Externalities of the Economic Stimulus Program

I go to school just outside Boston and my family lives near Philadelphia, so I do a fair amount of travel between the two cities. Lately, I’ve noticed one bothersome change – the amount of traffic created by construction projects has greatly increased the length of the drive. Given the poor shape most state budgets are in, and the emphasis on infrastructure spending in spending stimulus funds, my intuition says that the stimulus funds are financing this construction, which is in turn causing traffic.

Now, my trips are done later at night – I usually work during the day, have dinner, and pack before getting on the road. I’m usually traveling between 8 p.m. and midnight, since it fits my schedule and will theoretically minimize rush hour traffic issues. The favored time to do this roadwork, however, is overnight, when it impacts fewer people than during the day. As much as I don’t like that, at least there’s some forethought there.

One of the dangers of the government allocating funds as it will is that the need for economic value to be created might not be considered. We will spend in the name of taking action, even though taking action is more costly than not doing so, in terms of opportunity costs – the money must come from somewhere, after all.

It’s a fact of life that roadways need to be maintained, and I’m not arguing that. But if less-than-necessary work is being done in the name of “creating jobs” or “investing in America,” all the costs need to be included. There’s little good that can be said about traffic jams, but they do offer plenty of time to think, and this thought experiment occupied me during a recent construction-induced backup on I-84 in eastern Connecticut one evening.

The total time I sat in traffic, which I’m defining as a speed below 10 m.p.h., was 40 minutes – this excludes, for example, when the road was closed down to one lane, but traffic flow was moving along around 40-45 mph. During that time, I traveled about 2.5 miles of road that was bumper-to-bumper across three lanes of traffic, and a half mile that was two lanes of traffic of similar density.

According to this from Edmunds.com, the average mid-size sedan in 190 inches (15.83 ft.) long, and the average length of a trailer truck is 80 feet (various sources). I’d say about 15% of the traffic on the road with me at that point was trailers, giving an average length of 25.45 feet for vehicles on the road. Assuming 10 feet between vehicle in either direction, and each vehicle takes up 35.45 feet – meaning 149 vehicles would fit in one lane one mile long.

Approximating that for the number of “lane-miles” (8.5) yields 1266.5 vehicles in the traffic jam with me at that point in time (about 10 p.m., for the record). If there are 1.2 adults per car, then 1520 adults had their time wasted by sitting in traffic caused by road renovations; with Connecticut’s minimum wage of $8.00/hr. (being conservative), I calculate that it costs $12,150 in lost time per hour wasted, or $8,000 for the 40 minutes I sat in traffic.

These assumptions were meant to be conservative (i.e. not counting wasted gas), and it makes me wonder whether or not we’d actually be better off just dropping money from helicopters as stimulus, rather than making busy work that creates negative externalities.

Since we’ve clearly committed to trying to carry trade the economy back to profitability, we might as well take the next step in forming the Hedge Fund of the United States and find the best relative value opportunities.

Disclosure: None.

Comments

[Pat Shuff:]

Cash for coffins are shovel ready projects, the funeral processions also causing traffic delays.

www.usatoday.com/news/...

Aug 27 09:40 AM

[Dave Wrixon:]

You gormless twit. The road and bridges in the US are so bad you are lucky to still be making the journey at all! Eventually, that will have such an impact on capital investment that you will be lucky to have any commercially interesting prospects to drive for.

Your problem is not that they are doing something about the infrastructure, but the fact that they wait until they are in such a mess before doing something about the infrastructure.

And who got the blame for the recent major bridge collapse out there in the Midwest. No not the Engineers, nor the politicians but the poor bloody pigeons. I am a bridge engineer myself and pigeons are pretty unpopular but only in the US could they be blamed for structural collapse.

Furthermore, you should be grateful that at least a minuscule amount of the Stimulus is actually being spent in a way that will Stimulate rather just being pissed up against the wall like the vast majority of the package.

Aug 27 01:19 PM

[SAUBW:]

As a matter of fact, I had reached a similar conclusion as this author over the course of this summer. I was thinking of b****ing to the state DOT about it.

The main freeway route I use is not adequate to support traffic levels even normally, but now they have miles of that freeway blockaded down to one lane in both directions to fix surface imperfections(?). But, most of the time no one is even working, just a lot of flags, signs and markers. When they are working it is just a handful of workers on maybe a 1/4 mile stretch, so why barricade the road for miles and miles?

