Why Government Spending is So Impotent

We have a proposed Southwest Light Rail Transit line, a high frequency train that would connect downtown Minneapolis to my town of Eden Prairie. funding for capital costs will come from four sources: the transit sales tax in the metro area (30 percent), the County (10 percent), the State (10 percent), and the Federal Transit Administration (up 50 percent). Every month there's a new cost added to the currently estimated $1.25 billion project.

Ridership is projected to be 24,000 to 30,000 rides per day by year 2030, which would be a large increase from the 2000 rides a day generated via the buses that run from Eden Prairie to downtown. Currently, very cushy buses with large comfortable seats carry a handful of people downtown all day on each trip. Revenue, meanwhile, is falling, reflect low demand. Riders pay an average of $2.5 per trip, even though it costs $8 to cover marginal costs. The proposed project has many stops as planners hate express routes that travel nonstop node-to-node because this just encourages riders to live outside the city! The wishful thinking is basically designed to fail, not that anyone cares because they are all spending not just someone else's money, but each agency feels like the other agencies are subsidizing them, as if it doesn't all come from taxpayers in the end.

Spending money on such boondoggles to create jobs relies on a faith in the fiscal multiplier, and the magic of spending to reduce debt. Bush II spent like a drunken sailor (wars, medicare) and this ended with a disaster even though it should have been no worse than the alien invasion expenditures suggested by Keynesian economists. It should be remembered that after independence India focused on jobs and the poor, as opposed to free trade and property rights, and they stagnated for decades. If governments could boost the economy spending on big top-down projects, countries like India would have done much better than countries that were less hands-on in their management.