Photo: lovelydead

Cross-posted from Strong Towns.

The American Society of Civil Engineers (ASCE) has just released a report that should be titled “Pretending it is 1952.” Like a broken record, ASCE is again painting a bleak picture of the future if American politicians — as if they need to be plied — won’t open up the checkbook for our noble engineers. And in a way that the Soviet Central Committee would have expected from Pravda, the media and blogger world is sounding the alarm. This feels more like a cult than a serious discussion on America’s future.

In the Long Depression of the 1870s, the railroads found they had overinvested in transportation capacity. Speculating on future growth and the returns on land development, they collectively built more rail lines than could be put to productive use. The result was a huge financial correction in which the private-sector railroads consolidated their routes, downsized their unproductive infrastructure, and put their reserve capacity into endeavors that had a higher rate of return. This was a painful, but necessary, correction.

The parallels to 2011 are obvious. We’ve built out the interstate highway system as it was originally envisioned — although we opted to go through cities instead of around as planned — and then we built some more. We poured money into highways, county roads, and local streets. We have so much transportation infrastructure — a huge proportion of it with no productivity — that every level of government is now choking on maintenance costs.

While originally conceived in the name of “national defense,” these investments were made in the service of “growth” and the belief that all increases in mobility, no matter how insignificant, would add to the overall prosperity. We’ve spent trillions to save seconds in the first and last mile of each trip, and what we’ve gotten is the fake prosperity of a land-use pattern that is bankrupting us, housing bubble and all. This is the essence of the financial correction we are experiencing.

But there is one huge difference between today and 1873. Back then, while the railroads received government subsidies, they were still private businesses. They had to face financial reality. Today, our transportation systems are a public good funded through government spending. The only reality check on this system is financial collapse.

We have a government that can borrow and tax as much money as needed and a Federal Reserve to print whatever Congress lacks the “courage” to raise. Combine that with a cult-like belief that the path to prosperity in America is to create more growth through more infrastructure spending, and you have a recipe for financial disaster. There is no negative feedback loop here that will slow this madness. Even Tea Party darling Michele Bachmann is a shill for massively unproductive transportation projects in her own district.

So in steps the American Society of Civil Engineers. If this is an infrastructure cult, they are the normal-looking guy that is there to reassure anyone who might think of leaving. That is probably what upsets me the most. I’m proud to be a civil engineer, but I will have nothing to do with ASCE and their self-serving, narrow view of the world. Consider the following:

• ASCE estimated the “costs to households and businesses” from transportation deficiencies in 2010 to be $130 billion. (pg. 3 of the report)

• ASCE estimated the cumulative losses to businesses will be $430 billion by 2020. (pg. 5)

• ASCE estimated the cumulative losses to households will be $482 billion by 2020. (pg. 5)

If you add these together, the total cost to households and businesses is $1.042 trillion. Well, ASCE states that to reach “minimum tolerable conditions” (a pretty sad standard) would take an investment of $220 billion annually. Over 10 years, that’s $2.2 trillion. Yeah, you read that right. The American Society of Civil Engineers wrote a report that suggested over the next decade we spend $2.2 trillion so that we can save $1.0 trillion. And you wonder why we’re broke.

There are some things to understand about the $1 trillion as well. Those aren’t losses to businesses and households as in money out of their pockets. This is the same old game we reported on extensively last year with our disucssion of the cost-benefit analysis approach on the Staples overpass. The costs are all very real dollars that we spend. The benefits — or in this case the losses — are things like lost driving time and wear and tear on your car.

Say you work at a job making $25/hour. By ASCE math, I as an engineer spend untold sums and improve your commute by two and a half minutes in each direction. Each day that is five minutes saved. Each week it is 25 minutes. Each year I’ve saved you 22 hours. Over the 25 years of that road, I’ve saved you 540 hours which, at $25 per hour, is worth $13,500. Now, it is not just you that has enjoyed this tremendous windfall. Look around at the thousands of others on the road with you. Add them all up and, according to ASCE and the standard engineering approach, this transportation project is making us all very rich.

