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China spend money on infrastructure, meanwhile in the West there is 'Quantitative Easing' with money going straight to the banks. As you state there is real re

China spend money on infrastructure, meanwhile in the West there is 'Quantitative Easing' with money going straight to the banks. As you state there is real return in infrastructure expenditure - roads, trains, airports, education is genuine investment. A business case can be made for putting in a new 300kmh train set that spans the country. Over in the West we don't get that, instead we have to pay untold billions to the banks because if we don't then the sky will allegedly fall in so we have to kick the can down the road. GDP is also a useless figure. If we all decide to decide that our houses are worth double what they were worth five years ago and go about buying and selling these crumbling piles of bricks then have we really increased GDP? If, on the basis of these increasing property values everyone remortgages and buys fancy German sportscars and monster SUVs then have we really increased GDP? I am sure there is plenty of hubris going on in the Chinese economy and that status anxiety drives people to buy pointless luxury goods as per what happens in America, however, GDP is not all it is cracked up to be and there is a big difference in debt used to build an economy compared to debt used to prop up the rent-seeking classes.

icebraining 8y ago
We have quite a few high-speed trains here in the West - you can go from Sevilla to Berlin or Napoli in them. I agree that the GDP is a flawed metric, though.
gnarcoregrizz 8y ago
I've heard their directed investments referred to as 'qualitative easing' https://blogs.wsj.com/chinarealtime/2014/08/11/how-chinas-trying-to-boost-its-economy-qualitative-easing/ https://blogs.wsj.com/chinarealtime/2014/08/11/how-chinas-tr.... Unfortunately in the US, like you said, it seems like a lot of the capital has gone into west coast real estate and the stock market. Why wouldn't it? It's a lot easier to make money from rents than to actually build things. I'm always awed by how much indirect ROI you can get from infrastructure, and I'm always disappointed in how bad the US is at it these days. I like to cite the hoover dam as a wildly successful infrastructure project - I visited it for the first time recently and learned that it was built for ~49M USD (639M USD in today's dollars). The indirect ROI on it is epic. It spawned Las Vegas and allowed other west coast cities to grow all along the southwest, not to mention the money it's made back in hydroelectric power and tourism. It did take a crisis (the great depression) to build it for so cheap though... The recession probably would have been a good time to do this stuff. Unfortunately, we got higher asset prices instead. As for the GDP, yeah, it's a poor measure of growth. Yay, homes are now twice as expensive and people are relatively poorer, but we've succeeded in meeting our growth target!
- TallDave2 8y ago
  As with most projects from that era, the environmental impact study/mitigation for such an effort today would probably cost more than the entire original project, even in real dollars, even assuming you would be allowed to build it (you probably wouldn't).
  - gnarcoregrizz 8y ago
    Yeah. The Hoover dam would never happen nowadays, and it has undoubtedly had some environmental effects. Here is a fun example of how expensive infrastructure is here now: Irvine to Corona tunnel (11.5 mile tunnel under mountains) which would connect Orange County to Riverside County: estimated 28.3 billion [1]. Both are large population centers with large economies, separated by a small-ish mountain range. They spent almost 30 million on environmental studies. Norway made a 15 mile tunnel through the mountains for 113 million, or 0.4% of the cost. [2] 1. https://www.ocregister.com/2010/08/27/plans-for-irvine-corona-tunnel-shelved/ https://www.ocregister.com/2010/08/27/plans-for-irvine-coron... 2. https://en.wikipedia.org/wiki/L%C3%A6rdal_Tunnel https://en.wikipedia.org/wiki/L%C3%A6rdal_Tunnel
    - TallDave2 8y ago
      Great example... there was also an effort to expand the Tappan Zee bridge from the 1950s, adding a couple lanes was going to cost 5-10x the original iirc. https://en.wikipedia.org/wiki/Tappan_Zee_Bridge_(1955%E2%80%932017) https://en.wikipedia.org/wiki/Tappan_Zee_Bridge_(1955%E2%80%... On the plus side, we have some of the cleanest air and water any civilization has ever enjoyed, so regulation isn't all bad. Maybe the Boring Company can tunnel that out for a mere $250M.
TallDave2 8y ago
Unfortunately a lot of times those "investments" probably actually provide less value than they cost to maintain, let alone to build and maintain, particularly HSR which is generally only high ROI in a few small, rich countries with large point-to-point traffic over distances short enough that air doesn't make more sense (e.g. Japan). It's very easy to destroy value in building something.

