The Depreciation of America

May/05/2008 0:39AM
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There is a business school axiom that is still true today. If your annual capital investment in your company is not equal to or greater than your yearly depreciation, you are going to go out of business. You can do it for a while, but ultimately your structures will fall down around you and you will be gone. This is why the IRS allows for depreciation and depletion allowances.

My father’s generation, in addition to winning the big war, built most of this country. They built the plants that let us out produce the enemies in WW2 and defeat them. They built the roads and bridges, expanded the rail network,  the power plants, the airports, the refineries,the system of pipelines, and the ports. A large part of our infrastructure was built in that time. My generation did our share of building. We expanded the highway system, the airports, sent the satellites into space that work your laptop and cellular phone, and did a fair job of maintaining what our fathers had built. If we were a business, the investment probably matched the depreciation in those years. We fought a needless war in Viet Nam and spent billions accomplishing nothing. Still, we put money back into the infrastructure of the country.

In the past 25 years we have found new ways for our surplus cash. If a corporation had lots of cash, they would be forced to raise dividends, increase capital spending, buy back shares, or make acquisitions. The USA, Inc. has poured billions into other countries in the form of foreign aid. More billions into a space program that promises to return nothing. More billions into non workers and non shareholders in the form of entitlements. Very, very little has gone back into the infrastructure. Bridges are falling down. Air traffic technology is obsolete. Plant after plant has closed. Good riddance, most were polluters. No new refineries. Good. No new nuclear plants. Good. No work on the electrical grid that is beginning to cause non weather related black outs. Few new highways. Lots of pork projects that may produce little if anything. The Big Dig in Boston and the Big Tunnel in Chicago to name two. 

If it were USA, Inc., the stock would be selling for a pittance. We are letting the structure fall down around us and burning the cash on non productive ventures. Shareholders would be screaming for a new board. Corporate governance would be under attack. 

The world sees us today as a poorly run corporation. The dollar is shrinking in value. It’s the prime measure of our international respect.   We have another war that may be no better than the last and will cost $2 trillion through this year. Money  that was needed here to keep the corporation going. We continue to throw money at bad ideas like the space program and foreign aid. Money we don’t have.

We have the cash and don’t spend it wisely and watch as countries that never had the cash before are doing all the things our father’s generation did. They are starting from scratch and will pass us in the next 10 years. How did this happen?

Apathy. Just like a family business where the third generation is so spoiled and inept they can’t keep it going and growing, our country may have reached that point. Apathy has been the reason all leading civilizations have failed. Apathy is why it is so hard to have a sports dynasty. Apathy is why I haven’t expressed concern about my grandchildrens’ futures. I can’t sit back and watch it any more, and I hope I can convince a few of you to come with me in this crusade.

This blog is just a start for me. A place for me to get my ideas and thoughts organized. I plan to push it as far as one person can push it to see if we can shake this malaise before it destroys the future for my grandkids. 

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Comments (2)

  1. Dick Seehase says:

    Bill, Great post today! The only problem is, do US citizens have the mindset or eduacation to understand it? Consider every American running their own household as a business. lets spend less than we earn. There’s a novel idea, which certainly would put a crunch on credit companies. Consumer debt at a all time high, refinancing of homes, free furniture for two years, skip a payment at Christmas etc. Financial intelligence, why is it gone?

  2. Bill Robertson says:


    We made our kids into the have it now, don’t wait generation. They are putting everything into hock including the country.


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