ASCE is touting some other GDP costs as well, although it is hard to discern them clearly since, due to the ridiculousness of the numbers, they are forced to project out to 2040. Anytime someone has to project out that far to make an economic argument, they are grasping. For some context, consider that 30 years ago, inflation was over 10 percent, interest rates were over 15 percent, the internet was still a decade and a half away, Ronald Reagan was president, and the big event of the year was the launching of the Space Shuttle. Think they’ve factored in that kind of volatility? And you have to love the hubris of engineers making projections. What other profession would do a 30-year projection and come up with a precise number like $3.248 trillion?

ASCE estimated that, in a 30-year trend projection, we would have 400,000 more jobs in 2040 if we fully funded our transportation system (pg. 13). The ridiculousness of this number can’t be overstated. New jobless claims last week alone were 400,000. We’re supposed to make a multi-trillion dollar investment over the next three decades on a trend line projection that we’ll have 400,000 more jobs? Are they serious?

One other thing in the report that made me shake my head was a table they had titled “Top 20 Countries and Economies Ranked by the Quality of Roads and Railroads” (p
g. 17). For roads, the United States is ranked 19th, behind such countries as France (second), Switzerland (third), and Germany (fifth), all countries that I have driven in. Anyone who has done likewise will attest that the standard highway in Europe is like a country road here in the U.S. I agree that their freeways are awesome, but they are also designed to connect towns, not feed strip development. I would attest that the “quality” in this case is less engineering-based and more a function of their adjacent land use not messing things up as ours does.

The table itself is based on an “Executive Opinion Survey” from “The Global Competitiveness Report for 2010-2011” [PDF]. ASCE doesn’t point out that, despite the sad opinion of our roads, the report ranks the United States as the fourth most competitive economy in the world. It is not really clear how we became so competitive with an infrastructure system ASCE ranked as a ‘D’. Just maybe there is more to an economy than infrastructure?

At Strong Towns, we want our infrastructure maintained. In fact, it’s the common denominator of a Strong Town. But the reason why we can’t maintain our infrastructure is not because we lack the money or are afraid to spend it. It is because the systems we have built and the decisions we’ve made on what is a good investment are based on the kind of ridiculous math you see reflected in this ASCE report. We spend a billion here and a billion there and we get nothing but a couple minutes shaved off of our commutes, which just means we can build more roads and live further away from where we work. (Or, as we call that here in America: growth.)

Sixty years of unproductive infrastructure spending later, we are awash in maintenance liabilities with no money to pay for them. This is what happens when you have a government-subsidized, Ponzi-scheme growth system that, at all times, lives for the next transaction. America is all about new growth, which is why we don’t even bother to question the findings in a study like this.

The ASCE report is an embarrassment to the engineering profession. The fact that politicians, journalists, and bloggers are all lined up to mindlessly parrot these conclusions is pathetic. If we are actually going to get this country moving in a positive direction, we need a real understanding of how infrastructure spending is used to create value. We need a new approach to land use.

Photo: Christopher Romano

A reader sent me this great quote regarding Independence Day from John Adams:

It ought to be solemnized with pomp and parade, with shows, games, sports, guns, bells, bonfires and illuminations, from one end of this continent to the other, from this time forward forever.

In typical Adams style, I’m sure he said it with drama and meant it with all seriousness, but it brings a smile to my face nonetheless. Pomp and parade … Oh, if he could see us now.

I absolutely love the Fourth of July. My hometown of Brainerd bills itself as the Fourth of July capital of somewhere … I can’t remember if it is “the world” or just “Minnesota.” Either way, I grew up with an annual dose of the full spectacle of American pomp. The only parades I ever remember missing were the two when I was off in the Army, and those were very lonely affairs. The pomp and parade of basic training may be more dignified, but just isn’t the same. There’s no place like home.

