December 7, 2011
On transportation waste
A pair of interesting articles showed up in the past week, highlighting a fundamental disconnect between various factions in the infrastructure wars. Ashley Halsey III of the Washington Post wrote an article bemoaning the lack of trust that much of the public has that their infrastructure dollars are being spent wisely, given the current state of disrepair of the nation's roads, bridges, and transit systems. This article prompted a sharp rebuttal from Stephen Smith at Forbes, arguing that the public is entirely correct in this perception--that money is being wasted, the authorities in many areas are corrupt, and suggesting that the only solution that is being proposed by those who oversee our infrastructure is to pass the hat to taxpayers.
Unfortunately, both sides have many valid points. Our infrastructure is in miserable shape, for a myriad of reasons. And yes, corruption and waste abounds. The question, then, is what to do about it?
In Halsey's article, she stated two things which are obvious, and also pointed to some research which seems to confirm these things: a) much of our infrastructure is functionally or structurally obsolete; and b) the public takes a highly cynical view towards politicians who point this out, broadly suspecting them of championing boondoggles and wasteful projects with heated rhetoric. She noted the huge funding gap between the need claimed by infrastructure leaders and the actual monies appropriated by Congress--a gap frequently cited as hundreds of billions, if not trillions, of dollars.. She also suggested a few ways to break this logjam, such as localizing infrastructure spending--noting that people are more receptive to building things in their own communities, rather than supporting grand visions that will have primary benefits elsewhere; and that voters are less receptive to threats of doomsday. The article, it could be argued, was a puff piece, but it didn't contain, in my mind, anything truly outrageous or offensive.
Smith didn't see it that way. He's a writer I generally respect (although I disagree with him on much), but his article in Forbes was highly polemic, starting with the title: "Washington Post: Only Idiots Think Infrastructure Spending Is Wasteful, And Americans Are Idiots". Reading the article, I fail to see where Halsey ever stated--or implied--any such thing. Smith also chastised her for failing to address the real issue of waste and inefficiency in capital projects. Unfortunately, he then went off on an anti-transit tangent, acting as though mass transit was the primary source of the problem, even though Halsey discussed shortcomings with pretty much all modes of transportation, both passenger and freight. Smith pointed out the infamous inefficiencies with New York City transit, where union-mandated overstaffing is a longstanding practice and recent projects such as the Second Avenue Subway come in at pricetags which make even the CRC look like it was bought at a garage sale, referring to Alon Levy's excellent work documenting the issues with transportation projects in the US, rail in particular. He then concluded with this:
In many ways, transit boosters in America resemble self-destructive drug addicts who had rough childhoods. Yes, the past was difficult, but that doesn't make he bad decisions they're still making any less problematic. Like a drug addict, American transit "experts" will never get anywhere unless they acknowledge that they have a problem in the first place. They're like a heroin addict claiming that his live would be perfect, but only if stingy passers-by would just drop a few more dollars in his cup so he can buy another bag of dope.
Talking past each other
Unfortunately, such rhetoric doesn't help--and while Smith does identify a major issue that the US has with quality of governance, particularly in infrastructure, this sort of broadside does little to shed light on issues. Many transportation experts--by which I mean planners and administrators, as well as engineers and activists--are well aware of the problem. Levy is an adamant transit supporter, of course, and he's written extensively about this; I've written quite a bit here at PT. There's a couple errors that Smith make, either of omission or commission.
- As noted above, he focuses entirely on one segment of the transportation sector--transit--while broadly ignoring the rest. Waste exists, and it exists pretty much everywhere; there's just as much to be found in roadbuilding and aviation as there is in transit. The Big Dig in Boston. The Mercer Island tunnel. The CRC. The deep-bore tunnel. The Tappan Zee bridge replacement. The proposed tunnel under South Pasadena to complete the gap in I-710. Compared to these, the infamous "Bridge to Nowhere" proposed for Alaska, which was mentioned by Halsey (this drew more ridicule from Smith) is peanuts.
- Even within public transit circles, the NYC subway system is a particularly notorious and inefficient case--New York is a highly-unionized city with abundant financial resources, which is well-known for a corrupt political culture and a highly dysfunctional relationship with the state government in Albany. Most cities in the US are not New York when it comes to waste and boondoggles.
- The solution space wasn't explored much, if at all.
That said, there were a few things which Smith gets right:
- Reform is needed.
- Throwing money at the problem probably won't help. It will eventually get things built, but it won't improve the fundamental issues.
What is waste, anyway?
