Misplaced Priorities, Crony Capitalism, & The A.I. Bubble

The U.S. ranks high in GDP per person but lower in social well-being and equality. The U.S. scores low on metrics like maternal health, political rights, discrimination, and income mobility compared to other developed nations. In fact, the U.S. often falls outside the top 20 in overall social progress despite strong economic indicators. Wealth doesn't always translate to broad social benefits. 

Government policy and spending choices provide insight into how the U.S. has gone astray from the post-WWII shared prosperity model of common sense, broadly shared benefits, and best bang-for-the-buck decisions. 

Wisconsin, under Governor Scott Walker, rejected Obama administration funding (around $823 million) for a proposed high-speed rail line between Madison and Milwaukee in 2010. Walker, a Republican, made stopping the rail project a cornerstone of his campaign, and after winning, he canceled the plan, leading to the federal funds being reallocated to other states.

Instead, Wisconsin has focused on road building. See this post regarding induced demand and why widening and building more highways is generally a bad idea. It's bad for the environment and it doesn't alleviate traffic congestion. Nonetheless, Wisconsin is doing more of it at a significant cost.  This $1.7 billion (currently) project is expected to last through 2033.  

Wisconsin is also throwing a lot of money onto the AI bandwagon. Wisconsin is experiencing a boom in data center development, driven by AI, with projects from Microsoft (Mount Pleasant) and Vantage Data Centers (Port Washington). Since significant public monies and resources are involved, many are raising concerns about energy use and environmental impact, along with negotiating for benefits like infrastructure and green energy. 

Clean Wisconsin reported, "Two approved data centers in Wisconsin will use more power than all the homes in our state combined. More than the generation capacity of the Point Beach nuclear plant, the single-largest source of power in Wisconsin."

Further, these companies are drawn to Wisconsin for the water. Data centers need a lot of water. As PBS detailed, "Wisconsin has become a destination for new data centers because of the extreme heat they generate, benefitting from cooler climates and lots of water to regulate their temperatures. That’s why companies are eyeing the state — for its climate and water."

Good Jobs First has substantiated that while Wisconsin's data center boom creates construction jobs and investment, the massive sales tax breaks (like those for Microsoft) cost taxpayers tens of millions in lost revenue, with few jobs created relative to the subsidies, prompting calls for better state oversight, transparency, and "guardrails" for fair pay and worker protection, as current deals often lack accountability and permanent job guarantees.

On top all of the money being given away to data centers, Tom Kertscher and Paul Kiefer note, "Obsolete power plants continue to cost ratepayers. Now, the push to generate unprecedented amounts of electricity for data centers risks creating another $1 billion in ‘stranded assets.' ... Wisconsin ratepayers will owe over $1 billion on retired coal power plants by the end of 2026 — a total that may climb in the coming years."

On top of all these issues related to AI data centers, they are also short-lived assets. Meaning they depreciate at an exponentially fast pace - the technology and equipment are obsolete within years. Further, the AI market is a bubble. Don't take my word, environmentalists, or other naysayers, big investors who've called other bubbles are saying so. Not only are they saying so, they are putting their money where their mouth is; they are betting against AI. Based on the initial investment to build these centers, and how quickly they need to be replaced or upgraded, the profits needed to achieve such are nearly impossible. 

The choice to continue building highways rather than more efficient ways of moving people and goods degrades our environment and our economy. Shoveling money into unproven and inefficient ephemeral and illusory catalysts (power plants, data centers ... not to mention stadiums and convention centers) is a drag on future growth. There is a massive opportunity cost imbedded in these choices. By wasting money on these boondoggles, the money can't go toward more meaningful and productive uses.

In the end, this all continues to hurt the country, the states, and the citizens. As usual, the only benefactors are those being given these handouts and corporate welfare.  

For Futher Reading:

The Hidden History of Prosperity

America’s Forgotten Generation (of Prosperity)

Why Did the Rich Pull Away from the Rest?