For one day each year, humanity descends on an otherwise inhumane landscape, pedestrians boldly take back the public realm, and Brainerd feels like a community again. We brush up against each other walking down the street. We run into old friends and meet new ones. We look disapprovingly on the overly tattooed kids puffing on cigarettes, who crave our disapproval. We stand in reverence of the flag, veterans of past conflict and current warriors. We laugh at the zany and the bizarre.

These are all the things that I would imagine our ancestors doing too.

When I say that Brainerd has an “inhumane landscape,” I mean that it is generally inhospitable to people outside of their cars. Sure we have sidewalks in the downtown, but they are inches from streets designed for fast-moving cars, with “decorative” lighting for cars, signs for cars, shops designed for cars, and large parking lots (of course, for cars). I’ve detailed in this space how the new county government center is a confused blight on what is left of Brainerd’s urban fabric. But nonetheless, remove the cars from the street and it suddenly becomes a place that overweight people will walk a mile to be in.

Want to revitalize your town? Yes, it’s that easy. And really, you don’t even have to remove the cars altogether — just make them the third factor you design the public realm for after pedestrians and cyclists and the last factor you design the private realm for after buildings and sidewalks. In urban areas, tame the car and watch your places flourish.

But we’re a long ways gone in Brainerd. Our new county apostasy will be there for 50 years or more, as will the bizarre design of Laurel Street, a major part of the parade route that goes past all of our civic buildings. Laurel Street now has either a split personality (part street/part road) or is a cross dresser (a road in street’s clothing). I look at everyone smiling and having a good time and I kind of ache. Hey guys … you know, we wouldn’t necessarily have to have a parade to pull off a gathering like this. We could spend our money a little differently here and this kind of thing could happen all the time.

Speaking of the parade … I could be wrong, but the number of floats seemed down from prior years. While we had a good collection of soldiers, dignitaries, and law enforcement vehicles, it did not seem like many businesses participated. When I was a kid, I walked in the parade about every year there for a while. Once I carried a huge American flag with the rest of my baseball team. Our local sponsor asked us to do that. Another year I was on a float, again, for the business that sponsored our ball team. Neither of those two businesses were visible in this parade.

And come to think of it, neither were the places we were told were our economic future. The new places that put those old places out of business. There was no Walmart float. No Target float. Home Depot had plenty of wood and trailers, as did Menards, but they weren’t there. Super America, McDonald’s, Jimmy Johns … didn’t see any of these guys. 

And I didn’t see any of their accountants either. They don’t use our local accountants after all. Didn’t see their printers or advertisers either. That’s all handled at corporate. Same with their attorney and other professionals. But the local CSA was there (yeah St. Mathais farm) along with the best locally owned restaurant that is one of their biggest customers (yeah Prairie Bay). And the high school band. Gotta have a band.

The day ended with the fireworks and, say what you will about my hometown, we know how to do fireworks. And even though this video from the local paper called it the “Grand Finally” (which it may have been for some), to me the finale of this day was tucking my sleeping girls into bed, confident I was creating some memories that will help them to someday see the hidden potential in the places that matter most to them.

Happy Birthday, America. When we use the proper measuring device, I believe we’ll find that our best days are yet to come.

Not real wealth, just the illusion of wealth.Photo: John “K”

How is our experiment working?

At Strong Towns, the nonprofit, nonpartisan organization I cofounded in 2009, we are most interested in understanding the intersection between local finance and land use. How does the design of our places impact their financial success or failure?

What we have found is that the underlying financing mechanisms of the suburban era — our post-World War II pattern of development — operates like a classic Ponzi scheme, with ever-increasing rates of growth necessary to sustain long-term liabilities.

Since the end of World War II, our cities and towns have experienced growth using three primary mechanisms:

1. Transfer payments between governments: where the federal or state government makes a direct investment in growth at the local level, such as funding a water or sewer system expansion.
2. Transportation spending: where transportation infrastructure is used to improve access to a site that can then be developed.
3. Public and private-sector debt: where cities, developers, companies, and individuals take on debt as part of the development process, whether during construction or through the assumption of a mortgage.

