Monday May 12 2008
All times are London time
My FT column this week is on the problems of US infrastructure - particularly transport-related infrastructure - and why the country needs to do something about them. You can read it here and post comments below.
About this blog
I am the FT's chief business commentator and this blog is about business, finance, media, technology and related matters. I live in New York so there is a bias towards US topics but I range more widely. Comments and criticism, which hopefully are at least as interesting as anything I write, are welcome. There is more about me on my columnist page.
On my first visit 15 years ago to see relatives in LA, I was told that the Big Avocado is just a series of ethnic villages strung out longitudinally. I said I’d take the bus to go shopping on Wilshire Bvd. so I’d see a lot of LA en route. “You can’s do that - nobody does that” was the horrified response (only those who are so poor that they have to use public transport was the inference). That’s a bad sign, I thought at the time, but made no comment. Now German teletext reports that Americans are “praying at the pumps” for a fall in gas prices!
Of course when a country is run along Neo-liberal lines, investment in infrastructure is less likely to take place than when a country is run as a Social Market Economy (like Germany and Switzerland). And it is surprising how much is invested in infrastructure in Switzerland, especially when the electorate can set a referendum in motion AGAINST anything at any time. (Why that does not happen frequently is logical, politically).
My current reading is a series of 10 booklets (Die Klassiker der Wirtschaftstheorie: Adam Smith, Marx & Engels, Ricardo, Pareto, Hayek, Rawls, Keynes, Marshall, Wicksell and…Schumpeter) that come with the Sunday edition of the Neue Zürcher Zeitung. Blasts from the past!!
Posted by: J.J. | May 8th, 2008 at 7:40 am | Report this commentThomas Friedman wrote a similar column in the New York Times recently. My concerns about infrastructure investment are two-fold: first, it gives wide scope for political cronyism and inefficiency. Second, since it is “investment,” politicians seem to feel the money can be borrowed rather than funded out of current tax revenues. One brainstorm: “Renew America” bonds, available only to Americans, which would (a) encourage Americans to save more (b) with the added benefit of investing in national infrastructure (c) administered by a non-political public corporation which would have the added pressure to invest the funds efficiently of using American “widows and orphans’” money.
Posted by: M.P. | May 8th, 2008 at 1:23 pm | Report this comment@ M.P. “Renew America” bonds? Sounds like another scam to me. But…maybe, PROVIDED they are not front-loaded with potholes and attempts are made to off-load them in Europe.
Posted by: J.J. | May 8th, 2008 at 4:49 pm | Report this commentGreat article.
I also read a great article recently by a colleague of yours, Martin Wolf, that highlighted the folly of the global agricultural policies: “Food crisis is a chance to reform global agriculture”.
If you could combine the strong emotional argument of Martin’s article (i.e. that biofuel kills people in the third world) then you deprive US consumers the nice, warm feeling they would get when they drive their ethanol-powered cars, leaving them with the knowledge that they are using up limited resources and polluting the atmosphere.
The trick then is to combine this ‘feel bad’ emotional, and ultimately economic, factor with the ‘feel bad’ economic, and also emotional (dented national pride), factor that comes with the recognition of the points in your article: e.g. “Gosh, I never realised it before but actually the USA is a third world country!”
The hope is that this catalyses change: Consumers and politicians start to think, “My Goodness! There is no sustainable and ecological means to justify ‘one man, one car’. Gasoline is damned expensive and it will just get more expensive as it becomes scarce and as the world economy grows. So, the only sustainable way to travel is by train and other methods of public transport, whose infrastructure is in a terrible state, and so we’d better invest in them!”
Sure that doesn’t address the broadband issue, but it would be a nice start!
Posted by: James Amoroso | May 9th, 2008 at 9:07 am | Report this commentInfrastructure spending in the US in critically starved for the simple reason that there isn’t any money available.
Look at US spending as a fraction of GDP on health care, military, “homeland security” and criminal justice (e.g., the incarceration of 2 million people). Then compare those numbers with EU, OECD or even emerging countries in Asia. Add to the mix the current account deficit.
Anyone who travels internationally cannot miss the fact the US public infrastructure is crumbling — and whether funding sources are public, private or a mix, the slice of the pie simply cannot become larger unless other, nonproductive and wasteful pieces shrink.
Particularly appalling is the state of public transportation, especially rail transport. By the time the politicians and the general public realize that cheap gasoline is a distant memory there simply won’t be the investment funds available to fix the backlog problems, much less build for the current century.
Posted by: GREGG SPINDLER | May 10th, 2008 at 12:31 am | Report this commentI have noticed an increase in the amount of yellow (cole-seed/rap-seed which is processed into Rapsöl) crops in fields in Switzerland this year. That crop has been cultivated for generations (Hodler painted landscapes with bands of yellow raps in them), and some cantons run some of their buses on rapsoil. But farmers should be producing food only, imo.
I’m no engineer, but in the French press I read about Carlos Ghosn (who saved Nissan, and now runs Renault??) who has got the cooperation of the government of Israel to set up the infrastructure (a string of countrywide garages in Israel) to support his experiment with electric / battery run cars which will take place in Israel at some future date.
Posted by: J.J. | May 10th, 2008 at 7:27 am | Report this commentCheap, non-polluting, quiet - by any criteria the best solution?
To all: Re cheap gasoline
An item from the Financial Times Deutschland online today. It makes 2 important points
1. The Gen. Sec of OPEC says that oil exporters are having difficulty in finding buyers for the additional supplies (of oil) they are offering on the market. This shows, he says, that there’s sufficient oil being supplied to the market and that it is forecasts (by Goldman that oil prices could go much higher) that make big investors, pension funds etc. all the more determined to increase their investment in oil.
2. Oliver Jakob (Man. Director of research firm Petromatrix) agrees with the OPEC Gen Sec, saying there’s a “war going on between the Goldman-World and the physical (oil) world”.
Jakob says the market is pricing in a scarcity (of oil) which in fact does not exist.
All the above makes one think, does it not??
Here’s the original German text from the FTD online (note: Pearson sold the FTD some time ago - to a German media group)
>>Das Förderkartell Opec schreibt der Finanzwelt den größten Einfluss zu. Der Generalsekretär der 13 Mitgliedsländer zählenden Organisation, Abdallah El-Badri, sagte, dass die Ölexporteure Schwierigkeiten hätten, für ihr zusätzliches physisches Angebot Käufer zu finden. Dies zeige, dass der Markt ausreichend versorgt sei, so El-Badri. Das nächste Treffen der Opec ist auf den 8. September angesetzt. Es mehren sich jetzt die Stimmen, die eine außerordentliche Versammlung vor September empfehlen.
Olivier Jakob, Managing Director beim Researchhaus Petromatrix, kann der Einschätzung El-Badris zustimmen: “Es tobt momentan ein Krieg zwischen der Goldman-Welt und der physischen Welt. Obwohl noch nicht bewiesen ist, dass die Weltwirtschaft überhaupt mit solch hohen Preisen zurechtkäme, bestärken Preisprognosen wie die von Goldman natürlich große Anleger wie Pensionsfonds, ihr Engagement auszuweiten”, sagte Jakob. “Derzeit preist der Markt eine mögliche Knappheit ein. Eine tatsächliche liegt aber nicht vor”, so Jakob. <<
Posted by: J.J. | May 10th, 2008 at 8:17 am | Report this commentGAS-powered car are more efficient than electric (what about the carbon-footprint scenario, now so nauseatingly rammed down our throat at every opportunity? Does it not apply to electric-powered cars?)and do not starve the third-world.
Posted by: elizabeth schumann | May 10th, 2008 at 11:06 pm | Report this comment