It has signs up saying it is ARRIA, so it is a stimulous project, but for those using it, the patching(?) is causing more problems than the occasional pothole. Can't see anything else being done, although it looks like they are also building little parking places for state patrol cars to sit unseen and catch speeders on radar. So, I guess that "improvement" might provide some revenue for the state indefinitely).

That stimulus-funded freeway project is (and has been for about a month) causing unprecedented summer traffic jams, even overflowing to parallel nearby country smaller highways that now are hopelessly jammed as well. My worst trip was almost 3 hours to get 40 miles, most of which was averaging less than 5 miles an hour, often stopped dead, and covering multiple lanes. (a Friday night with the fleeing cabiners headed north). Literally thousands of commuters and travelers sitting on the road burning gas.

There is really no good alternative road on which I can bypass that freeway, but two days ago a crew also closed down the closest thing to a semi-reasonable alternative (a county highway) to re-do a railroad crossing. So, now I am driving around a second detour, that is actually on my first detour, on dusty gravel roads just to get to the city. Neither road or crossings seemed to me to be in such bad shape that it was hazardous or anything like that, though maybe not absolutely as smooth as it could be.

It does sometimes seem as if there is no consideration for the cost or time of the people who are affected by these projects all being done at the same time. Although it gives one the impression that the objective is to make it as difficult as possible to get from point A to point B, it is probably for the purpose of appearing to be spending as quickly as possible, so the public can witness their stimulus money in action (pretty slow-motion action here...).

When traveling West to get to my hobby farm, there is yet another bridge out on a state highway (has been out for a month or more, although it is a small bridge and only a few years old). Again - a miles-long detour, then back on the main road to encounter yet another detour for a bridge closed 40 miles away over the Mississippi.

That one that has the same construction design as the the ill-fated Mpls bridge, and it has been closed down for replacement since a month or two after the Mpls bridge went down, and still isn't done. Frankly, I think they take their sweet time on every government project, unless there is a public stink about it. When there is, they finish in 1/2 the time and I think that just bespeaks the general inefficiency of just about everything the government does. Their normal speed is about 1/2 of what everyone else's is.

While some of these projects really needed to be done, others almost seem as if they were started because they have to spend the money on something, but there seldom seems to be any hurry to get them finished once started. The crews really should get some framing carpenters in to train them on normal working speed...).

But, to the article's point these extremely-long traffic delays are annoying and are costly to the commuters and the net benefit is probably negligible on some projects. They do not need to be so disruptive to the people who pay for it in the first place. Some of these projects are well-executed, but the majority are not.

The state Dept of Transportation does manage to do their major freeway projects in the city at night and disrupts travel as little as possible. Probably more costly, but maybe not so much when all parties (commuters, nearby businesses, etc) costs are included because the crews really do work faster under those conditions, whereas these shotgun projects being initiated now with stimulus money seem to proceed at a snail's pace, if that.

I'm not so sure about the actual stimulus effect of these road projects either, since these jobs will disappear once the stimulus funds are gone (by next summer?).. So, aren't we just doing the same as the Cash for Clunkers program (pulling forward projects or sales that would have happened in a year or two anyway)? But then the bottom drops out again after that? Sure seems that way to me...

I constantly drove over that Mpls bridge, including the morning of the day it went down, and I only missed its fall by minutes in the evening of that day. The federal transportation investigation faulted the gusset plates design being too thin, and I heard of all kinds of accusations as to who/what was at fault. But, I had never heard or read anything about pigeons previously.

When I repeatedly drove across that bridge while the adjacent lane was being all jack-hammered out to a foot or more deep, it did not seem to me to be a real good idea to remove so much of the surface(?) of a bridge still being used.

And also have all the heavy equipment on the bridge at the same time- but then I'm not an engineer. But, sure enough there are lawsuits against the construction company doing the "re-surfacing" just as I anticipated there would be.

However, as to the state of decline of these roads and bridges, I would opine that if federal and state government do-gooder's had not diverted gas tax revenues into other programs for decades in the first place, then the current state of roads and bridges would be not even be an issue. But, things weren't bad enough back then to use the money for its alleged purpose and justification for its collection.

More of the elected official's postponement mentality combined with squeakiest wheel scenario, I guess... So, that gas tax money was robbed just like the Social Security fund and now they want us to pay for it again, and their keeping us from getting to work is just another unintended consequence.

Aug 27 04:58 PM