One major area of disconnect, which wasn't explored by either author, is that terms such as "waste" mean different things to different people. Many (not all!) critics of transit, when they claim it is wasteful, often mean that they consider it undesirable at any price. Some critics are heavily invested in the automobile--owning one (or several) and living in auto-dependent places and having auto-dependent lifestyles--and believe that their preferred mode should be the one that receives investment. (This position is often justified with majoritarian arguments--most everybody drivers, only a few percent use transit). Others critics have reactionary attitudes towards transit and its users; and still others object to public subsidies of anything and consider transit to be an egregious offender. Smith is certainly not in the first two camps (being an urbanist); though he may be in the third (being a libertarian).
To Levy, however, waste means an entirely different thing. When he claims something is wasteful (in the US), it's because other first-world economies (with similar labor costs, access to capital, and technical expertise) have proven track records building the same thing for far less money. Levy's judgment of waste (in transit; he writes far less about roadbuilding, often considering that to be waste of the first kind) is not a judgment of the worth of the projects in question; but of how they are built. And in his writings, he goes into quite a bit of detail as to where the bodies are buried: inefficient or outmoded regulations and regulatory bodies (particularly the FRA); a lack of technical standards for things that ought to be standardized (in many countries, the same LRT vehicle will work unmodified in any city's transit system; something which is decidedly not true in the US); a political culture more susceptible to capture by special interests (including both vendors and labor); less economies of scale (particularly for transit) than in other countries which build much more of it. To that, you might add the common use of transportation projects as economic stimulus vehicles (even during good economic times); and a greater difficulty assembling political coalitions in support of projects, thus necessitating more compromises to satisfy the various stakeholders.
Its the politics, stupid
Unfortunately, our political culture tends to produce one of two responses to the problem (and many others in public-sector governance): Throw money at the problem, or blow things up. Throwing money won't solve the problem, and blowing things up solves the problem of waste, but does little to help with the more fundamental problem that our infrastructure is in decay. And while many voters may be correct in their suspicions that their money is often not wisely spent; there's ample evidence that our infrastructure really is in deplorable shape--that not all such claims of dire emergency are examples of crying wolf from corrupt officials and rent-seeking special interests looking to loot the public till. However, some are--and separating wheat from chaff is often difficult.
Ultimately, the long-term solution to this is not an easy one; likely requiring structural reform in the nature of politics themselves--and thus something that politicians groomed under the current system are unlikely to deliver. However, as Levy shows, there are many places which do manage to build public projects with far less waste and fuss than we manage here in the US, places which are wealthy democracies to boot. No particular political ideology seems to have a monopoly on good governance--it can be found in places as diverse as the various European social democracies, as well as in quasi-libertarian societies such as Hong Kong. The first lesson for US leaders would be to study what works abroad and emulate it--not-invented-here syndrome is far too present in US polity. The second lesson is to understand how to reduce the influence of special interests (both right and left) on the political process. This is a battle which must be continuously fought, as special interests sooner or later tend to figure out how to game whatever system is put in place to restrain them. And probably a third lesson is to get transportation back out of the culture wars--in many places, busses and trains and freeways are regarded by the public as boring old utilities that are only politically remarkable when they are badly screwed up. Here, it seems our transportation infrastructure choices are among the great social issues of the day, with the decision to build rail or roads carrying tremendous amounts of freight in some great moral struggle. Other forms of public infrastructure, such as the power grid (which is publicly-owned in many places) or the sewers, don't seem to generate anywhere near the same level of heated rhetoric.
December 8, 2011 1:43 AM
Stephen Smith Says:
Smith also chastised her for failing to address the real issue of waste and inefficiency in capital projects.
Not just capital projects – I specifically discussed operational overstaffing, on both metro lines (in NYC, though if I wanted to go on forever, I also could have mentioned the fact that BART and WMATA should really be driverless by now) and regional rail lines (everywhere).
Reading the article, I fail to see where Halsey ever stated – or implied – any such thing.
Funny you didn't see it that way – to me, the implication was obvious. (Though I'm curious to see what other commenters think about the piece.) She clearly paints experts as being overwhelmingly of the opinion that more funding is necessary. And in fact not even just "overwhelmingly" – completely! There literally isn't a single contrary opinion expressed to her "experts believe it needs more money, the unwashed masses think it needs to trim waste" line. You mention in your piece that there are indeed people who believe that costs are an issue, which is no doubt true (although I think you overestimate the influence and clout they have – it's a view that largely resides in the blogosphere, and certainly is rarely if ever voiced among the political experts of the short she cited). But then why didn't she mention any of them? It was not labeled as an opinion piece, so if a reader is taking the WaPo at its implied word – that is, the implication of any mainstream high-brow paper that it will give both sides of the argument when they aren't batshit insane – the reader would conclude that there are no experts (or even smart people) who believe that waste is a bigger problem than funding.
