Why is infrastructure different? (Part 3)


So far we've established that there is no real political argument against Biden's infrastructure plan. At least not one that holds any water. There are those economists though, that have some fears about whether such a large injection of liquidity into the economy at a time when it is beginning to recover, will cause inflation problems. If you want to broaden your view on this, take a look at this article from VOA News which I think is a reasonable assessment of risk versus reward. With a current jobs shortfall of around 9 million, to me, the opportunity to overheat the economy presents a low risk. Certainly the Federal Reserve is not concerned and the same goes for many economists.


Republican leadership is petrified, but not out of concern for the economy. To them, the plan has the potential to banish them to the political wilderness if it succeeds. If ever you needed evidence that politics is broken in the US, there it is right there. In times of critical need, you would expect there to be a politics of unity for the good of the nation, but that will never happen in the US. You have to ask yourself, which party can deliver a better life for me and my family? For the majority of Americans there is only one choice and that is the Democrats. Even right minded Republicans would agree at the moment, they are the only party that have a clear policy agenda and a viable plan to put a broken nation back together again.


So where to next? If only it were as simple as that. The next big challenge comes from within the Democratic Party itself. Over many decades, they have become the masters of snatching defeat from the jaws of victory. Any Party that has such a wide spectrum of political beliefs will always face challenges, as they try to hold the big tent aloft. As a result, Biden faces some difficult times ahead. Not only does he have to deal with the inevitable challenge of obstructionism and messages of fear from the GOP political messaging machine, he also has competing ideologies within his own party. I want to put aside the progressive wing for the moment and concentrate on Jo Manchin, because he is the real problem and try as I might, I can't find a way around him without a bigger majority in the Senate, which ironically needs him onside to achieve.


I think Dana Bash hit the nail on the head yesterday on CNN when she said "Manchin is now one of the most powerful men in the world". I have little doubt that he bathes his ego every day with that thought. To be fair to him, (even though I don't want to be), in the past, he also voted against Republicans on similar senate rule changes. His legitimate concern now, is the 'the boot on the other foot' argument. What if he goes along with these sweeping changes to effectively remove the super majority and consign the filibuster to history? More important, what happens if or when the Republicans regain power?


If you consider it carefully, even with the filibuster, the GOP have been ruthless in their pursuit of tax breaks for the rich, sweeping deregulation and environmental barbarity. Imagine if they could move forward on a policy agenda that just needed a simple majority vote. Right now the Democrats desperately need to get rid of the filibuster and I actually agree that it should go. However, that simple change could have the biggest impact on US politics for decades. Given the current slim majorities held in both houses and with mid terms not too far away, it's a roll of the dice for the Democrats and it's the equivalent of putting all your money on number 17. Once the filibuster is gone, then then you will see a huge change in the balance of power. The good news is, that if the Dems can get it done now, then they have a real chance of retaining power for the foreseeable future and that's why the pressure is on.


Given that everything from voting rights to guns, to the environment, appears to revolve around the filibuster, you can see that the months ahead are actually going to be very interesting from a political standpoint. Don't forget, Manchin also knows that once the Dems have a majority for his vote not to matter, retribution for his current obstructive behaviour is likely to follow as sure a night follows day.


Moving back to infrastructure, it seems, you can talk about it all day long. At some point you have to walk the walk amidst all the other competing issues that take up Biden's time. Right now, there are so many competing priorities. He must go to bed with his head in a spin every night. It's easy to think of infrastructure as roads and bridges as the GOP persists on insisting it is. The good news is, Biden has Pete Buttigieg, better known as the Fox rebuttal ninja. Pete is a great communicator, his style is not adversarial and his ability to pick out the key pertinent points, make him the perfect messenger to sell the plan to the voting public.


America has never been very good at looking outside the US to learn from other global partners on best practice for infrastructure. Much has been said about the US losing its global competitive edge. I would respectfully suggest that it is living in the glorious past. The US does not have a global competitive edge. The truth is, it is sadly lagging behind. On the good news front, it has some world beating technology companies that can help on its journey back to dominance. Whether it's liked or not, there's only on big player when it comes to building infrastructure and that's China. Those 'commie bastards' as Republicans like to refer to them, knock the ball out of the park when it comes to playing a focused long game. They are unhindered by democracy and the wider population has seen nothing but a rise in cost of living benefits, unless you happen to be on the wrong side of their human rights policy.


Regardless of how you feel about China, they are now in my view, the main economic player on the global stage. I know many will disagree, but if you look at the growing influence they have in developing markets, it is staggering. The Chinese know that the key to economic expansion is infrastructure. They have got so good at it, they are dominating infrastructure in other continents like Africa. Take a look at this report from Deloitte, then tell me I'm wrong. The US is living in some instances with third world infrastructure. Here is a snippet from National Geographic Science that looks at just one important fraction of the problem;


More than 91,000 dams dot the nation—and roughly 15,500 of them could cause fatalities if they failed, according to the National Inventory of Dams. Most of these dams were built many decades ago. By 2025, 70 percent of them will be more than a half century old, according to the American Society of Civil Engineers.


This is not just about jobs, it's about public safety. It seems like lawmakers are incapable of looking forward when it comes to almost every policy. It's this reactive, rather than pro-active attitude to public spending, that is the source of poor decision making. If you believe in small almost non existent government, infrastructure is only ever built when it can turn a profit. To explore this mentality, you only have to look at US healthcare to understand it. Capitalism used to embrace a sense of social responsibility, but as time has passed, the social element has given way to profit. I can hear you screaming GET TO THE POINT MARTIN! My point is, infrastructure is not a hard sell to the voters, especially if you can do it without increasing taxes on 98.2% of households. The problem is that the US is not very good at it in comparison to other global partners.


I know I said yesterday it's time to get to the good stuff and I promise we will tomorrow, I just wanted to frame the good stuff against a clear understanding of the challenges Biden faces. I promise I will spend the whole post tomorrow looking at the potential benefits of the marriage of the American Rescue Plan with the Jobs Plan and at the same time we'll look at how the Chinese build infrastructure as a point of reference.


Have a great Friday

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