WSJ: Put Down That Shovel!

Forget old-fashioned infrastructure. Here are six government projects to foster a lasting economic recovery.

The House has passed a $154 billion jobs bill, and the administration has announced a plan to spend $50 billion of repaid TARP money to "create" jobs—this time its green jobs, "shovel ready" infrastructure projects ($27.5 billion for highway construction and repair) and a tax credit for small businesses.

More infrastructure? Recycling Great Depression-era projects is lame. My advice? Put down that shovel! It's time to try something else.

We're in a knowledge economy now; we use high-tech tools to efficiently and effectively design, make, market and sell. Building roads and bridges willy-nilly won't make us more productive; and without increases in productivity and the associated corporate profits, there can be no sustainable job creation, no increase in standards of living, and no real economic recovery.

Given that real tax cuts are off the table and a new stimulus (even if it isn't called that) is inevitable, the best we can hope for is to use the power of the government to clear a path that private enterprise can't, via one-off projects that end and disband. Stop thinking concrete and massive construction projects. Think small—photons, electrons and proteins. Here are six ideas:

• Climb poles for wireless. Every street light in the country can be fitted with a wireless access point. Lots of companies, including Google, have tried to roll this out. But dealing with thousands of state and local governments to get access to poles and power is a nightmare. A stroke of the pen can create the Local Wireless Corps, with unfettered access to street lamps, telephone poles and utility sheds to create a massive wireless network to deliver Internet access—10 megabit, even 50 megabit speeds—to both homes and next generation mobile phones. AT&T and Verizon will complain about the competition, but so what—they're hardly hiring.

• Dig fiber ditches. Even faster wireless is too slow. If, as the Federal Communications Commission states, broadband is a priority, let's open up the right of way to a Local Fiber Corps to lay fiber-optic strands to every one of the 120 million U.S. residences (even the 10 million empty ones). The goal is gigabit speeds. It's attainable now. New applications like YouTube are bandwidth hogs. It's hard even to imagine the types of applications possible in a 100 meg or gigabit per second speed world. The only one way to find out? Build it. Then sell the fiber along with the wireless lamp posts to the highest bidders. More than one in each town will keep competition alive. And with so much bandwidth, arguments over things like network neutrality will magically disappear.

• Sequence proteins. In 1971, Richard Nixon declared a $100 million campaign to find the cure for cancer. We spend 5,000 times that much every year treating the disease. We may not be able to cure cancer, but we can find it much earlier when treatments are simple.

Scientists today shove cancer samples into mass spectrometers, in order to identify unique proteins for tens of thousands of types of cancer. The goal is that some day we can all be screened for those proteins as early warning signals. With so many college graduates among the unemployed this cycle, 100,000 of them can dust off their knowledge of biology and we could sequence every known cancer type for $50 billion. Medicare would save two to three times that much each year on cancer treatment due to early detection.

• Lighten backpacks. My son's backpack is 20 pounds. And he's only in the fourth grade. My high school son's backpack is even heavier, loaded with textbooks and cans of Red Bull to keep him attentive as his teachers drone on. A Textbook Corps can scan these books, put them on a reader like the Amazon Kindle, link them to high-tech projectors called SmartBoards that are going into many schools. We can instantly change education, not to mention saving many sprained backs.

• Scan medical records. The administration has talked about the time and money this would save, but doctors, hospitals and insurance companies don't want to go through the expense and hassle of digitizing all of our records. Only the feds, threatening to withhold Medicare payments until digitization takes place, could ram this through. Workers would knock on the door of every doctor's office, armed with scanners and Web software.

• Require TOU meters. It's funny how the "I don't work for the electric company" trick to get our kids to turn off lights has morphed into kids shaming parents into "saving the planet." Yet we still pay flat rates, though utilities need to build plants for peak periods, usually summers from 2-5 p.m.

With price signals, households would shift electrical usage to cheaper times. The technology is starting to roll out (with some stimulus money) in the form of Time of Use (TOU) meters replacing those ugly glass bulbs with spinning disks. Coupled with wireless in-house devices that show appliance electrical usage in real time and clever software at utilities, I'd bet peak usage would drop 30% and educate a million workers on the workings of the future smart electric grid. Beats subsidies for caulking windows.

For a $14 trillion economy, each 1% in productivity is $140 billion of additional output. Forget roads and bridges and shovels. It's a virtual infrastructure of ubiquitous bandwidth and digitized information that will require permanent workers and create a sustainable growth economy, a lot faster than shovels.

Comments

[Hamish MacEwan]

I found the headline quite misleading. For example digging fibre trenches is a shovel job, and fibre network deployments can be "shovel ready."

All good ideas.

[Cameron Newland]

I like the spirit of your post, but I find three things necessary to comment on.

