economics of war

As the US gradually withdraws troops from Iraq, an AP story reports that billions have been wasted on unfinished and abandoned projects.

A $40 million prison sits in the desert north of Baghdad, empty. A $165 million children’s hospital goes unused in the south. A $100 million waste water treatment system in Fallujah has cost three times more than projected, yet sewage still runs through the streets.As the U.S. draws down in Iraq, it is leaving behind hundreds of abandoned or incomplete projects. More than $5 billion in U.S. taxpayer funds has been wasted on these projects — more than 10 percent of the $53.7 billion the US has spent on reconstruction in Iraq, according to audits from a U.S. watchdog agency.

While this news is more fodder for opponents of the war, the real costs of the invasion are in the mass of destroyed infrastructure and the diversion of funds that might have been spent on more humanitarian needs. Of course the real cost of any war, this one included, comes with the thousands of soldiers, insurgents, and civilians who have lost their lives, and the families who will miss them.

A few projects are mentioned that have been finished successfully.

There are success stories. Hundreds of police stations, border forts and government buildings have been built, Iraqi security forces have improved after years of training, and a deepwater port at the southern oil hub of Umm Qasr has been restored.

Police, other security, and a deep water port–sounds like good support for my long-held belief that the war was, from day one, all about exploiting Iraq’s oil reserves. Security and transport must be there for oil to get out.

massive traffic jam

At least a couple of times, I have written about the terrible traffic problems here in China. Now there is a story about just how bad it can get.

Triggered by road construction, the snarl-up began 10 days ago and was 100 kilometers (60 miles) long at one point. Reaching almost to the outskirts of Beijing, traffic still creeps along in fits and starts, and the crisis could last for another three weeks, authorities say.

In this instance, most of the traffic is trucks rather than passenger cars. That means resources for production are being delayed for very long periods. Some are transporting food that is rotting and will have to be trashed.

The article does mention some small measures sometimes being taken to reduce traffic. In Inner Mongolia drivers are only allowed to drive every other day, based on the license plate number being odd or even.

The tone of the article is that this is a natural result of China’s strong economic growth. I am trying to think this through, but it seems to me that proper planning and design should allow us to avoid such problems.

china economy now #2

Yesterday China was announced to be the world’s second largest economy, overtaking Japan. As the article suggests, China has grown to have much greater influence over world markets and politics, especially commodity markets where China’s rapid growth has diverted resources and created new suppliers.

Another article emphasizes that China’s large economy does not imply that it is wealthy. The population is so large that per capita GDP is only $3,600 in China, compared to $46,000 in the US. Poor income distribution is also a problem and exaggerates the real poverty of most Chinese.

The question not many try to answer, Can China continue to grow at such a phenomenal rate?

Assessing what China’s newfound clout means, though, is complicated. While the country is still relatively poor per capita, it has an authoritarian government that is capable of taking decisive action — to stimulate the economy, build new projects and invest in specific industries.

That, Mr. Lardy at the Peterson Institute said, gives the country unusual power. “China is already the primary determiner of the price of virtually every major commodity,” he said. “And the Chinese government can be much more decisive in allocating resources in a way that other governments of this level of per capita income cannot.”

at least they are trying

What a great idea–maybe–China Plans Huge Buses That Drive Over Cars. Not drive over as on top of them, but really over them. That would allow a bus to skip through traffic jams, get people to their destination quicker, and encourage more people to use public transport. It would also allow cars to pass underneath when the bus is at the bus stop.

Maybe. I commute by bicycle every day in China. Sometimes the traffic jams get so bad I get stuck on my bike, not enough space to get between any two cars. One reason this happens is Chinese drivers do not follow traffic laws, and Chinese police do not enforce them. One of these 3D Express Coaches might drive over three cars and then need to stop because a car is in front of its front-left wheel waiting to make a left hand turn.

In the drawing it looks like the bus maybe runs on a track, but even so the cars will have to follow traffic norms for the bus to be a practical solution.

will the dam hold?

Recent rains and floods in China have already taken the lives of over 1000 people. This article brings a new slant to the story, the danger of the Three Gorges Dam becoming overwhelmed with the volume of water more rains might bring. If the dam fails, the damage and fatalities are impossible to predict, but would be horrific.

In another story, huge quantities of trash are also threatening the dam after being washed into the river from towns upstream.

Deng Xiaoping was apparently a big supporter of the dam as one symbol of China’s emergence into the developed world. The project was pushed through despite the protests of environmentalists and others who supported a series of smaller dams. Building Three Gorges displaced three million people.

The benefits of the dam? Lots of hydro-electric energy being produced, but that too might have been done more efficiently with a series of smaller dams. There is a benefit also to the nationalistic Chinese who can–for now–point to Three Gorges as a great feat of Chinese engineering. We can all hope that the pride never gets compromised by what would be a terrible catastrophe.