They had names like the
Hoover Dam, Tennessee Valley Authority and the Grand Coulee Dam. They were all
the products of Franklin Delano Roosevelt’s New Deal, trying to extract the
United States from the devastation of the Great Depression that sent millions
of Americans crashing down the economic ladder, escalating unemployment to
disastrous levels. FDR’s efforts in the 1930s gave rise to make-work efforts,
all aimed at infrastructure with a heavy emphasis on hydroelectric power,
ranging from the Civil Works Administration to the Civilian Conservation Corps.
Aside from the jobs directly created from such efforts, one of the most massive
governmental infrastructure programs in history, there was one huge,
history-changing result.
The United States had
developed a massive oversupply of electrical power, way more than the nation
thought it could ever use. Programs were introduced to carry electricity to
farmers on isolated tracts, but the real value is generally not known to most
Americans. That oversupply of electricity actually won World War II for the
allies. Not only were American heavy industry plants located far beyond Axis’
bombing range but we had unlimited power to become the endless supplier of
ships, planes, tanks, trucks and munitions to our allies… and ourselves. The
German, Italian and Japanese were completely unable to match our industrial
output, and as their military machine ran out of parts and arms, the fell to a
blow that only American manufacturing capacity could deliver.
For example, “the
abundance of hydroelectric power from federal dams on the Columbia River
transformed the production of Liberty cargo ships. The large supply of electric
power allowed steel mills to operate at peak production and ship builders to
arc weld the ships instead of using rivets to assemble them. This process
allowed Northwest shipyards to cut the production of a Liberty ship from 226
days to just 10 days.” BPA.gov.
“By 1944, Bureau of Reclamation powerplants in
the West had quadrupled their hydroelectric power output. By war’s end the
following year, Reclamation powerplants had produced 47 billion kilowatt hours
of electricity, enough to make 69,000 airplanes, 7 million aircraft bombs,
5,000 ships, 5,000 tanks, 79,000 machine guns, and 31 million shells. Electric
power generated at Grand Coulee was so important to the war effort that its
power accounted for as much as one-third of the aluminum used in aircraft
during World War II. It was power from Grand Coulee, as well, that charged
reactors at the nearby, top-secret Hanford Site, which figured prominently in
the making of plutonium supplied to Los Alamos for the atomic bomb.” NPS.gov.
Even after the war, the
access to so much cheap hydroelectric did not go to waste. The Pacific
Northwest, home to many of Boeing’s massive aircraft manufacturing facilities,
expanded into what has made Seattle such a tech powerhouse (think Amazon and
Microsoft) today. But that hydroelectric power made its way into Oregon and
California. The rust belt slowly yielded to the new West Coast tech belt, from
San Francisco and the Silicon Valley down to the high-tech manufacturing
centers in Southern California. From Stanford to Cal Tech. If anything made
America great in the 20th century, it was hydroelectric power.
Enter Donald Trump. On
the one hand, his austerity-driven GOP Congress – wanting to save money to
enable an unnecessary tax cut for the wealthiest Americans – snarled at the
prospect of more spending on anything except military might. Infrastructure?
Kick the can down the road and pray. But Trump promised revitalizing
infrastructure to “make America great again.” That most Americans thought we
still “great” were did not seem to faze him.
Since Mr. Trump believes
in smaller government as well, the core of the President’s infrastructure plan
is and always has been to transfer as much as he can into the private sector
and let the market set rates for just about everything. There is a rather
complete philosophical disconnect between the notion of a government doing what
it can to make life better for “most of us” and the need for much government at
all. That new highway, tunnel and bridge tolls are extremely regressive taxes
(taxes that are not based on an economic ability to pay) or that electric bills
might soar out of the reach of many Americans simply did not matter. That
private contractors almost always cost more than government equivalents (often
twice as much) was irrelevant.
Trump’s plans, very much
in the background of a highly-distracted political arena, are slowly getting
concretized, and the goals seem to me not to be in the best interests of most
of us. Cutting taxes might be great for some, but raising the cost of living
devastates those who can afford it least. Shifting government infrastructure to
private ownership increases the profits to the wealthiest Americans and shifts
additional costs to the rest of us. Simply, this strategy is an accelerant to
an already-excessively-polarizing income inequality reality that places the
United States dead last among developed democracies in that horrific economic
statistic.
The July 28th New York
Times explains: “Now, the Trump administration has proposed rethinking the
entire system, with a plan to sell the transmission network of wires and
substations owned by the Bonneville Power Administration, a federal agency that
distributes most of the Columbia basin’s output, to private buyers.
“The idea is part of a
package of proposals that would transform much of the infrastructure in the
United States to a mixture of public and private partnerships, lowering costs
to taxpayers and improving efficiency, administration officials said. Assets of
two other big public power operators, based in Colorado and Oklahoma, would be
sold, too, if Congress approves the measure.
“Debates about government
and its role in land and environmental policy are always highly charged. But
perhaps nowhere could the proposed changes have a more significant impact than
along the great river of the West — fourth largest by volume in North America,
more than 10 times that of the Hudson. Privatization would transform a
government service that requires equal standards across a vast territory — from
large cities to tiny hamlets — into a private operation seeking maximum returns
to investors.
“Wringing profits from a
system that has provided electricity at cost would inevitably raise prices,
critics of the idea said, while supporters envision a streamlined grid open to
innovations that government managers cannot imagine.” Simply, adding profits to
the cost factors cannot make electricity cheaper. Privatizing any
infrastructure makes it cost more. “Lowering the cost to taxpayers” just might
be the clue that gives it all away. Taxpayers are, in the largest sense of the
word, the richest members of society. But what we are not seeing is a “lowering
of the cost” in general, just a shift from the tax based to a dramatic rise in
costs to consumers instead.
The assumption that
government operations always cost more than private equivalents is a pretty standard
“drain the swamp of unnecessary bureaucrats” line, but just looking at the fact
that using military contractors and consultants resulted in a 1.88-per-worker
multiplier over the comparable cost of internal government costs, you have to
know that’s just not true. Remember that Obamacare advocates, responding to the
insurance lobby when the bill was passed, dumped an expansion of Medicare
alternative because the insurance carriers said that they could not complete
with that lower price! The focus of privatized owners is not “cost reduction,”
but higher profits. And those higher profits have to be paid by someone… like
you and me. Transferring infrastructure to the private sector is madness and
will make income inequality that much worse.
I’m
Peter Dekom, and if an increase in the cost of everything is your idea of
making America Great Again, then you have the right guy in the White House!!!
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