First, wireless lightpoles would be doomed to failure. Municipal wireless networks have notoriously low adoption rates, and even slower throughput. You yourself admit that even new wireless technologies are not fast enough. To make your post more convincing, I think you ought to redact the wireless lamp-post portion. Stick with fiber, that's where the future (and the productivity) is.

Also, do remember that electronic medical records absolutely are already running in my (if not most) medical systems in the country. They're already delivering cost savings and productivity increases, though I admit they are not completely ubiquitous, nor are they completely standardized.

Lastly, I think it's important that you draw a line between infrastructure spending projects and next-generation/productivity/technology spending projects, but you err in saying that one is more important than the other. When you neglect infrastructure (think Katrina, or the decaying dams of the Ohio River), you destroy plenty of wealth. Don't think that the "new economy" is more important than the "old economy". After all, we still need a functioning 'old economy' infrastructure if we're to maintain our leadership in innovation, technology, and productivity.

[David MD]

1. Aggressive anti-smoking campaign. NYC has 8.5 percent teen smoking rate and helped 350,000 adults to quit dropping adult rate from 21 percent to less than 16 percent on target for 12 percent for 2012. Implement this plan nationwide which includes spending CDC recommended amount of money fighting smoking in the US.

2. Clean up air pollution for 460 coal powered electric plants. According to a recent National Academy of Sciences report $120 billion in health care costs from air pollution half of that from coal powered power plants and have from motor vehicles. 20,000 to 50,000 premature deaths per year from particulate matter from air pollution. 4,000 premature deaths per year from asthma and allergies. One in four emergency room visits from asthma and allergies.

3. Cash for clunkers for heating plants in buildings in cities that use older, more polluting fuel oil replacing those old heaters with newer, cleaner burning heaters. NY City has many of its great buildings heated by steam and perhaps the steam tunnel system should be extended so as to reduce the amount of air pollution. Today much of that steam is generated by coal (which can be cleaned up) but in the future by nuclear or other clean air technology.

4. High speed rail between Philly and NY City. Only 80 miles by air, Philly should be 1/2 hour away "suburb" of NYC.

5. High speed rail (like in France with TGV) in Northeast corridor and other key places in the country.

6. Changing delivery vehicles and taxis, etc. to electric/ electric hybrid.

[SpyBoy]

Greetings,

Yeah But, there is a very real need in this country, at every level; local, State, and Federal, to address the substantial problem of infrastructure deterioration. Our ( publicly-owned and operated ) bridges, tunnels, subways, water delivery systems, electrical power distribution grid, etc., need to be repaired and rebuilt. To these physical structures, and the humans who depend on them, the fact the, generally, we have moved to a knowledge/information based economy, is irrelevant. While there is a move towards privatization ( or public-private hybrid models ) of many of these infrastructures, in which private corporations would assume some responsibilities for such repairs, it is clear that the majority of the expense for this effort will be born by the taxpayers. I think it is imperative to keep that in mind as one thinks about best practices in application of these subsidies.

[Sand prince]

Allow non Americans to get a 3year green card provided

1. They buy a house worth 1,000,000 million dollars and do not rent it out for 3 years

2. They Agree not to work in the USA till they become citizens

3. Allow them to become citizens after 3 years if

a. they have not broken the law
b. Have not sold their house
c. Have bough private medical insurance every year.If they havent the are thrown out

Your 10,000,000 home will be gone and the money coming in in will be

[TomOfTheNorth]

Mr. Kessler,

Thanks to the Skeptical Market Observer - http://scepticalmarketobserver.blogspot.com/ - I caught your 12/25 WSJ OpEd today. It was a wonderfully rational antidote for my increasing frustration at the misdirected focus of our National Legislators. However even in your comments section one can see people often have a hard time comprehending the bigger picture. That said, there are no bad ideas here, however many are not investments of a 'jump start' nature. Furthermore, your critics apparently miss that your list tends to increase the likelihood of 'new economy' expansion - i.e. that broadening access to enabling technologies will unleash greater innovation. Well done!

[akolea]

Better late then never on my post....give Apple 1/2 the annual budget that we spend on Education and Healthcare and have them design the best, most innovative and sustainable systems and they get to pocket whatever they save. Give them 2 years to design, implement and innovate this idea immediately.

[Thomas Sabo Australia]

Cash for clunkers for heating plants in buildings in cities that use older, more polluting fuel oil replacing those old heaters with newer, cleaner burning heaters. NY City has many of its great buildings heated by steam and perhaps the steam tunnel system should be extended so as to reduce the amount of air pollution. Today much of that steam is generated by coal (which can be cleaned up) but in the future by nuclear or other clean air technology.

[חדרי מלח]

Thanks Buddy! I hope you enjoyed our “India” and “Indian culture a lot”, which even made you to forget updating your own website.
Any ways good luck “Mark” for your new ventures, but keep updating your site, because there are many interesting topics among which I like marketing and economic development…

[Nike Free 3.0 V2]

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