There's a lot to dislike in he-said-she-said journalism (a.k.a., the supposedly "unbiased" approach), but those are the standards the Washington Post holds itself to, and those are the standards its readers hold it to. So those are the standards I'm holding it to. And by those standards, she clearly implied that there are no experts who disagree about spending.
terms such as "waste" mean different things to different people
To me, waste means any money that could be spent on improving transit but is not. If you hire six people to do the job of one, as commuter railroads do, then this is 5/6 waste. I'm pretty sure Alon is on board with me here. Granted, the money isn't being burned – it's going into someone's pocket, but if "not being incinerated" is your only criteria, then nothing is ever wasteful.
Most cities in the US are not New York when it comes to waste and boondoggles.
That's something that people said to Alon in the comments section of the post of his I link to, and he pushed back, and I think he was right to. The only three cities that have built/are building new rapid transit recently are NYC, SF, and DC. NYC has the bulk of the projects, which is why I focused on it. But I also mentioned SF. I didn't mention DC (Silver Line), because I was trying to keep the article focused, but that seems to be at least 100% more expensive than it should be compared to other first world countries.
And NYC is not known as the most wasteful city when it comes to operating practices (aside from OPTO). Regional railroads across America are just as bad as in New York, and WMATA and Muni/BART are, afaik, reputed to be more wasteful than the MTA.
(Two other big rail projects are CAHSR, which I think we can all agree is at least half wasteful spending, and then LA's future subway plans. AFAIK, these have been criticized for their high costs, too, but I'm not as sure about this one.)
Unfortunately, he then went off on an anti-transit tangent, acting as though mass transit was the primary source of the problem, even though Halsey discussed shortcomings with pretty much all modes of transportation, both passenger and freight.
Sure, transit was only one of a few infrastructure projects she mentioned, but she did mention it, so presumably she thought her argument applied to it. I write about transit, not highways or ports or dams. But like I said, if she didn't think it applied to transit, then she wouldn't have included it on the list. She thought it did, so I don't see why it's unfair of me to criticize her points with respect to transit. I stated in the article that I was focusing on transit; am I not allowed to criticize her unless I address each infrastructure mode? I wasn't trying to write a book.
The solution space wasn't explored much, if at all.
I have written about solutions before. I chose not to in this article, because I wanted to keep it narrowly focused.
December 8, 2011 4:11 AM
Alon Levy Says:
I'm kind of annoyed people keep quoting my construction cost compilation and not, say, my post about trust (and yes, I know my construction cost compilation was a better post; still). In general, what you see with those calls for grand programs to fix The Nation's Dilapidated Infrastructure is statements of trust in the government's ability to do things. Usually, they're also accompanied by criticism of people for not trusting the government.
The issue is whether the government has the right to people's trust. And I don't think it, or any other institution or even any individual, does. Maybe by default it does, but once trust is broken, it takes a lot to reestablish it. And nothing done since Nixon has really improved the quality of American governance. How long and how much effort does your partner need after cheating on you to convince you that they're going to be faithful in the future? And has the US government done anything comparable when it comes to infrastructure cost overruns, to say nothing of military action or the economy?
December 8, 2011 5:29 AM
Michael Perkins Says:
Ashley Halsey III is a guy.
December 8, 2011 6:25 AM
Chris I Says:
What is it about transit costs that make them intrinsically more expensive? In this country, we have become very good at building highways. If you look to Europe, where they have a more balanced approach to transportation, mass transit capital and operating costs are much more reasonable, relative to highway costs. It seems to me that you should be arguing for increased transit spending, so we can reduce the waste with increased knowledge and economies of scale.
December 8, 2011 7:42 AM
Terry Nicol Says:
Wouldn't it be cheaper, easier, faster and more effective to replicate engineering best practices from European and Japanese engineers rather to build enough new transit to acquire better approaches on our own?
December 8, 2011 8:29 AM
Alon – trust, not trust, whatever, my point in the post wasn't to discuss the reasons for the waste, just to point out that it exists, and Halsey is doing a disservice to readers by pretending it doesn't, and that the only waste was in earmarks (and a bridge that was never even built) and that's gone so why why won't those stupid tea partiers just give us the trillions we need already??
I didn't discuss solutions or deeper systemic problems (Alon – the lack of trust you're referring to) because frankly, I don't see how we can discuss the deeper stuff when we all can't agree on what's going on in the here and now. (And I'm not accusing anyone on the internet of not understanding this – the problem lies with the sort of people who don't read Alon's blog.)