icebraining 8y ago

We have quite a few high-speed trains here in the West - you can go from Sevilla to Berlin or Napoli in them. I agree that the GDP is a flawed metric, though.

gnarcoregrizz 8y ago

I've heard their directed investments referred to as 'qualitative easing' https://blogs.wsj.com/chinarealtime/2014/08/11/how-chinas-trying-to-boost-its-economy-qualitative-easing/ https://blogs.wsj.com/chinarealtime/2014/08/11/how-chinas-tr.... Unfortunately in the US, like you said, it seems like a lot of the capital has gone into west coast real estate and the stock market. Why wouldn't it? It's a lot easier to make money from rents than to actually build things. I'm always awed by how much indirect ROI you can get from infrastructure, and I'm always disappointed in how bad the US is at it these days. I like to cite the hoover dam as a wildly successful infrastructure project - I visited it for the first time recently and learned that it was built for ~49M USD (639M USD in today's dollars). The indirect ROI on it is epic. It spawned Las Vegas and allowed other west coast cities to grow all along the southwest, not to mention the money it's made back in hydroelectric power and tourism. It did take a crisis (the great depression) to build it for so cheap though... The recession probably would have been a good time to do this stuff. Unfortunately, we got higher asset prices instead. As for the GDP, yeah, it's a poor measure of growth. Yay, homes are now twice as expensive and people are relatively poorer, but we've succeeded in meeting our growth target!

TallDave2 8y ago
As with most projects from that era, the environmental impact study/mitigation for such an effort today would probably cost more than the entire original project, even in real dollars, even assuming you would be allowed to build it (you probably wouldn't).
- gnarcoregrizz 8y ago
  Yeah. The Hoover dam would never happen nowadays, and it has undoubtedly had some environmental effects. Here is a fun example of how expensive infrastructure is here now: Irvine to Corona tunnel (11.5 mile tunnel under mountains) which would connect Orange County to Riverside County: estimated 28.3 billion [1]. Both are large population centers with large economies, separated by a small-ish mountain range. They spent almost 30 million on environmental studies. Norway made a 15 mile tunnel through the mountains for 113 million, or 0.4% of the cost. [2] 1. https://www.ocregister.com/2010/08/27/plans-for-irvine-corona-tunnel-shelved/ https://www.ocregister.com/2010/08/27/plans-for-irvine-coron... 2. https://en.wikipedia.org/wiki/L%C3%A6rdal_Tunnel https://en.wikipedia.org/wiki/L%C3%A6rdal_Tunnel
  - TallDave2 8y ago
    Great example... there was also an effort to expand the Tappan Zee bridge from the 1950s, adding a couple lanes was going to cost 5-10x the original iirc. https://en.wikipedia.org/wiki/Tappan_Zee_Bridge_(1955%E2%80%932017) https://en.wikipedia.org/wiki/Tappan_Zee_Bridge_(1955%E2%80%... On the plus side, we have some of the cleanest air and water any civilization has ever enjoyed, so regulation isn't all bad. Maybe the Boring Company can tunnel that out for a mere $250M.

TallDave2 8y ago

Unfortunately a lot of times those "investments" probably actually provide less value than they cost to maintain, let alone to build and maintain, particularly HSR which is generally only high ROI in a few small, rich countries with large point-to-point traffic over distances short enough that air doesn't make more sense (e.g. Japan). It's very easy to destroy value in building something.