In each of these mechanisms, the local unit of government benefits from the enhanced revenues associated with new growth. But it also typically assumes the long-term liability for maintaining the new infrastructure. This exchange — a near-term cash advantage for a long-term financial obligation — is one element of a Ponzi scheme.

The other is the realization that the revenue collected does not come near to covering the costs of maintaining the infrastructure. In America, we have a ticking time bomb of unfunded liability for infrastructure maintenance. The American Society of Civil Engineers (ASCE) estimates the cost at $5 trillion — but that’s just for just major infrastructure, not the minor streets, curbs, walks, and pipes that serve our homes.

The reason we have this gap is because the public yield from the suburban development pattern — the amount of tax revenue obtained per increment of liability assumed — is ridiculously low. Over a life cycle, a city frequently receives just a dime or two of revenue for each dollar of liability. The engineering profession will argue, as ASCE does, that we’re simply not making the investments necessary to maintain this infrastructure. This is nonsense. We’ve simply built in a way that is not financially productive.

We’ve done this because, as with any Ponzi scheme, new growth provides the illusion of prosperity. In the near term, revenue grows, while the corresponding maintenance obligations — which are not counted on the public balance sheet — are a generation away.

In the late 1970s and early 1980s, we completed one life cycle of the suburban experiment, and at the same time, growth in America slowed. There were many reasons involved, but one significant factor was that our suburban cities were now starting to experience cash outflows for infrastructure maintenance. We’d reached the “long term,” and the end of easy money.

It took us a while to work through what to do, but we ultimately decided to go “all in” using leverage. In the second life cycle of the suburban experiment, we financed new growth by borrowing staggering sums of money, both in the public and private sectors. By the time we crossed into the third life cycle and flamed out in the foreclosure crisis, our financing mechanisms had, out of necessity, become exotic, even predatory.

One of humanity’s greatest strengths — our ability to innovate solutions to complex problems — can be a detriment when we misdiagnose the problem. Our problem was not, and is not, a lack of growth. Our problem is 60 years of unproductive growth — growth that has buried us in financial liabilities. The American pattern of development does not create real wealth. It creates the illusion of wealth. Today we are in the process of seeing that illusion destroyed, and with it the prosperity we have come to take for granted.

That is now our greatest immediate challenge. We’ve actually embedded this experiment of suburbanization into our collective psyche as the “American dream,” a non-negotiable way of life that must be maintained at all costs. What will we throw away trying to sustain the unsustainable? How much of our dwindling wealth will be poured into propping up this experiment gone awry?

We need to end our investments in the suburban pattern of development, along with the multitude of direct and indirect subsidies that make it all possible. Further, we need to intentionally return to our traditional pattern of development, one based on creating neighborhoods of value, scaled to actual people. When we do this, we will inevitably rediscover our traditional values of prudence and thrift as well as the value of community and place.

The way we achieve real, enduring prosperity is by building an America full of what I like to call Strong Towns.

Road widening is what engineers are taught to do for safety. Problem is, it makes things more dangerous.Photo: WSDOT

After graduating from college with a civil engineering degree, I found myself working in my home town for a local engineering firm doing mostly municipal engineering (roads, sewer pipe, water pipe, stormwater). A fair percentage of my time was spent convincing people that, when it came to their road, I knew more than they did.

And of course I should know more. First, I had a technical degree from a top university. Second, I was in a path towards getting a state license (at the time I was an engineer in training, the four-year “apprenticeship” required to become a fully licensed professional engineer), which required me to pass a pretty tough test just to get started and another, more difficult, exam to conclude. Third, I was in a profession that is one of the oldest and most respected in human history, responsible for some of the greatest achievements of mankind. Fourth — and most important — I had books and books of standards to follow.

