The Big Dig and the failure of government spending

Writing on TPM Café, Nathan Newman faults big business for the failure of the Big Dig in “Corruption of Privatization.” He’s half right. Bechtel and the Big Dig contractors, beyond a doubt, delivered a sub-standard product. But Boston wasn’t merely a customer and the city’s failure to provide robust oversight is juxtaposed to another huge project: the clean-up of Boston Harbor. That project was also budgeted for $6 billion but finished on time and under budget. The Big Dig, decidedly, did not.

The core problem, however, isn’t just oversight but the inefficiency of government spending. Here’s Jeff Jacoby again:

Only in the public sector, where market discipline is nonexistent and financial losses are the taxpayer's problem, would such mismanagement be tolerated for so long. Only in the public sector, where political considerations far outweigh the bottom line, and where consumer satisfaction carries little weight, is such shoddiness and lack of oversight routine. In the private sector, incompetent performance generally means lost business, reduced earnings, or even bankruptcy. Only in the public sector -- under Democrats and Republicans both -- are negligence and failure commonly rewarded with ever-increasing budgets.

Echoes of Milton Friedman, explaining the four ways to spend money:

There are four ways in which you can spend money. You can spend your own money on yourself. When you do that, why then you really watch out what you're doing, and you try to get the most for your money.

Then you can spend your own money on somebody else. For example, I buy a birthday present for someone. Well, then I'm not so careful about the content of the present, but I'm very careful about the cost.

Then, I can spend somebody else's money on myself. And if I spend somebody else's money on myself, then I'm sure going to have a good lunch!

Finally, I can spend somebody else's money on somebody else. And if I spend somebody else's money on somebody else, I'm not concerned about how much it is, and I'm not concerned about what I get. And that's government. And that's close to 40% of our national income.

The “privatization” of the Big Dig, such as it is, did not cause the now-lethal mess of a public project. Quite to the contrary, if the Boston Tunnel system had been sold to the highest bidder with the agreement that the company could collect tolls for twenty years, it’s much more likely that the project would have been completed on time and somewhere in the neighborhood of the original estimate. The reason is that a private company would have a fiscal interest in doing the job efficiently, safely, and correctly. As long as the federal dollars were flowing to Beacon Hill, neither the Massachusetts government or the private contractors had a stake in the outcome. Too bad for Milena Del Valle.