December 8, 2011 11:27 PM
First off, thanks (again) to Stephen and Alon for dropping by. Second off, apologies for not responding sooner; I found myself unexpectedly busy for most of the day. (Which is, I guess, a GOOD thing).
Regarding the WaPo story--it appears that the reporter in question is your average generalist journo major who got stuck on the transportation beat. Some reporters in that role acquire sufficient domain knowledge to ask the right questions--the local transportation reporter for The Oregonian, Joseph Rose, is quite knowledgeable on the subject, and does more digging when doing his stories than simply relying on the statements of public officials and think tanks. Halsey doesn't appear to be that sophisticated, which is why I referred to it as a "puff piece"--it's probably an item that deserves more to be ignored than attacked.
There are plenty of people "inside" who are concerned about escalating costs. Not everyone who works for government, even in administrative roles, is simply interested in turf-building and back-scratching. Here in Oregon, there's plenty of the latter, unfortunately. The latest MAX line costs an outrageous $200M per mile (for a mostly surface route); and it's not obvious why. The Canada Line was built for less per km. OTOH, TriMet has had a good history of doing these sorts of projects on time and on budget, and there has generally been reasonable continuity of the local political personalities--there isn't a history of corruption that can be easily blamed. The project itself is by most accounts a slam-dunk by US standards (it's a well-sited line in an important transit corridor); if it were half the price (or even 2/3, given that includes a major bridge as part of the design) it would probably be a no-brainer. A white elephant project, it is not. As $1.5 billion, though, it's a hold-your-nose project; one that makes the technical angel and the political devil on my shoulder have regular arguments. :)
(And some of the proposed roadway projects, starting with the outrageous Columbia River Crossing, are even worse than MLR. The CRC is a multimodal project and includes an extension of the Yellow Line; but the LRT component is a fraction of the overall budget).
Unfortunately, the more political the role, the more that politics is called for, and I think we're all in agreement that some sort of reboot on how things get done would be a good idea. I'm sure we disagree on the details, but right now there are too many trolls on too many bridges. That said, I wish to reiterate that this affects all transportation infrastructure, not just public transit or HSR; and when you get right down to it, the transportation sector is far from the worst offender when it comes to out-of-control government spending. The figures that we routinely argue about in transit circles are rounding errors in the Pentagon's budget, after all; and I'd argue that busses and trains are more socially useful than missiles and tanks, especially above a certain level necessary for defense of the nation. Of course, this isn't a military affairs blog, so that observation may be irrelevant.
At any rate, I'm glad to see you subscribe to the "good" definition of waste on this topic. I certainly won't defend practices
Alon--much of your work on trust and governance was kept in mind, even if I didn't like to much of it. Obviously, no institution has the "right" to be trusted, even if they do have the legal right to command obedience (or even fealty); and I don't consider it a bad thing that trust in government-at-large is at a low ebb: it means the people are paying attention. I do think that there are a few factions in this country which like it that way, for various reasons. You mention Nixon as a breakpoint for good governance--that's an interesting observation as it was Nixon and his aides who helped bring about the end to the New Deal coalition that had dominated US politics for nearly four decades. (It can't all be blamed on Nixon, of course; the massive debacle that was Vietnam had a lot to do with it, and the Civil Rights movement angered a significant portion of the population). Whether or not the 30+ years before it were actually an era of good governance, though, is somewhat debatable. During that time, there was a more durable "establishment" then there is today (it unraveled in the 60s), with far fewer checks and balances working against it--the mainstream press generally sided with the establishment for the most part. That era permitted massive public projects such as the Interstate highway system, the Apollo program, and the disastrous urban renewal schemes which wrecked many cities and inspired St. Jane to put pen to paper. In the current political and legal environment, all of these would be much more difficult to pull off. The mid-20th century also featured far more powerful political machines than are found today; and a signification portion of the population was relegated to legal second-class status. Many great things and monumental public works were built during that time, so it is easy to remember it fondly; but the price was dear and still being paid in many ways.
Still--what to do about it is the important question. As noted in my prior rant on the subject of governance; the risk of the "good guys" not leading reform efforts is that the "bad guys" will volunteer to do the job--but instead go and trash the place, salting the earth before they leave. We've seen a few instances in the past year of newly-elected governors killing off transit projects as a first order of buisnes; some of which were arguably boondoggles, some of which were clearly not. In some cases, this might be beneficial in the long term--while I'm no fan of Chris Christie; the New Jersey Democratic Party is a festering cesspool of corruption and has been for years--there always the hope that being out of power will cause the machine to break down. (Likewise with the tenure of Ahnold in California--the Golden State could do far worse, and Grey Davis and his cronies badly needed comeuppance). However, "friendly" reform is generally less disruptive to those who depend on the services in question--but it's awfully hard to pull off.