A book of standards to an engineer is better than a bible to a priest. All you have to do is to rely on the standards. Back in college I was told a story about how, in WWII, some Jewish engineers in hiding had run thousands of tedious tests on asphalt, just to produce these graphs that we still use today. Some of our craft descends from Roman engineers who did all of this a couple of millennia ago. How could I be wrong with literally thousands of years of professional practice on my side?

And, more to the point, what business would I — let alone a property owner on a project I was working on — have in questioning the way things were done? Of course the people who wrote the standards knew better than we did. That is why they wrote the standard.

When people would tell me that they did not want a wider street, I would tell them that they had to have it for safety reasons.

When they answered that a wider street would make people drive faster and that would be seem to be less safe, especially in front of their house where their kids were playing, I would confidently tell them that the wider road was more safe, especially when combined with the other safety enhancements the standards called for.

When people objected to those other “enhancements”, like removing all of the trees near the road, I told them that for safety reasons we needed to improve the sight distances and ensure that the recovery zone was free of obstacles.

When they pointed out that the “recovery zone” was also their “yard” and that their kids played kickball and hopscotch there, I recommended that they put up a fence, so long as the fence was outside of the right-of-way.

When they objected to the cost of the wider, faster, treeless road that would turn their peaceful front yard into the viewing area for a drag strip unless they built a concrete barricade along their front property line, I informed them that progress was sometimes expensive, but these standards have been shown to work across the state, the country, and the world, and I could not compromise with their safety.

In retrospect I understand that this was utter insanity. Wider, faster, treeless roads not only ruin our public places, they kill people. Taking highway standards and applying them to urban and suburban streets, and even county roads, costs us thousands of lives every year. There is no earthly reason why an engineer would ever design a 14-foot lane for a city block, yet we do it continually. Why?

The answer is utterly shameful: Because that is the standard.

In the engineering profession’s version of defensive medicine, we can’t recommend standards that are not in the manual. We can’t use logic to vary from a standard that gives us 60 mph design speeds on roads with intersections every 200 feet. We can’t question why two cars would need to travel at high speed in opposite directions on a city block, let alone why we would want them to. We can yield to public pressure and post a speed limit — itself a hazard — but we can’t recommend a road section that is not in the highway manual. 

When the public and politicians tell engineers that their top priorities are safety and then cost, the engineer’s brain hears something completely different. The engineer hears, “Once you set a design speed and handle the projected volume of traffic, safety is the top priority. Do what it takes to make the road safe, but do it as cheaply as you can.” This is why engineers return projects with asinine “safety” features, like pedestrian bridges and tunnels that nobody will ever use, and costs that are astronomical. 

An engineer designing a street or road prioritizes the world in this way, no matter how they are instructed: 

1. Traffic speed
2. Traffic volume
3. Safety
4. Cost

The rest of the world generally would prioritize things differently, as follows:

1. Safety
2. Cost
3. Traffic volume
4. Traffic speed

In other words, the engineer first assumes that all traffic must travel at speed. Given that speed, all roads and streets are then designed to handle a projected volume. Once those parameters are set, only then does an engineer look at mitigating for safety and, finally, how to reduce the overall cost (which at that point is nearly always ridiculously expensive).

In America, it is this thinking that has designed most of our built environment, and it is nonsensical. In many ways, it is professional malpractice. If we delivered what society asked us for, we would build our local roads and streets to be safe above all else. Only then would we consider what could be done, given our budget, to handle a higher volume of cars at greater speeds.

We go to enormous expense to save ourselves small increments of driving time. This would be delusional in and of itself if it were not also making our roads and streets much less safe. I’ll again reference a 2005 article from the APA Journal showing how narrower, slower streets dramatically reduce accidents, especially fatalities.

And it is that simple observation that all of those supposedly “ignorant” property owners were trying to explain to me, the engineer with all the standards, so many years ago. When you can’t let your kids play in the yard, let alone ride their bike to the store, because you know the street is dangerous, then the engineering profession is not providing society any real value. It’s time to stand up and demand a change.

It’s time we demand that engineers build us Strong Towns.