Analysis of Texas Roads: Multipliagra
This is truly remarkable.
Here you will find the "Texas 2030" report on the benefits of road-building in the "On Loan to Keynes State."
How do I know they changed the name, the old "Lone Star State"?
In the report, they make a first pass in which they do not model ANY benefits to increased capacity, at all. So the report claims that the first $70 billion spent does not reduce congestion ONE BIT....
...But the project still yields a 3.4 Benefit to Cost ratio because of (WAIT FOR IT!!!) construction spending multipliers. NO. ROAD. JUST THE CONSTRUCTION SPENDING CREATES A POSITIVE MULTIPLIER OVER THREE.
If you do account for the reduced congestion, according to these rent-seeking bandits, you get a cost of $213 billion, and an economic benefit of $1.4 trillion. That's a "multiplier" of more than *6*! Now, you should all know that "Priapobamaism," or a multiplierection lasting more than four hours, is not normal. You should stop taking Multipliagra, and seek medical attention.
No matter how you slice it: Deficit spending is its own reward! The new voodoo ecnomics....
Just as tax cuts were supposed to increase total revenue (if you are a Republican), the idea here is that deficit spending more than pays for itself, and increases tax revenues, to boot!
I am awestruck by the sheer brazen brass of it! No economist could be that stupid; it has to be a bald-faced lie. It take juevos of pure orichalcus to make this work. Brav-o!
As I believe Angus has pointed out before, by this logic Zimbabwe should have the largest GDP on earth. Robby Mugabe should get the Nobel Prize for his innovative Keynesian policies. (I shouldn't joke; the second part may happen, come October.)
(Nod to Jason Scheppers, P.E., who also posed this excellent question:
When you go to the store and buy a loaf of bread you likely pay a market price. The bread provider likely provides jobs to wheat farmers, truckers, grocers, bakers and those folks in the supply chain likely spend the money that they earn from their services. Given those factors buying a loaf of bread creates a multiplier affect just as claimed for the transportation construction activity in the 2030 report. I see no evidence presented that the multiplier on "buy a loaf of bread," or any other product, is materially different than the multiplier applied to construction activity. )
Jason continues, in his comment to the Authority:
I suggest that the optimal infrastructure improvement is when the incremental cost is equal to the incremental benefit or the incremental B/C ratio equals 1. With the report’s assumed value of economic activity for each dollar of construction there are no amounts of improvements that have a benefit cost ratio lower than 1. It is nonsensical to think that there are no levels of infrastructure spending that go too far and waste resources. I challenge the committee and their technical experts to enumerate the funding level that sets incremental cost benefit ratio equal to 1.
See!? Mugabe is CORRECT! As the deficit heads to negative infinity, GDP heads to positive infinity, FASTER, because of Mulipliagra, Daddy's Little Helper.