Carolina credit will expire at year-end. These are wise investments, through tax breaks, that will spur even more growth. So, we should not take the wind out of our sails.

Each of the above changes would add significant numbers of jobs. They are not outlandish, as America’s greatness has been fueled by public/ private investment. The rest of the world is copying us, so we should not throw our baby out with the bathwater. Let’s invest in America. Let’s invest in us.

A Beautiful Mind Had it Right – Nash’s Theory still applies today

One of my favorite Russell Crowe movies is “A Beautiful Mind” directed by Ron Howard about the schizophrenic Ph.D. in economics, John Nash. If you saw the movie, you know that Nash won the Nobel Prize in Economic Science for his theory which became known as “Nash Equilibrium” that was used in game theory, economic development and other areas. In short it was all about maximizing everyone’s gain. From Wikipedia, this example might help define what Nash’s theory was all about:

“Stated simply, Amy and Will are in Nash equilibrium if Amy is making the best decision she can, taking into account Will’s decision, and Will is making the best decision he can, taking into account Amy’s decision. Likewise, a group of players are in Nash equilibrium if each one is making the best decision that he or she can, taking into account the decisions of the others in the game.”

The reason I raise is this is that we can all benefit more if we work with each other rather than against. If we all try to win the game, whatever that is, we will actually end up in a collective lesser state. This is a key reason why collaboration is vital to the success of most endeavors, including and especially politics. But, let me use a real example of how a region can benefit more economically through collective partnering under Nash Equilibrium.

In Charlotte, North Carolina, we have a terrific new “transmodal distribution facility” that is near the airport. The facility is adjacent to and incorporates railroad train tracks in the distribution process. It is also very conveniently located to three interstates (I-85, I-77 and I-485) and a fourth four lane highway (US 321) which connects to I-40 about forty miles away. If you know your North Carolina geography, you will know that Charlotte is right on the border with South Carolina and several towns in SC are actually included in the Metro Charlotte area.

A key reason for its success is more than the rail, highway and air access. Charlotte is also a convenient driving distance from ports in Charleston, South Carolina, Wilmington, North Carolina, Savannah, Georgia and Jacksonville, Florida. With the deepening of the Panama Canal set to be complete in 2015, bigger ships can sail from Asia-Pacific (China, Vietnam, Indonesia, Japan, etc.). Yet, unless these ports are dredged to become deeper, the bigger ships cannot enter the harbors there and will sail past. Activity has begun in various stages, but here is where Nash Equilibrium should come to fruition.

The states of North and South Carolina (and Florida and Georgia) should work collectively along with business and the Federal government to deepen all ports noted above. We will all benefit more greatly if we invest together. This would be true on other economic investments where we should work less at cross purposes and compete as a region. I recognize there have been pockets of success where this has been done, but to me, with the significant cost of dredging these harbors and the stalemate in fighting in Washington where Congress is moving money around to fund a very limited transportation budget for infrastructure, this a keen example of why we must work together to benefit more.

Former Transportation Secretary Ray LaHood and Former Pennsylvania Governor Ed Rendell have been promoting a bipartisan investment in our infrastructure, each representing the major political parties. LaHood said this is the best jobs program we could possibly have. And, as I have said before, borrowing money to invest in assets, is different from borrowing money for operations. This is where we need to spend our money as the collective return on investment is huge.

So, to the state legislatures and Congress, let’s get with it and work to invest in America’s ports and roads. As Rendell said, if we don’t deepen our ports, the ships will sail right by us to Canada. John Nash indeed had a beautiful mind. We should follow his direction to maximize our collective gain.

 

 

 

 

America is one big pothole – how to fix them and create jobs

Part of the above headline is a quote from former Secretary of Transportation and Republican lawmaker, Ray LaHood. When he and former Democrat Governor of Pennsylvania, Ed Rendell appeared on PBS Newshour the other night regarding America’s need to improve our infrastructure, LaHood responded to Judy Woodruff’s question about its importance with “America is one big pothole.”

Rendell and LaHood are co-chairs of a bipartisan group called “Building America’s Future,” which is pushing for the overdue needs to rebuild and improve America’s roads, bridges, ports and electrical grids. Both speak from experience in what improving infrastructure can mean for the assets in question, but the jobs they create both directly and indirectly. And, we need not have to wait for another bridge to collapse to prove the need. Attached is a link to their interview with Woodruff on PBS Newshour. http://www.pbs.org/newshour/bb/nation/jan-june14/infrastructure_01-08.html

They cite numerous examples of how the American Recovery and Reinvestment Act (ARRA) has aided in improving infrastructure and getting people back to work. With the echo effect of the projects at hand, these capital investments are some of the best job programs around, as people are needed to build, repair and renovate, not to mention the peripheral support, supply chain and maintenance jobs. And, the needs exist whether we address them or not. Rendell cited the number of bridges identified just in Pennsylvania that were deemed in need of significant repair. On his watch, they were able to rebuild and repair about 20% of them, but there is much work left to be done.

To show an echo effect, one of the reasons cited as to why the City of Chicago did not get the 2016 summer Olympics it was vying for is our aging infrastructure. Further, one of the challenges facing our even larger move into solar and wind energy is our infrastructure is insufficiently supportive to where the new sources of power exist. In other words, we need more grids to garner and distribute electricity in places more conducive to alternative energy to make it even more effective and widespread.

Yet, in my last post, I mentioned an even more concrete example. With the widening and deepening of the Panama Canal slated for completion next year, almost all of our eastern harbors are not deep enough to support larger transport ships. We have plans that need to be expedited to dredge these harbors. As LaHood points out, if we do not do this, the larger ships will sail past these harbors to larger Canadian ports. That means more distribution jobs will be needed in Canada and fewer in Jacksonville, Savannah, Charleston, Baltimore, New York and Boston. That also means fewer taxes collected from wages and fewer goods bought here causing a very unwelcome echo effect. People will migrate where the jobs are.

There are numerous examples of win-win partnerships that are occurring. In fact, per “That Used to be Us: How America Fell Behind in the World it Invented and How it can come back” by Thomas Friedman and Michael Mandelbaum, this co-investment in our future between federal, state, local governments and private business is how we have become so successful over time. I have written about one example before where Clemson University, the City of Charleston, the wind turbine makers (GE, Siemens, etc.) and Department of Energy and South Carolina Energy Department have invested in a wind turbine testing facility in Charleston. The idea is to help the onshore and offshore wind turbines be more functional and efficacious.

When some leaders question paying for these investments, here is where we need to distinguish between capital investments and operational funding. I have heard several economists state that borrowing money to pay for an asset is different from borrowing money to pay for operations. With the low-cost of borrowing as of this writing, the time to borrow money to do this is now. With that said, we do need sustainable funding to pay the cost of borrowing and both cite an increased gas tax, as an example. There are other avenues to do this, but we need to explore the entire cost/ benefit equation with the bipartisan lens they are offering. This issue is too important to leave it to the special interest groups who lobby and tell our congressional leaders what they need to do.

I have written several posts about our infrastructure needs. Rendell and LaHood are breath of needed fresh air into addressing these needs. They have real ideas and experience to help us address real problems. Let’s get behind their efforts and challenge our leaders to do the same.