Friday, January 9, 2009

Only Government?

“…only government can provide the short-term boost necessary to lift us from a recession this deep and severe. Only government can break the vicious cycles that are crippling our economy.”
--Barack Obama – 01/08/2008

As a commenter at
HotAir lamented, “Where do I begin?”

I am not an economist. I will not attempt to lecture on
inflationary aspects of conjuring up a trillion dollars out of thin air. I cannot attempt to elaborate further than already has been on the ignorance of such a statement as our President Elect made. I cannot attempt to provide a voice of reason to Congress about where the actions of such an irresponsible bailout will take us.

No, I am not an economist. I do, however, spend my days determining how much it costs to build things, and so I get a feel from being in the midst of the action, if you will, as to how the free market economy is supposed to work. The pure mechanism of the economy, the provision of value in the form of money for value provided via added product and service is, in construction, as naked a reality as it gets. All products and services being equal, the best price wins the job. Competitors unable to secure new jobs go out of business. It is easy to start construction companies, and even easier to mismanage them into oblivion. Subsequently, the construction industry has one of the highest turnover rates for new businesses in and old businesses out in the country. Poor contractors start up and fail, capable contractors start up and survive, and good contractors start up, survive, rise within the industry, and make some good money for a while. The best contractors find the way to rise, stay ahead of the good, and make good money for a very long time. These contractors are the like of
Pepper, Bovis, Turner and Walsh.

I work in private sector construction, but I began my career in public sector construction. Having been exposed to both sides, it comes as no surprise to me that Pepper, Bovis and Turner dabble in very little, if any at all, government construction, and Walsh does so only on monumental ($100+ million at a time) roadwork projects and other large infrastructure projects like sewage treatment plants, that make the headache of it worthwhile.

Government contracts in general are an exercise in one’s skills in filling out formwork. In my days of assembling proposals for the US Navy projects, I spent perhaps 70% of my time assembling the “Technical Proposal,” outlining our past projects, current personnel, and other general safety and financial responsibilities. The other 30% of my time was spent actually figuring out how to build the project and how much it cost. This would have been fine had we been given an adequate amount of time, however when given the same two to three weeks to price the job as we would have had without all the extra “Technical” paperwork, let’s just say I didn’t get a whole lot of sleep. Projects themselves are carried out in just as much tedious paperwork. Sorting out a 6” discrepancy in a measurement, rather than a simple phone call, requires writing an official Request for Information form, waiting for the answer in writing, signed by the architect and perhaps as many as three or four different government agents. God forbid that 6” dimension change has an issue involving a difference in cost, and the subsequent 90 days it can take to get something like that approved.

Quite the mirror image, Pepper is mildly famous within the industry for having completed a $20 million contract for a trusted client purely on a handshake agreement, with the contract arriving signed toward the end for the sake of hyperventilating lawyers, and record.

Such is my own personal experience in government versus private sectors. Government is woefully inefficient, even in its direct money transactions with the private sector. Government never innovates, government never produces and government never solves any problem. Government slows progress, government blocks the producer from solving problems, government lassos the innovator for intense examination before something new and valuable can be produced.

Only Government?

Only Government can step aside, allow the private sector to clean its wounds, set a cast on its broken bones, heal and leave the hospital that is the recession.

Only Government can infect the wounds so deeply that a gangrenous depression is inevitable.

1 comment:

  1. Paul,
    As my co-blogging associate at principalities, David, has noted--"recessions have economic causes, and depressions have political causes". I think that about sums up the difference.

    You've got a good blog here, which I will begin looking in on--thanks for stopping by at our place.