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A Sideways Skyscraper Curse?
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13 COMMENTS
TAGS Booms and BustsTaxes and SpendingBusiness Cycles
10 HOURS AGODoug French
The Skyscraper Index shows a correlation between the construction of the world’s tallest buildings and economic busts. It was created by economist Andrew Lawrence in 1999. Mark Thornton of the Mises Institute expanded on Lawrence’s work combining Austrian Business Cycle Theory to the analysis.
Dr. Thornton said in an interview,
Record-setting skyscrapers are a prominent example of how distortions in interest rates (i.e., actual rates below “natural” rates) alter the economy’s structure of production in an unsustainable manner, but obviously it is not the building of a very tall building that causes an economic crisis. The most general impact on the economy is that the structure of production is reoriented toward longer run and more roundabout production processes. Record-setting skyscrapers usually require a multitude of new technological processes and systems all of which have to have their own production, distribution, installation, and maintenance systems. This is symptomatic of the entire economy in an artificial boom.
What those of us in Vegas are wondering (h.t. Jeff Barr); wouldn’t this theory apply to large scale public works projects? The improvements are horizontal instead of vertical, but what happens at the end massive of highway infrastructure projects like the ones continuing in Las Vegas.
Project Neon is the largest public works project in Nevada history. At a cost of $1.5 billion, what is affectionately known as the “Spaghetti Bowl,” the interchange between Interstate 15 and U.S. Highway 95 located just west of downtown, is being overhauled. Mick Akers writes for the Las Vegas Sun, the “3.7-mile-long widening of Interstate 15 between the Spaghetti Bowl and Sahara Avenue, improves the busiest stretch of highway in the state. It sees 300,000 vehicles daily, or 10 percent of the state population, with 25,000 lane changes per hour.”
The project began in the spring of 2016 and this past July it was believed to be 40 percent complete. “Project Neon is nearly 40 percent complete, recording roughly 400,000 man-hours of work thus far without a recordable injury,” said Dale Keller, Nevada Department of Transportation project manager. “Meanwhile, the transformation of Martin Luther King Boulevard into an enhanced feeder-like roadway paralleling Interstate 15 is nearly complete.”
Mick Aker lists what has been done.
More than one mile of reinforced concrete box culvert for flood control.
The longest sign structure in the state — an automated traffic management sign, which measures 12.5-feet-tall by 77-feet-wide or about the size of video billboards common in stadiums.
46 girders set, including the longest precast girders in the state (168 feet long).
607 tons of reinforcing steel — more than five times the steel used in the Statue of Liberty.
6,342 cubic yards of concrete — enough to pave a 12-foot lane of concrete, 1-foot thick for 2.5 miles.
43 structures demolished.
More than 17 miles of utilities installed.
While Project Neon has gone …read more
Source:: The Korelin Economics Report
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