December 9, 2011 9:25 AM
Douglas K. Says:
A minor digression from the general discussion:
The latest MAX line costs an outrageous $200M per mile (for a mostly surface route); and it's not obvious why.
I expect this video explains a lot of it.
"The property over which the alignment passes will be purchased and modified by the project to allow the placement of trackways."
Follow the yellow lines in the video. Notice how many buildings the proposed alignment passes through that need to be either remodeled or demolished? And how much of the line is on private land instead of running along an old rail corridor, the shoulder of a freeway or the middle of a street? Even the segment along SE 17th appears to involve modifying or demolishing buildings.
Assuming the route in the video is accurate, this is the first (and, let us hope, the last) time that Tri-Met has EVER found the need to condemn this much right-of-way for a light rail line. Every previous project was built almost entirely on existing right-of-way or (in the case of the airport line) across vacant land.
December 9, 2011 11:11 AM
- Insurance: $49.6M
- Utilities/Street Construction: $76.5M Track grade, structures, installation: $274.1M
- Stations and park&rides: $50.1M
- System costs: $69.9M
- Ops/Maintenance Facility: $8.1M
- Right-of-way: $204M
- Vehicles: $87.1M
- Professional services: $173M
- Unallocated contingency: $161M
- Escalation to year-of-expenditure: $120M
- Finance charges: $273M
Right-of-way costs are higher than normal, but they don't explain everything.
Of course, the last three things do merit explaination. Contingency funding is normal in project planning, and the amount given is not excessive--stuff goes wrong (or right) on projects, and it's good to plan for this even if you don't know what. Project costs are, per Federal policy, quoted in YOE (year of expenditure) dollars; meaning that projected inflation is included. Personally, I have issues with this accounting treatment, given that inflated dollars are worth less--most forms of accounting do a better job of future-discounting. And for some reason, finance charges (interest, etc.) incurred during the project's construction are counted as a project cost--but finance charges paid outside (such as interests on bonds that are still paid off after the line is in operation) are not so included--this also strikes me as weird.
But then again, this accounting treatment is standard for all projects, and is not unique to MLR.
December 9, 2011 11:39 AM
@Chris I: EngineerScotty gave several examples of US road projects that are just as overpriced as transit ones. Alon gives cost comparison for a particular project in this post (though its first sentence is false).
December 9, 2011 5:56 PM
Douglas K. Says:
Right of way costs more than $200M, while track grade, structures and installation cost $274M. If "structures" include the new Willamette bridge, then subtract that and Tri-Met is paying more for the right-of-way than installing the track.
If Tri-Met had been able to build this on an existing right of way, they could have saved a big chunk of the $204 million right-of-way cost, at least some of the $76.5 million utilities/street construction, and part of the "track grade, structures and installation" cost. All of those costs inflate the contingency budget, YOE adjustments, finance charges, and probably insurance. It wouldn't surprise me if creating this corridor was ultimately responsible for as much as a third of the overall project budget.
Although... nearly $175M for "professional services"??? I admit I don't know what "professional services" means in this context; if it was attorney time, that would be over 500,000 billable hours at $300 per hour. So I'm pretty sure it's not lawyers and accountants. Any idea which "professionals" are going to be pocketing all that money?
December 9, 2011 7:48 PM
Douglas K. Says:
Okay, sorry about that. I thought my first post got lost because it didn't show up forty minutes later, so I wrote the second, shorter one.
December 9, 2011 9:23 PM
Aaron G Says:
This blog likes to mess with you that way, happens to me all the time. Often I'm on flaky wifi and I assume it was my fault and end up double posting.
December 9, 2011 10:34 PM
Unfortunately, double-posting and server issues have been commonplace here lately--Google Blogger provides better performance that this platform of late. :( If a double-post happens, don't worry--the mods will come by sooner or later and clean up, and no need to apologize.
As far as the question of what "professional services" is for, the bulk of it goes to pay for design and engineering costs. It might even include sunk planning costs incurred by TriMet already, but I'm not sufficiently wonky to know for sure.
While there's no NEPA for Dummies book, unfortunately, there is this...
December 13, 2011 4:15 PM
Alon does a follup article to the Stephen Smith piece, which I encourage all to read.