Reviewing the past can get tiresome. I am happy that the “here’s a look at the top stories of 2004” is over for another year.
Retrospection can teach us valuable lessons, however. Perhaps that is why our nation seldom examines economic mistakes. We really don’t want to know what we did wrong. It might force us to change things we still do today.
Take some national and local examples:
The United States spent more than $2 billion constructing the Tennessee-Tombigbee waterway between 1971 and 1984. Adjusted for inflation, the cost would exceed $8 billion in 2005 dollars. Even before the waterway was completed, independent economists argued its benefits would never exceed the costs.
After several years of operation, one estimate was that over its lifetime, the waterway would give the nation 8 cents back for every dollar spent. Not 8 cents per year, 8 cents total! Now that 20 years have passed, we should have a rigorous study of the true benefits it is producing compared to the actual costs and of the political and bureaucratic process that led to its funding despite obvious warning signs it would be a waste of money.
Locally, consider the locks at St. Anthony Falls in Minneapolis. U.S. Sen. Hubert Humphrey fought to get federal money to build these locks in the 1950s. The argument was that they would foster industrial development in North Minneapolis. Building the locks required removing a small, scenic island and two spans of a beautiful bridge — and tens of millions of federal dollars.
Less than three decades after the locks began operation, Minneapolis decided that it really did not want any industry along the river. Locking past the falls in a canoe is fun, but if we really were going to spend that much money on a purely recreational facility, would we choose those locks?
Another white elephant is just a few blocks away. When it was proposed, the Metrodome was touted as the greatest thing since sliced bread. We tore down a functional, classic football stadium on campus at the University of Minnesota to increase the “need” for this facility, and we imposed a sales tax surcharge on several services in the core cities. A decade barely passed before we were told that the Metrodome was an ill-designed, obsolete, low-revenue-producing facility that urgently required replacement. Now we are looking at spending the better part of a billion dollars to build replacements, yet the Metrodome is no older than a lot of good pickup trucks. How did we make such bad decisions?
Mistakes are not limited to concrete and steel structures. In 1983, we were told that the reforms proposed by the Greenspan Commission on Social Security would fix that program for all time. Now critics describe the Greenspan reforms as a charade, an unsustainable Ponzi scheme, a fraud on the public. A lot of bright people served on the commission, and the changes enjoyed broad support from luminaries ranging from the conservative President Ronald Reagan to liberal Sen. Daniel Patrick Moynihan of New York. Where did they go wrong?
© 2005 Edward Lotterman
Chanarambie Consulting, Inc.