GEN McCaffrey on Strategic Challenges

[Surferbeetle]

I’ll state the obvious and say that effective National Strategy is about precisely and accurately shooting for that theoretical balance point between cost and benefit, which allows for the efficient and sustainable (resources used are less than or equal to resources generated) use of a nations capital and minimizes negative opportunity costs. I’ll again state the obvious and note that a nations government requires an ongoing investment from its populace so that it can adequately provide for its populace's needs in the realms of economics, security, and governance. If we take a nation's GDP as a representative metric for analysis it is possible to project a typical government’s expected expenditures in these three particular arenas as a percentage of GDP. I’m going to be lazy and just touch upon infrastructure (seen as a subset of governance unless you follow the Thatcher/Reagan/Mulroney model of Public-Private-Partnerships/Outsourcing) of the US, Germany, Italy, and Iraq: four nations in which I have lived in, portions of whose infrastructure and security arenas I am familiar with, and whose respective languages I have made some laughably meager attempt to learn. My observation is that a nation which does not adequately invest in both its infrastructure and security is not meeting the needs of its populace; furthermore just building infrastructure (or a security apparatus) is not an endpoint, lifelong maintenance is required.

Onwards…

United States

• $14.26 trillion USD GDP (2008 estimate)

• Electricity Consumed 3.892 trillion kWh (2007 est.)

• Roadway total: 6,465,799 km

• Military Expenditures 4.06% of GDP (2005 est.)

Germany

• GDP $2.918 trillion USD (2008 estimate)

• Electricity Consumed 549.1 billion kWh (2006 est)

• Roadway total: 644,480 km

• Military Expenditures 1.5% of GDP (2005 est.)

Italy

• GDP $1.823 trillion USD (2008 estimate)

• Electricity Consumed 316.3 billion kWh (2006 estimate)

• Roadway total: 487,700 km

• Military Expenditures 1.8% of GDP (2005 est.)

Iraq

• GDP $103.9 billion USD

• Electricity Consumed 39.88 billion kWh (2008 est.)

• Roadway total: 2,272 km

• Military Expenditures 8.6% of GDP (2006)

From GAO Report # GAO-09-476T

Despite its substantial budget surplus and international assistance, Iraq has not spent the resources it set aside for reconstruction efforts essential to its economic recovery. As table 2 indicates, Iraq has spent about 12 percent, or $2 billion, of the $17.2 billion it allocated for reconstruction activities in the oil, electricity, and water sectors. In contrast, U.S. agencies have spent almost 90 percent, or $9.5 billion, of the $10.9 billion Congress made available for investment activities in these sectors since fiscal year 2003. Moreover, Iraqi ministries have consistently spent far higher percentages of their operational budgets, which include employee compensation, than they have of their investment budgets, which include infrastructure construction costs.

We need to balance an analysis of reconstruction stats in Iraq with this observation by SIGIR

From the June 26th 2008 Economist article The Cracks are Showing:

“America invests a mere 2.4% of GDP in infrastructure, compared with 5% in Europe…”

“Only around 20 states use cost-benefit analyses to evaluate transport projects; of these, just six do so regularly. Alaska’s “bridge to nowhere” is an infamous result of this sort of planning.”

“Congestion on [US] roads costs $78 billion annually in the form of 4.2 billion lost hours and 2.9 billion gallons of wasted petrol, according to the Texas Transportation Institute.”

“How can all this be fixed? In January a national commission on transport policy recommended that the government should invest at least $225 billion each year for the next 50 years. The country is spending less than 40% of that amount today.”

David Canning (Harvard University) and Peter Pedroni (Williams University) have a 2004 paper (it does not appear to have been submitted to a journal with the attendant peer/editor review process) on the internet entitled The Effect of Infrastructure upon Long Run Economic Growth. It can be seen as a ‘how-to paper’, lists some interesting references, and provides the following summary:

For telephones and paved roads we find no evidence of a worldwide infrastructure shortage. For these, we find that on average countries are near the growth maximizing levels of infrastructure provision, although a significant number of countries are over providing while in others there is under provision. For electricity generating capacity our results can be taken to support the view that countries are all close to the optimal level of provision, though we do have some evidence of under provision in some countries.

An examination of US bridge failures can be found here

Popular Mechanics: The 10 Pieces of U.S. Infrastructure We Must Fix Now

No one can predict what bridge, levee or water main will fail next. But some problems are widely known, and work is long overdue. As PM's new special report makes starkly clear, we need to begin rebuilding the nation's infrastructure somewhere. Here are 10 great places to start.

American Society for Civil Engineers has posted it’s 2009 Report Card for America’s Infrastructure. BLUF the cost estimate is 2.2 trillion USD. The executive summary is here