Peter Schiff, the economist who predicted the 2008 financial crash, once observed that government is a one-trick pony: the only trick it knows how to do is raise taxes. This time, the “trick” is on Honolulu taxpayers who actually thought their government would honor a promise not to use city dollars for rail construction.
What began as a transit system has now evolved into an organic creature with wants and needs of its own that neither politician nor citizen can bring under control: Traffic, jobs, big contracts, political donations, community health, even Honolulu’s international prestige, are all on the line.
The rail project creeps closer to downtown with construction of a station in Aiea.
Cory Lum/Civil Beat
No one can kill rail, but strangely, no one can seem to finish it either. Much like the late UK Defense Minister Duncan Sandys once said of an unpopular jet procurement, when it comes to rail, “Unfortunately, it has gone too far to cancel.”
There’s an impolite term we use for things like this: Too big to fail.
Don’t get me wrong, this is not about pointing fingers at political parties or personalities. The real problem has to do with the fact that we are not being realistic about the kinds of commitments we are buying into.
Honolulu rail proponents have been trying to square a circle in pitching the ongoing project as somehow affordable or cost-controlled. Historically, however, the pattern of most major infrastructure projects has been to exceed initial cost estimates by significant amounts.
Why are rail and other big infrastructure projects generally more expensive than first billed? First, as illustrated by the moon race example, currency debasement — or more crudely, “inflation” for the non-wonks — affects the purchasing power of money as time passes.
What began as a transit system has now evolved into an organic creature with wants and needs of its own that neither politician nor citizen can bring under control.
In our current climate, because the Federal Reserve has stated that it wants an inflation target of 2 percent per year, the dollar will probably always lose at least 2 percent of its purchasing power annually. The inflationary pressures that make it expensive for you to buy and build a new house in Honolulu are the same pressures that make a decade-plus big infrastructure project a fiscal headache for policymakers and taxpayers alike.
Second, and more importantly, cost estimates are often low-balled to make big ticket projects more digestible to the public.
Flyvbjerg’s study warns that communities and stakeholders “should not trust the budgets, patronage forecasts, and cost-benefit-analyses produced by promoters of major infrastructure projects … The most effective planner … is sometimes the one who can cloak advocacy in the guise of scientific or technical rationality.”
For taxpayers, when it comes to government planning, being skeptical is always the best insurance policy.
Honolulu residents may be complaining that city leaders lied to them, but they need to be prepared for the fact they have certainly not seen the last of broken promises or local tax liabilities for rail. If they still want it, they’re going to pay for it.
The Federal Transit Administration is controlled by a Republican administration, not Democrats. Sen. Daniel Inouye is no longer around to make the taxpayers of the other 49 states pay for Hawaii’s ideas, and Hawaii’s congressional delegation lacks the seniority to bring home the bacon in Trumpworld.
Even worse, taxpayer-funded bailouts are very much like potato chips: Betcha can’t eat just one. Problems aren’t solved by throwing more money at struggling projects any more than eating more carbs can satisfy someone with insulin resistance. The moral hazard of any public project surrounded with the expectation that others will use it, others will pay for it, and yet somehow, all us will collectively benefit from it, is a dangerous slope for democratic governance.
We have every right to be upset with Honolulu leaders for breaking promises to residents, but the real question we should be asking is why do we keep believing the same lies from different politicians?
In life, there is no such thing as a free lunch. “Free,” when we read between the lines, always means someone else is paying for it. In Hawaii, we have become dependent on a theory of governance that the cost of mistakes should be socialized to the public and the rewards for success should be privatized to a handful of already wealthy or connected individuals.
The Honolulu rail project was supposed to get us out of traffic. In the end, it’s only getting us into trouble.
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