by James A. Bacon
Do they really believe this stuff, or do they just think we’re too stupid to see through it? Here’s what Governor Bob McDonnell had to say in a press release issued yesterday to tout Virginia’s updated Six-Year Improvement Program for transportation spending:
Each dollar invested in transportation yields significant benefits, sustaining thousands of jobs and producing a multi-billion dollar impact on Virginia’s economy. [The] significant and historic increase in funding will mean shorter commutes, new roads and more jobs all across Virginia. It is crucial to sustaining our economic recovery and to ensuring Virginians can continue to find the good jobs they need and deserve, in every region of our state.
What possible basis does McDonnell have for asserting that raising taxes — taking money from Virginia citizens — and plowing money into transportation projects for which the state has conducted no Return on Investment analysis — will wind up “creating” jobs?
Yes, spending money on transportation projects does create short-term construction jobs, and it might (emphasize might) create jobs indirectly by bolstering economic productivity of citizens and businesses. But that money doesn’t grow on trees. It comes from taxes, and taxes come from the pockets of Virginia citizens and businesses who would have spent or invested it in ways they thought best.
In order to claim that transportation spending “creates jobs,” McDonnell would have to compare the job gains resulting from that spending to the job losses caused by the taxation. It is conceivable that there would be a net gain, but the administration has not conducted such an exercise. It is entirely possible that the transfer of income would result in a net loss.
Once upon a time, there was a powerful argument for transportation spending. Building a road and highway network that connected cities, towns and farms created tremendous economic value by expanding markets and stimulating trade. But everything is connected now. The challenge today is mitigating traffic congestion, which has a very different value proposition: reducing the costs associated with unproductive time spent driving.
There are two levels of questions we must ask. First, will new road and highway projects actually reduce congestion, and for how long? Or will the phenomenon of “induced demand” simply encourage people to drive more, in which case the effect of congestion mitigation is temporary?
Secondly, what value do Virginians ascribe to the reduced travel times attributable to reduced congestion? As I argued in a recent post (“Where’re My Cars, Dude?”), motorists may not be willing to pay as much in HOT lane expressway tolls to reduce travel time as commonly thought. If motorists aren’t willing to pay much for travel time savings, why should taxpayers?
The research on road/highway ROI appears to be, at best, thin and inconclusive. The bottom line for Virginia is that we don’t have the foggiest idea of what kind of return to expect from the road and highway projects on the state’s Six-Year Improvement Program. For all we know, the McDonnell spending priorities will destroy economic value rather than create it. Simply asserting that highway spending creates jobs does not make it so.
