Krugman on the Hudson Tunnel

Krugman discusses the Hudson Tunnel, blaming Governer Christie for not opening up the state coffers to pay for a new tunnel.

http://www.nytimes.com/2010/10/08/opinion/08krugman.html?_r=1&partner=rssnyt&emc=rss

As always, Krugman's "analysis" is nothing more than condescending generalities:

"And right now, by any rational calculation, would be an especially good time to improve the nation’s infrastructure. We have the need: our roads, our rail lines, our water and sewer systems are antiquated and increasingly inadequate."

In other words, over the last quarter century, while government spending at all levels has surged, vital infrastructure has been neglected, primarily because sewers and bridges, unlike overpaid government employees, don't vote. Now, the reward for government neglect is more money to governments to solve the problem that their neglect created.

"And the price is right: with interest rates on federal debt at near-record lows, there has never been a better time to borrow for long-term investment."

First of all, why should the federal government finance a commuter tunnel, which is a quintessentially local issue? More fundamentally, Krugman, as always, neglects the tattered finances of state and local governments, which can't afford more debt. Krugman lives in a world of infinite resources.

"We are no longer the nation that used to amaze the world with its visionary projects."

The goal shouldn't be to "amaze the world", it should be to spend wisely for the benefit of American citizens. And, in any event, I find it impossible to believe that people in Shanghai, Berlin, or Sydney are even going to be aware of, let alone amazed by, a new commuter rail tunnel in New Jersey.

"So, about that tunnel: with almost 1,200 people per square mile, New Jersey is the most densely populated state in America, more densely populated than any major European nation. Add in the fact that many residents work in New York, and you have a state that can’t function without adequate public transportation. There just isn’t enough space for everyone to drive to work.

But right now there’s just one century-old rail tunnel linking New Jersey and New York — and it’s running close to capacity."

According to Krugman, the current tunnel isn't even at capacity yet -- its close to capacity. And, as he admits, New Jersey is extremely crowded, meaning there's no way for it to grow substantially. So, its very possible that the current tunnel will meet New Jersey's future needs. I'm not saying it will -- I'm no expert in long-term demographic trends of New Jersey -- but Krugman offers literally no evidence that a new tunnel is necessary or will satisfy any current or future needs.

"So last year the project began. Of the $8.7 billion in planned funding, less than a third was to come from the State of New Jersey; the rest would come, in roughly equal amounts, from the independent Port Authority of New York and New Jersey and from the federal government."

That son of a bitch Cristie is a terrible public servant for not pissing away federal money. Why can't he focus more on pork-barrel projects instead of showing a concern for the greater good?

"Even if costs were to rise substantially, as they often do on big projects, it was a very good deal for the state."

Note the incoherence of this sentence, which is essentially asserting both that: a) Krugman has no idea what the cost will be; and b) it is a good deal. Krugman is trying to do a cost-benefit analysis with no understanding of the cost, which is impossible, underscoring that Krugman just makes baseless assertions.

"When people ask why the Obama stimulus didn’t accomplish more, one good response is to ask, what stimulus?"

Already making excuses for the failure of the stimulus. This is a recurring theme. The New Deal never provided sustainable economic growth (see the 1937 recession), but, according to Krugman, again, this wasn't a failure of Keynesian theory, but inadequate stimulus. Krugman doesn't offer success, he offers excuses.

"Leaving aside the cost of financial rescues and safety-net programs like unemployment insurance, federal spending has risen only modestly"

In other words, if you arbitrarily exclude certain categories of massive federal spending, federal spending hasn't gone up much. This is roughly the same as saying if you exclude their bad loans, banks were extremely well-run.

"By refusing to pay for essential investment, politicians are both perpetuating unemployment and sacrificing long-run growth."

Krugman, like all liberals, sees no dissonance between the assertions that politicians are short-sighted morons, but that they should be given massive power. Interestingly, the great George Orwell, one of my intellectual heroes, made the exact same mistake, destroying any claims he might have had to being a serious political thinker.

UPDATE: My brother, who is an expert on and advocate for mass transit, disagreed with this post, noting that studies project that the tunnel will shave commute times. I have no doubt that this is true. Perhaps I should have been clearer in my post: I have no doubt that the Hudson Tunnel will have benefits. But, benefits in a vaccum are meaningless is terms of evaluating a decision -- benefits need to be valued somehow. Saying that the tunnel will shave five minutes off a commute doesn't answer the question of how much those five minutes are worth to paying customers. The only way the tunnel's benefits can be ascertained is through a properly functioning price mechanism. As always, the question is will riders pay for the convenience.

I propose an elegant solution. There are three constituencies that will benefit from the tunnel -- heavily unionized contractors, heavily unionized Port Authority workers, and commuters. If, as the tunnel's proponents claim, there are benefits to the tunnel sufficient to justify its costs, New Jersey should float bonds to finance the construction of the tunnel. The exclusive source of funds to repay the bonds will be fares. In no event would the taxpayers pay the bonds. If the bonds aren't sold (i.e. the market determines that they can't be serviced from the tunnel's revenues), the contractors and Port Authority workers (or their union pension funds) either accept the bonds in leiu of payment or agree that the tunnel won't be constructed. If the bonds don't sell, or the contractors/Port Authority workers won't accept them, it shows that the whole project is a waste of resources, and that its advocates are just lying about the merits of a project that they themselves won't pay for or believe in.