Posts Tagged: Friedman



Building American Bridges – In China

Despite the paranoid and near-endless calls by come columnists and pundits for economic austerity measures throughout the developed world, there are those in America calling for much-needed upgrades to that nation’s infrastructure as a way to stimulate job-creation and engage in the patriotic act of nation-building by actually building a nation.

The New York Times’ Paul Krugman and Thomas L. Friedman relentlessly lionize this approach as a path towards economic recovery and the improvement of the nation. Consider today’s column by Friedman where he says:

. . . we used the cold war and the Russian threat as a reason and motivator to do big, hard things together at home — to do nation-building in America. We used it to build the interstate highway system, put a man on the moon, push out the boundaries of science, teach new languages, maintain fiscal discipline and, when needed, raise taxes. We won the cold war with collective action . . . Imagine where we’d be today if on the morning of 9/12 Bush had announced (as some of us advocated) a “Patriot Tax” of $1 per gallon of gas to pay for education, infrastructure and government research, to help finance our wars and to slash our dependence on Middle East oil. Gasoline in the U.S. on Sept. 11, 2001, averaged $1.66 a gallon.

Strong words that are more than worthy of contemplation. But also worthy of contemplation isn’t just what infrastructure gets built and why; but also where, when and by whom it’s constructed.

Let me explain:

A 700 ton precast segment is lifted to form the Skyway portion of the Eastern Span replacement of the new San Francisco-Oakland Bay Bridge.

Two months ago the New York Times ran a fascinating article profiling how American companies tasked with building a new San Francisco-Oakland Bay Bridge were outsourcing much of the construction to overseas Chinese manufacturers. We’re not talking just about steel here, but “football field” sized roadbed segments that would be entirely pre-fabricated in China then shipped to America to be assembled by American workers.

The California government entered into the deal willingly as it would reportedly save the state around $400 million. The total cost of the bridge is $7.2 billion.

Now $400 million isn’t peanuts. Especially so for California, a state whose financial situation makes Greece look like Mike Tyson. But $400 million out of $7.2 billion?

That’s a savings of just over 5% of the total project cost. Was saving $400 million worth the billions of dollars – not to mention all the multipliers and indirect economic benefits – shipped overseas to China?

This isn’t an argument in favour of economic protectionism. Globalization is here to stay and will only increase in our lifetime and as I’ve pointed out before, it’s nothing new to us – after all much of North America’s original transport infrastructure was built by outsourced Chinese labour.

The free flow of goods and people throughout the world has proven to be an essential and invaluable tool to growth and wealth creation. But if we as western developed nations become serious about infrastructure spending as a means to stimulate job-creation and nation-building, we’re going to have to pay attention to deals like these.

Sometimes you’ve got to worry about taking care of the homestead.

Granted, this arrangement was brokered long before the economic crisis hit. But the fact that two American companies acted as middle men between the California government and a massive Chinese consortium – reaping whatever profits they could from the deal – suggests that “buying American” isn’t always clear and objective policy.

Building infrastructure alone isn’t enough. Sometimes we’ve got to build it ourselves.

Want more? Purchase Cable Car Confidential: The Essential Guide to Cable Cars, Urban Gondolas & Cable Propelled Transit and start learning about the world's fastest growing transportation technologies.