Restoring Shared Prosperity

The AI Industry Is About to Collapse

The AI Bubble and the U.S. Economy: How Long Do “Hallucinations” Last?

Talking With Paul Kedrosky

Michael Burry’s AI Warning Can’t Be Ignored

Scott Walker Is A Creep

Scott Walker says Wisconsin needs a break from 'massive new interchanges in Milwaukee'

Isn't it odd how Wisconsin has $5 billion for Foxconn, but we can't find any money to fix our roads?  We have millions for sport stadiums, but there's not money available for our transportation needs. We have corporate welfare for any business that comes along with their hand out. But when basic infrastructure needs to be upgraded or repaired, Scott Walker can't find the money or the project just isn't a priority for him. 

The Republican party has been the party of road building (over other forms of transportation) for decades. They have to learn there are ongoing expenses with any investment - roads are no different. To love the ribbon-cutting for new roads (or any project, for that matter), but to then skip town when repairs are needed is irresponsible and a dereliction of duty. Also, Republicans shouldn't continue to support sprawl and the roads needed to get there, if they don't want to pay to keep those roads in working condition.

Scott Walker isn't a leader. He's a crony. A crony who continually funnels public dollars to his contributors, whilst short-changing the state and the needs of the citizens. His contradictory opinion of the Affordable Care Act, preexisting conditions and his involvement in the lawsuit regarding such perfectly illustrates this. Cost of Wisconsin's stance on the Affordable Care Act: $1.1 billion through this fiscal year.

Aside: Funny how an article supposedly about Scott Walker not wanting to fix Wisconsin roads turns into a hit piece on Tony Evers wanting immigrants to have drivers licenses.

The "Friendly" Skies?

For Further Reading:
Airline Deregulation #Fail

Flying Blind: Airline Deregulation Reconsidered

Walker Mismanagement/Ineptitude Continues

Highway project delays rack up $700 million cost overruns

While some of these increases come from faulty cost estimates or unavoidable inflation, the new figures underline the obvious: Delays can be costly for Wisconsin taxpayers. When projects are paused because of financial challenges in the state's road fund, the price of materials, labor and real estate can rise... 

The four major highway projects were each delayed for one year because last summer Gov. Scott Walker and GOP lawmakers couldn't settle on an approach to paying for them... 

Refusing to back increases to the gasoline tax or vehicle registration fees last year, Walker settled on bonding as the solution to the state's transportation funding woes, asking $1.3 billion in borrowing to fund the state's transportation projects while freezing state borrowing for most other needs.

Republican legislators pushed back, ultimately lowering the borrowing to $850 million. 

"He'll say that he hasn't increased taxes, but he's certainly pushed the cost of these projects onto the state credit card, and it's going to cost people a lot more," said Sen. Tim Carpenter (D-Milwaukee), a member of the Transportation Projects Commission. "Whoever comes in after him is going to have a complete mess on their hands."

Sunday Reading

The Case for Free Trade is Weaker Than You Think
This Study Shows How Low Corporate America's Taxes Really Are
Don't Dismantle Government - Fix It
Only About One-Quarter of Corporate Stock is Owned By Taxable Shareholders
Vast Majority of $22.8 Trillion is U.S. Corporate Stock Won't Be Taxed
America's Trickle-Down Experiment Has Failed
America Isn't Going Broke
The Most Horrendous Lie on Wall Street
New Stadium? Teams Now Want The Whole Neighborhood
The Truth About Football Stadiums: Those Supposed Great New Jobs Are Bogus
Should Retail Companies Get Subsidies?
The Suburb That Tried To Kill The Car

Midweek Reading

Concept Of "Limited Government" Is Right-Wing Bunk
Move To Ghost Job & Back Gives Capitol Police Chief Big Raise

Chief Dave Erwin — who has overseen a crackdown on Walker protesters at the statehouse — received an overall salary hike of 11.7%, to $111,067 a year, the same rate as his predecessor. That amounts to an $11,680 annual raise... 

Walker officials took similar steps to skirt civil service salary limits for Deputy Police Chief Dan Blackdeer. His pay jumped by 14.6%, to $96,048, on June 16.

