Ira Stoll's Perspective:
Massachusetts residents who tuned in to the Olympics opening ceremony saw a new 30-second campaign commercial from the Democratic candidate for U.S. Senate, Elizabeth Warren, that said America should be more like Communist China.
“We've got bridges and roads in need of repair and thousands of people in need of work. Why aren’t we rebuilding America?” asks Warren, a professor at Harvard Law School who served in the Obama administration. “Our competitors are putting people to work, building a future. China invests 9 percent of its GDP in infrastructure. America? We’re at just 2.4 percent. We can do better.”
|Massachusetts' Elizabeth Warren faces reporters during a news conference.
The ad juxtaposes robust Chinese cranes and dump trucks with decaying American bridges and idle but sympathetic-looking American workers wearing hard-hats.
Professor Warren has been in the news lately as an inspiration for President Obama’s “you didn’t build that” comment. And Mr. Obama himself has been making somewhat similar points about infrastructure on the campaign trail.
On July 27, the same day Professor Warren announced her new ad, Obama, campaigning in Virginia, said, “I think it makes sense for us to take half the savings from war and let’s use it to do some nation-building here at home. Let’s make sure that we’re rebuilding our roads and our bridges. Let’s build broadband lines into rural communities and improve our wireless networks and rebuild our ports and airports. We can put people to work right now doing the work that America needs done.”
Professor Warren’s approach is so flawed that it’s amazing that her campaign would spend the money on putting it into a prime-time Olympics commercial that was presumably designed not to alienate people but rather to get them to vote for her. You really have to see it to believe it.
The first problem is mathematical. U.S. gross domestic product is about $15 trillion a year. Increasing infrastructure “investment” to the 9 percent Chinese level that Warren cites would mean an additional $1 trillion a year in government spending. That’s an immense spending increase. To put it in context, the entire federal government spent about $3.6 trillion in 2011, on revenues of about $2.3 trillion.
Where would this money come from? Not tax increases, right? Warren has already reportedly promised nearly a trillion dollar tax increase, spread over 10 years, by raising the estate tax, imposing the Buffett Rule, and letting the Bush tax cuts expire for those earning $250,000 a year or more.
But that money, she has said, would go toward deficit reduction. If Warren really wants to spend $1 trillion a year more on infrastructure, she’d need to eliminate all national defense spending ($705 billion) or all Social Security spending ($730 billion) and then find another more than quarter trillion dollars. Or else she’d have to go on the biggest borrowing or taxing binge in American history.
Math, though, is hardly the only problem with emulating China’s approach to infrastructure spending. History is another. America and China are at different junctures in our development. America built a lot of bridges, tunnels, and highways in the 1950s and 1960s when China was stuck under Communism. A lot of China’s spending now isn’t going to outpace America but to catch up with things that we’ve had here for decades, like potable water and a population that is mostly non-rural.
Finally, not all of China’s infrastructure spending is worth emulating. The Chinese Communist treatment of those who stand in the way of their projects makes Robert Moses, the mastermind of so many of New York’s neighborhood-destroying highways, look like Mother Teresa.
For example, the group International Rivers reports that 1.2 million people were displaced to construct the Three Gorges Dam. That $40 billion project also reportedly had devastating effects on the Chinese river dolphin, river sturgeon, and paddlefish.
China is able to spend so much on infrastructure because it’s an unfree country. It lacks the rule of law that lets American community groups wage legal and political battles against big government projects. Warren may protest that when she’s talking about “infrastructure.” She mainly means maintaining existing roads and bridges, not building brand new projects that flatten urban neighborhoods or destroy scenic rivers. But that’s not what’s happening in China.
One of the ironies here is that some of the lawyers opposing big proposed American infrastructure projects on environmental or eminent domain or racial discrimination grounds were trained by Warren and her colleagues at Harvard Law School and at other similar institutions like the University of Chicago, where Barack Obama taught after attending Harvard Law School.
Such opposition, sometimes spurious, can succeed in delaying and raising the cost of private development projects even if the opponents ultimately do not prevail in court or in the political process. Free-market fans tend to like the eminent domain suits and dislike the ones about snail darters, and it is a distinction worth maintaining.
But if the choice is between having people like Elizabeth Warren and Barack Obama in law schools training students to block these infrastructure projects, or having them in the government taxing the rest of us to pay for more of them, I’m glad to live in America rather than Communist China.
Here in America, at least, the people may not get to elect the law professors, but we sure do get to vote on the president and senators.
Ira Stoll is editor of FutureOfCapitalism.com and author of “Samuel Adams: A Life.”
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