Understanding the Decline of the Empire is really not that hard. It only requires a small but profound change in your thinking.
At Yahoo's Tech Ticker, Dartmouth professor Richard D'Aveni talks about the difference between expenditures and investments. With expenditures, like those in Obama's stimulus plan, the Empire spends money to boost short-term consumption. That's why it's called a stimulus. The key word is short-term. It's like having a few drinks or doing some blow. You feel good for a while, but the effect quickly wears off. Then you need more stimulants to keep the feeling going. That's exactly the position of the United States today.
With capital investments, your goal is longer term wealth creation. There may not be much immediate reward, but eventually you'll get a big payoff. Reforming and expanding the electrical grid, or building high speed rail, are the gifts that keep on giving (more below). Watch the video.
I've written about high-speed rail in the past. In Planes, Trains and Automobiles, I introduced the Goldman Sachs/High-Speed Rail Scorecard, which indicated that expenditures (bailouts, gifts) given to the Giant Vampire Squid were far larger than those for high-speed rail. Actually, it's very hard to figure out just how much money the Sea Monster has received—the total benefit—because they own one branch of the government outright, and rent another. Thus it is very difficult to think of a policy that does not benefit them. We do know that the Squid's profits were quite impressive in 2009. I expect 2010 to be another banner year for Lloyd Blankfein & Company.
For new trains, the picture has not changed much since April 23, 2009 when I wrote Planes, Trains and Automobiles. The amount of stimulus money expended to study (not build) High-Speed Rail remains the same: $8 billion. (The Vampire Squid got $12.9 billion from the AIG deal alone.) I say "expended" and not "invested" because to count as an investment, you've actually got to do something that creates wealth over the longer haul. An expanded train system has been studied more than once in the past.
The only new development showed up in my local newspaper, the Pittsburgh Post-Gazette. (I use the word "newspaper" loosely here.) I'm going to quote the whole thing so you can get a good feel for the Futility of all this.
This is not an investment. What we have here is a bunch of political hacks fighting over meager spoils from the stimulus package. Simply ridiculous. Is it any wonder the Empire is in decline?
Region gets little money for fast rail lines$750,000 to study connection between Pittsburgh, capital
Friday, January 29, 2010
While Western Pennsylvania appeared to get very little from President Barack Obama's $8 billion high-speed rail initiative, there were a couple of glimmers of promise following Thursday's grant announcements.
The only money coming here is $750,000, to pay half the cost of a study into improving Pittsburgh-to-Harrisburg passenger rail service.
The Pennsylvania Department of Transportation said the study will assess what improvements are needed to increase service from the current one daily round trip to eight, and to increase the speed to 110 mph, similar to service east of Harrisburg.
Currently, passenger trains from Harrisburg to Pittsburgh average less than 50 mph.
The study will look at possible improvements to the corridor, including dedicated tracks for passenger trains. The current line is congested with freight traffic.
The Harrisburg-to-Philadelphia segment got $25.65 million in Thursday's announcement to add to years of improvements that have increased train speeds, frequency of service and ridership.
But possibly the best news for Pittsburgh was that Ohio scored $400 million toward its plan to launch passenger rail service between Cleveland, Columbus, Dayton and Cincinnati.
Efforts have begun to upgrade service between Pittsburgh and Cleveland, which would better tie the city into Ohio's emerging hub of passenger rail lines, and eventually to a network that is contemplated to crisscross the Midwest.
U.S. Rep. Jason Altmire, D-McCandless, said Thursday that he would continue efforts to get Pittsburgh-to-Cleveland added to the nation's list of designated high-speed rail corridors. Govs. Ed Rendell of Pennsylvania and Ted Strickland of Ohio also have requested the designation.
"When I heard what the amount (of the Ohio grant) was, I was very happy," said Ken Prendergast, executive director of All Aboard Ohio, a nonprofit group that has been pushing for years to restore passenger rail service connecting the state's urban centers. "But I have to tell you there's a lot of work remaining to be done."
The funding will pay for track upgrades, grade crossings, new stations, maintenance facilities and rail cars. Ohio had sought $564 million but Mr. Prendergast said he believes the award is sufficient to launch the service within two years.
It won't be high-speed rail -- top speeds are contemplated at 79 mph -- but the Ohio Rail Development Commission sees 110-mph trips as a longer-term goal.
The biggest winners in Thursday's announcement were California, $2.25 billion; Florida, $1.25 billion; Chicago-St. Louis, $1.1 billion; and Wisconsin, $810 million. The $8 billion was allocated in last year's economic stimulus legislation.
Although Pennsylvania got a relatively meager sum, there was nary a cross word from political leaders. "From a national perspective, it is highly appropriate to make the largest investments in the two marquee projects in California and Florida," Mr. Rendell said.
U.S. Sen. Bob Casey said the planning grant "takes us a step forward toward extension of high-speed rail service all the way to Pittsburgh." "I am pleased to see stimulus funds at work for high-speed rail in Pennsylvania," said U.S. Sen. Arlen Specter.
"Obtaining funding for a planning study for high-speed rail between Pittsburgh and Harrisburg is an important step forward, but we must remember that this is only the first step," Mr. Altmire said.