Monday, January 16, 2012

Why You Should Support California High-Speed Rail, Part Two



Let me say it again: JOBS.

Construction of the initial high-speed rail segment would create literally tens of thousands of jobs. Moreover, those jobs would be targeted at a particularly depressed area of the state (the Central Valley) and a particularly depressed sector of the economy (construction).

Here is the choice we are presented with: In this economic crisis, we are faced with millions of people who find themselves out of work, and who are spending their time chasing after such menial employment as fast-food and retail jobs-- and, even then, largely not finding them. As things sit today, we as a society are supporting them through unemployment insurance, food stamps, and (if they have children) a host of other social safety net programs. It is altogether proper for us to do so, and to try to reduce human misery among us.

However, at the same time, these programs do cost money, and while they do get that money flowing through the local economy, they produce little long-term social benefit. During the Depression, we understood this, and we chose to employ millions of people constructing things that would produce just such a lasting benefit. The Works Progress Administration built thousands of publicly useful projects around the nation, including roads, bridges, water systems, and the bulk of the South Carolina library system. You can still find WPA stamps on sidewalks and curbs in older parts of Riverside. Instead of paying people to look for scarce, menial work in the private sector, public works projects pay people to build something that will yield dividends for years to come.

So we find ourselves again in a massive economic crisis, even though the recession "officially ended" some years ago. We have mass unemployment, and our social programs cost more even as our tax base shrinks-- made worse in California, because we are so reliant on sales taxes, which hew very closely to economic conditions. How do we recover?

Well, the way we got out of the Depression was by building stuff: roads, bridges, sewer systems, parks, and eventually tanks and bombs. People get jobs, they can pay the people who provide them services, pay taxes, those people then hire more people, and so on and so forth. It's called a "multiplier effect" in economics, and public works projects have a huge multiplier effect.

Really, we could build damned near anything and have this effect on the economy. The Obama stimulus bill spent quite a lot of money on highway projects, and all indications say that it kept us from further economic decline. However, I'd much rather use this fantastic opportunity to gear up for the post-petroleum economy. Right now, people need jobs, companies need work, suppliers need customers, and prices are low. The time to invest in the infrastructure that will drive our economy for the next century is now. High-speed rail is one big, worthy project, and building it will help put our state on the road to employment and economic recovery.


Alon said...

Infrastructure is not the only thing with a multiplier effect. The multiplier is equally present if you spend money on education, or health care, or unemployment insurance, or means-tested welfare. The construction sector doesn't need money more than teachers or the generic poor do; unemployment is affecting everyone more or less equally. Ditto long-term benefit: helping people get out of poverty now means that they'll be able to accept higher-value jobs in the future instead of being saddled with whatever they can get today. People who enter the labor force in a recession have lower lifetime incomes than those who enter it during growth because they start out with jobs that pay less or are not matched to their skill level and never catch up.

The US can try to recover the way China did in the last few years, by building public works as a jobs program and not as good transportation policy. That's the same way the US recovered in the 1930s, only it took the US much longer then because FDR's stimulus was halfhearted. Or it can try to recover the way Sweden did in the 1930s, using unemployment benefits and working-class wage increases. I find Sweden's approach more humanistic, myself.

JN said...

Alon- Entirely fair criticisms. As I tried to point out, I'm far from being against the idea of safety net spending. However, I don't think that the HSR system is public-works-as-jobs-program. I think that we need this system desperately, and that it has the beneficial side effect of coming at a time when a huge percentage of our industrial capacity is *begging* for work. If you can't support the system because it'd revolutionize intrastate travel, support it because it'll put people back to work.

Further, as I tried to get across in my earlier post (, we don't have the luxury of Sim City-like control over the budget. If the HSR project is killed, the money will likely not be shifted into [insert progressive priority here]. The federal money is already earmarked for "deficit reduction" should it not be spent, and the state bonds will likely not be sold at all. What we would be left with is not $10bn to redirect into other social priorities, but $10bn less in economic stimulus to the state. If there were a meaningful choice between HSR and social welfare spending, we could have that debate. Our choices, however, are between HSR (and the rest of the budget being a smoking crater) and no HSR (and the rest of the budget still being a smoking crater). Given that, I will choose HSR, and I think you should as well.