Dec 13 2009

Are We Entering the “Superproject Void”?

The New York Times (11/29/09) thinks we are.  According to Louis Uchitelle,

Generation after generation, giant public works projects have altered the American landscape. The Erie Canal and the transcontinental railroad come to mind. So do massive urban sewer and sanitation systems, the Tennessee Valley Authority, rural electrification, the Hoover Dam, the Interstate System, the subway networks in San Francisco and Washington, the Big Dig in Boston … and the list abruptly stops.

For the first time in memory, the nation has no outsize public works project under way.

Actually, the Times’ Superproject data is supportive of  21stCenturyWaves.com’s  Maslow Window model and its relation to Macro-Engineering Projects (MEPs) over the last 200 years — including the early 19th century, near-MEP Erie Canal mentioned by the Times — as well as current MEPs and those anticipated during the 2015 Maslow Window.

1. The 1960s Apollo Maslow Window appears in public works spending data for the last 60 years.
The signature of the long economic wave is visible in the Times‘ graphic of public works spending as a percentage of GDP from the late 1940s to the present; Click HERE.

The rapid rise in spending during the 1960s was enabled by  the major economic boom that triggered the 1960s Maslow Window;  it slammed shut just before 1970 and was followed by a precipitous decline across the 1970s and beyond. Both mirrored the trends of the long wave at those times.  As Uchitelle points out, “the strongest periods of economic growth in America have generally coincided with big outlays for new public works and the transformations they bring once completed.”

The  post-WW II spending boom of the 1950s and late 1940s has not been replicated in the late 1990s and early 2000s.  Instead, the Panic of 2008 and our current great recession appears to be following the pattern of the Panic of 1893 and the great 1890s recession, which, after 1899,  rapidly rebounded into one of the most ebullient decades in U.S. history:  the 1903-1913 Maslow Window.  It featured Theodore Roosevelt’s transformative Panama Canal and the spectacular international races to both the north and south poles.

2.  Over the last 200 years, MEPs tend to cluster in rhythmic, twice-per-century pulses.
In The Way MEPs Really Work,”  I adopted the definition of an MEP from Eugene Ferguson (1916-2004), a well-known professor of engineering and later history, and a founding member and former president (1977-78) of the Society for the History of Technology  According to Ferguson,

MEPs are: 1) at the state-of-the-art of technology for their time; 2) extremely expensive (at least $ 1 B,  in 2007 USD) and usually large in size; and 3) sometimes practical in purpose, but often they are aimed at satisfying intangible needs of a spiritual or psychological nature and are highly inspiring.

This is a demanding definition that excludes many extraordinary projects like trans-continental railroads or large highway systems because, while expensive and significant, they do not stretch technology.

The rhythmic, twice-per-century pulses of MEPs are visible in Cordell (1996).  Their association with Maslow Windows and regular timing suggests that the next flurry of Superprojects and MEPs will begin near 2015.  So, any “Superproject void” should be short-lived.

3. The Erie Canal was considered by Thomas Jefferson to be “a little short of madness.”

ErieCourtesy of the Memorial Art Gallery of the University of Rochester.

Uchitelle correctly identifies the Erie Canal as the key Superproject of early America, although I have been unable to convince myself that it is a true Ferguson-style MEP in the context of other MEPs of the last 200 years (e.g., the Panama Canal or Apollo Saturn V).

The Erie Canal is considered to be the greatest engineering marvel of its day and was often referred to as the 8th Wonder of the World.  Construction began in 1817 and it opened in 1825; the canal featured 18 aqueducts and 83 locks to accommodate the 568 foot rise from Albany to Buffalo.  It led to a population boom in western New York state, caused a drop in transportation costs by more than 90%, and opened up the western Great Lakes area to new settlers. In essence, the canal was a response to the pressures for westward expansion that had been ignited by the Great Exploration of Lewis and Clark earlier in the Maslow Window.

Jefferson’s “madness” quote referred to the canal’s cost: $ 7 M, courtesy of the New York state legislature; that’s about $ 0.1 B in 2007 USD, which is a little low for a true primary MEP. More impressive is its cost expressed as a fraction of GDP: 0.1 %.  That’s large and puts it in the same class as the Panama Canal (Apollo was 0.2 % of GDP); this is the best case for Erie being a Ferguson-style MEP.   However, despite the Erie Canal’s “engineering marvel” reputation, the project leaders were ebullient amateurs, not professional engineers because there were none in the U.S. at that time.  And its key technology advancements were limited to new, efficient techniques for removing tree stumps so the canal could be kept on schedule and within budget. 

The Erie Canal is definitely a Times-style Superproject, but not quite a Ferguson-style MEP.  I view it as transitional between the smaller, but still important, engineering projects of the late 18th century, and the more modern, true MEPs beginning in the mid-19th century Dr. Livingstone-Suez Canal Maslow Window.

4. Construction of the spectacular Golden Gate Bridge from 1932-37 did not end the Great Depression.
Uchitelle’s interest in the history of American superprojects relates to our recovery from the current great recession. 

President Obama has earmarked just $80 billion — a tenth of his stimulus package — for megaprojects, and put off most of that down payment until next year. His focus instead has been on spending hundreds of billions to quickly and visibly repair existing public works, especially highways, and also levees, dams and locks, particularly in the New Orleans area. That’s not a bad thing — those repairs are certainly needed — but it doesn’t create permanent wealth.

By the standards of the past, however, they are not the spectacular feats of engineering and ingenuity that greatly enhance the economy. The Erie Canal was just such a feat …

“Last year at this time we were debating whether we should be concentrating our spending on big projects that, in the long run, add to economic growth,” said John J. Wallis, an economic historian at the University of Maryland. “That debate never got resolved, and the stimulus bill we enacted in February ended up focused instead on quick spending.”

This is consistent with Harvard economics professor Robert Barro who finds that stimulus spending doesn’t work to stimulate the economy; “The available empirical evidence does not support the idea that spending multipliers typically exceed one, and thus spending stimulus programs will likely raise GDP by less than the increase in government spending,” (Wall Street Journal, 10/1/09)

The Golden Gate Bridge is a spectacular Northern California landmark that was built between 1932 and 1937 during the Great Depression  for $ 35 M; that’s about $ 530 M in 2007 USD.  As a fraction of GDP it’s 0.01%, much smaller than the Erie or Panama Canals, but still a sizeable amount of cash.

It’s significant that GGB was financed privately (without any significant expenditures of state or federal money), so it could have stimulated the economy, but in 1938 — almost a decade after the Crash of 1929 that triggered the Great Depression and 6 years after Franklin Roosevelt was elected — U.S. unemployment was still about 14%.  Well-known Keynesian economists George Akerloff and Robert Schiller believe that FDR and Hoover were ineffective. In fact, “Confidence — and the economy itself — was not restored until World War II completely changed the dominant story of people’s lives, transforming the economy,” (Animal Spirits; 2009).

5. Current MEPs, the Panic/Recession of 2008+, and our current recovery suggest that any “Superproject void” will be brief. 
Indeed, the 2015 Maslow Window — a Golden Age of Prosperity, Exploration, and Technology — should not be late, based on the last 200 years of financial panics and great recessions (e.g., the 1890s great recession) that commonly occur in the decade just prior to Maslow Windows.  Plus pre-Maslow Window secondary MEPs — like the Large Hadron Collider and the International Space Station — point to the on-time opening of the 2015 Maslow Window.

 

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