Why Pot Makes You Feel Good
A Texan Tragedy: Ample Oil, No Water
Social Security A Model For Washington Budgetmaking
How The State Borrowed A Billion Dollars To "Cut" Your Taxes
Billion Dollar Blunder
Five Facts About Household Debt In The United States

Expand The Parkway?

I see the idea of expanding the Lake Parkway south to Oak Creek is percolating again. With that in mind, here's an old response to that proposal (at the time, July 2009, being pushed by Pat McIlheran, Journal Sentinel writer, and Pat Jursik, Milwaukee County board member):

Pat [McIlheran] follwed up his last bit of nonsense with more of the same, Radical old idea: Let us move around.

In the latest expounding of obliviousness, Pat pushes for extending the Lake Parkway all the way to southern Oak Creek. Is there any problem more highways will not solve for these guys?

McIlheran then runs through the typical gamut of right-wing, development, talking-points: the automobile represents freedom, no one wants to ride the train/light-rail, and building on green space is cheap and therefore preferable.

His description of Pat Jursik's, Milwaukee County Board member, idea for this highway expansion is "revolutionary". In today's environment - sprawl, pollution, water shortages, crumbling roads and infrastructure, stressed budgets - to suggest we build more is absurd. To suggest we build mass transit options that alleviate our dependence on automobiles and highways is, as Pat would say, "Right on!"

McIlheran thinks that if we don't expand highways and if we do expand rail options, we are "cutting off people's options." Someone check into Pat's relationship with the highway lobby. Is there a status quo entity for which he is not a shill? Again, Pat goes back to the oldie but goodie, implying that because we are Americans we can do whatever we want...the planet be damned! Not building highways, continuing to allow us to spew pollutants, nor paving over green space somehow equates to American freedom and would be "cutting off our options".

He then goes on to show more ignornace regarding the latest research, and a complete blindness to a Milwaukee case study. He, agreeing with Jursik, pontificates that tearing down the highway and replacing it with a surface street or lift bridge would be foolish. Maybe they both should read, 4 Cases of How Tearing Down a Highway Can Relieve Traffic Jams.

They mention how surface streets isolate one area of the region from the other. But on the contrary, what they actually do is encourage high-density development and community along those surface streets. Just the opposite of what McIlheran and Jursik are proposing. They want to relieve surface streets of traffic - which would relieve the businesses along these streets of customers. This of course would lead to more exit-ramp, big-box retailers sprouting up along the highways so drivers can jump on and off to get items they might need on any given day. We'd hate to see people shopping in their own neighborhoods supporting local retailers and entrepreneurs. It's much better that we spend money at absentee-owned stores that pay a lower wage and subsequently siphon much of that spending outside our border. Basically, McIlheran and Jursik just want more of the same. More highways for more driving, just not on surface streets, so all of our driving can be at higher speeds, alongside more of the same, haphazard development we've seen over the last 50 years.

The boogeyman here is congestion. We need more highways to relieve all our congestion? What congestion? Milwaukee has one of the shorter commute times of any larger city. Milwaukee was recently ranked the third best city in the country for commuters by Forbes magazine.

We need an investment in rail. Being one of only two or three areas in the country without, or not planning, light-rail is bad for business, the environment, and our quality of life. And, this would only make our commute time even better.

Glaringly absent from the article is a discussion of induced demand. The phenomenon whereby building highways, adding lanes, actually increases congestion on those highways. But economic development, urban planning, and quality of life are obviously not Pat's forte. He's only worried about convenience.

Is McIlheran unaware of the environmental issues breathing down our necks? Or just unwilling to make lifestyle changes to avoid catastrophe? He even makes a crack about, "the silliness of opposing all new pavement." Seemingly, somehow, glorifying and proclaiming the righteousness of paving over open space. Again, showing his complete ignornace regarding the environmental issues with sprawling development.

For Further Reading:

Car Clowns

Road To Nowhere 

What We Spend Money On

How Americans Spend Money