WCA May 2017

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48 Wire & Cable ASIA – May/June 2017
From the Americas
Myth 1: Government must ramp up infrastructure
spending to make up for past neglect.
The net stock of government infrastructure per person (total
value net of depreciation) has been growing steadily over
the past 15 years and is now at the highest level since 1971.
After adjustment for inflation, it has grown 27.3 per cent
from $16,394 per person in 2000 to $20,876 per person in
2015. Since 2008, annual spending to acquire new public
infrastructure has been particularly high, with Canada
ranking relatively high on international comparisons of
government capital spending.
Myth 2: Infrastructure is largely the domain of
governments.
Those who argue that Canada would benefit from
increased infrastructure spending usually overlook the
major contribution made by the private sector. For over
40 years, the net stock of infrastructure per person
from non-government organisations has exceeded that
of the government sector. In 2015, the net stock of
non-government infrastructure represented 72.6 per cent of
Canada’s total infrastructure stock, up from 63.4 per cent in
1971.
Myth 3: Increased infrastructure spending will spur
economic growth.
In practice, not very much of public infrastructure spending
goes toward the high-in-demand roads, railways or ports
that can increase long-term economic growth by improving
the economy’s productive capacity. Just 10.6 per cent
of what the federal government plans to spend on new
infrastructure will go for trade and transportation projects.
Most will favour so-called green and social infrastructure,
such as public housing, community centres and hockey
arenas. While these initiatives may be appreciated by the
local community, they are unlikely to provide productivity
gains. Moreover, infrastructure spending generally fails
to stimulate the economy in the short term because of
delays in fulfilment and errors in targeting the sectors of the
economy in greatest need.
Myth 4: With interest rates low, now is the time to
ramp up government infrastructure spending.
Failure to account for other relevant fiscal and economic
costs exaggerates the opportunity provided by low interest
rates. Other fiscal considerations include the future
operation and maintenance costs of a new infrastructure
asset, which can be up to 80 per cent of the total lifetime
cost and are not influenced by current interest rates.
In addition, the economic costs of the taxes that fund
infrastructure spending add considerably to overall costs
and should be properly accounted for. A more fundamental
problem is that the interest-rate argument wrongly assumes
infrastructure spending should always be largely or
completely financed by debt.
Myth 5: The federal government should take the lead
on infrastructure.
Government grants give Ottawa influence over which
projects are undertaken and how they are managed,
imposing federal priorities that may not reflect the particular
needs of a given region. Conditional grants can distort local
decision-making by encouraging recipient governments to
undertake projects likely to receive funding over others that
may be of higher local priority.
Federal infrastructure grants can also lead to a deterioration
in the recipient government’s accountability to taxpayers.
Automotive
To commend their product to the
Japanese, USA carmakers may have to
learn to blow their horns louder
Writing from Tokyo, Jonathan Soble of the New York Times
observed that, even as Japanese cars command a wide
swathe of the United States market, American brands are
barely visible in Japan, where Toyota, Honda and other
domestic brands rule the roads. Of the nearly five million
cars and light trucks sold in Japan last year, Mr Soble
reported that just 15,000 were American, or a mere 0.3 per
cent of the total. He wrote: “Toyota sells more vehicles at a
single mega-dealership in California.”
This has long frustrated American auto executives and
trade negotiators and is a source of resentment in the new
administration in Washington. President Donald Trump
has accused Japan of shutting out American producers by
throwing up regulatory barriers and rigging the currency
market in favour of Japanese brands. In a meeting with
American executives in January he said, “They do things to
us that make it impossible to sell cars in Japan.”
Mr Soble noted that such talk is alarming to the Japanese,
whose auto industry is “a pillar of the economy.” From the
standpoint of Yoshihiro Masui, a car collector unusually well
positioned to offer an opinion, the problem lies elsewhere.
(“Trump Wants More American Cars in Japan. Japan’s
Drivers Don’t,” 9th February)
“Of course American cars don’t sell in Japan,” the Times
was told by Mr Masui who owns, in addition to a replica
Model T with a race car’s engine, a gleaming white Ford
Thunderbird – the latest of nearly 70 Detroit-made vehicles
he has bought and sold over the years. “Dealers don’t
make an effort to convince people. I’ve never seen a TV
commercial. You go to a car show, they’re not there.”
 “German cars are popular in Japan, but American cars
hardly sell at all,” Akio Mimura, chairman of the Japan
Chamber of Commerce and Industry, said at a news
conference in February. “If they’re going to sell cars in
Japan, it’s obvious that [the American carmakers] need
to make an effort to appeal to Japanese customers.”
 “Japanese cars are boring,” one of Mr Soble’s local
respondents told him. But this is apparently not well
known in Japan.
It would seem that a first step in the effort recommended
to the carmakers of Detroit by Mr Mimura might be a
visit to Madison Avenue for a persuasive ad campaign.
Dorothy Fabian
Features Editor