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  • Perhaps the Most Bizarre Comparison of the Year (So Far)

    Posted by David Foster on February 3rd, 2007 (All posts by )

    The American is an interesting new business magazine, edited by James K Glassman. In the February issue, there’s an article by John Makin on China’s new Tibetan railway. The article starts with the following comparison: In 2005, Americans spent about $10 billion on women’s intimate apparel. During the period 2001-2006, China spent $4 billion building the 710-mile rail line from Golmud to Lhasa. From this comparison, Makin draws the conclusion that the contrast:

    …highlights the difference today between the richest country in the world and the country that is gaining wealth at the fastest pace. One is consuming, the other investing.

    Now, I’d think that if someone want to assert that we’re spending too much on luxuries at the expense of infrastructure–railroad infrastructure, in this case–he might want to report on how much the U.S. rail infrastructure spending actually is. But no such numbers appear in the article.

    There are four major U.S. railroads: CSX, Norfolk Southern, Burlington Northern, and Union Pacific. These are all public companies, and from the cash flow statements (last 4 quarters) a total capital expenditure of about $7 billion may be derived. This is for a single year, whereas the Tibetan railway capex extended over a period of 5 years. (The US numbers include locomotives and cars as well as track improvements; I’m not sure exactly what is encompassed in the Chinese number.) And there are indeed some substantial capital projects being undertaken by US rails–read here about main line double-tracking being carried out by both BNI and UNP.

    There are certainly reasons to be concerned about the level of infrastructure investment in the U.S., including railroad infrastructure. I think substantial additional investments will be needed in order to cope with expanded rail traffic, which is being driven by many factors (one example here.) But the numbers suggest that rail investment in America is, at the present time, by no means insignificant.

    It’s also important to remember, when comparing the U.S. with a rapidly-developing economy like that of China, that much of our infrastructure spending was done long ago. There is a strong cumulative factor in economic development. We are still benefiting from the work done by those who built the transcontinental railroad in the 1860s.

    I see a lot of articles and blog posts which have the general theme “the U.S. is eating its seed corn.” Again, while there is some truth to this, it is not helpful when exaggerated statements are made. For example, someone in comments on a blog recently made the flat assertion that “we don’t make steel in the U.S anymore.” Actually, Nucor alone made 22 million tons last year (made from scrap in electric arc furnaces.) Mittal Steel made about 20 million tons in the three integrated mills (incorporating blast furnaces) that I added up (Burns Harbor, Indiana Harbor, Sparrows Point–there are more.)

    In any event, if you are perchance planning on a trip to Victoria’s Secret this weekend, I think you can go without feeling guilty that you are undercutting America’s railroad infrastructure.

     

    15 Responses to “Perhaps the Most Bizarre Comparison of the Year (So Far)”

    1. James A Pacella Says:

      I read that the economic growth the US had last year over the year before that exceeds the entire economy of China.

    2. Lexington Green Says:

      “…$10 billion on women’s intimate apparel.”

      This sounds low to me. If we have to invest in anything, I say this is it.

      Full disclosure: I speak from the perhaps limited perspective of a heterosexual adult male. Others may perceive things differently.

    3. Mrs. Davis Says:

      Perhaps this explains why China is facing demographic disaster.

    4. veryretired Says:

      I’m with Lex—women’s intimate apparel is reproductive infrastructure. I’d rather see some nice lingerie than any stretch of road or train tracks, esp. on SWMBO.

    5. Sandy P Says:

      Single

      White

      Male

      Bimbo?

      I’m married and have long been out of the acronym lingo.

    6. Dan from Madison Says:

      She Who Must Be Obeyed, I believe. From what others have told me, of course.

    7. Jonathan Says:

      SWMBO: closely related to theo.

    8. joseangel Says:

      Although China continues impressing the world with huge investments in buildings and public works. It remains to be seen whether that will ever empower the individual.

    9. Lexington Green Says:

      “Huge investments in buildings and public works” may not “ever empower the individual.”

      But there can be no doubt that women’s intimate apparel empowers the individual.

      More investment in reproductive infrastructure!

    10. Don Hodges Says:

      China reportedly has such excessive reserves that money is chasing real estate “investments” that have little prospect of long-term viability. I have seen the bubble in Atlanta (’70’s), Dallas (’80’s), and now Florida(’00’s). The Chinese will be able see through many of these new buildings for years. Meanwhile, the U.S. prepares to invest in a real sure thing: $240 more Billion for Iraq – thank goodness the Chinese reserves are financing that too. I wonder when the music stops?

    11. veryretired Says:

      “Rumpole of the Bailey”, a great BBC series with Leo McKern (I think is the name). SWMBO was , as described above, “She Who Must Be Obeyed”, his long suffering wife, who disapproved of his weakness for port, and pubs in general.

      My own version is remarkably non-disapproving, although she is dubious about all this internet business. She uses it extensively for work and research, not gabby sites about politics and other blathery wastes of time.

      Oops, time to go—she’s repainting her office and needs me to help move some stuff. After all these years, it’s a bonus to still be considered good for something, even if it’s just moving some chairs or a desk.

      Perhaps a reward lurks in the lingerie drawer. One can always hope….

    12. Lexington Green Says:

      Don’t just hope, Veryretired, buy her something!

    13. John Says:

      This dang railroad is going to TIBET, fer cryin’ out loud. It’s just like these huge capital expenditures on airports that China is making in cities where they hope people might want to go in the future, once the business and tourism infrastructures get built. But right now, the Five Year Plan says build transportation infrastructure, even if there is nowhere to go to.

      Just what resources is China going to pull out of Tibet to justify this expense? I watched this happen over and over again in the USSR. One of these days the Pearl River Delta is going to take their ball and go home, drying up funding for these sorts of adventures.

    14. Mike Cunningham Says:

      Two points.

      VeryRetired

      Rumpole’s weakness was for Pomeroy’s Claret, a worthy drink for a barrister; not Port, which is just adulterated dregs!

      “…Bizarre Comparison…”

      Where I live, in a small market City in England, a small construction development project is taking shape, with the usual proposed mix of retail barns selling cheap shoes and cheaper, nastier food no doubt. But my moan is that the area where the shops will stand was cleared by the demolition of small and medium-sized factories!

      So we are throwing out our own means of manufacture, and making space to sell more and more “cheap” Chinese goods! The so-called “cheap” goods will turn out to be the most expensive things which British people ever purchase, as they are slowly sending all their manufacture towards ‘The Yellow Peril’, all in the supposed cause of spending less money!

    15. John J. Coupal Says:

      Mike C.,

      The Brits seem to be doing very well in the science, technology, basic and applied research areas, and so forth. It IS discouraging to see decrepit factories razed to make way for shops selling Chinese knick-knacks. Britain’s exports are of high value-added items.

      If the quality of the Chinese knick-knacks sold in Britain are often of as poor quality as those sold here in the states, the buyers will reject them, even if they are of lower price.

      Initially, after WWII, Japanese products were of poor quality but slowly improved, and dramatically to become world class. Japan was a democracy after the war. Of course, China remains a communist dictatorship, so individual liberty there is a long way off, if the government has anything to do about it. But, it will come.

      Manufacturing is seen by the Chinese government as a means of advancing with available resources.