Underestimating project costs forces legislatures to keep funding them

Evidence

But what if you didn’t tell the officials how much the projects would cost? What if you let the legislators know about only a fraction of what you knew would be the projects’ ultimate expense? Once they had authorized that small initial expenditure and you had spent it, they would not be able to avoid giving you the rest when you asked for it. How could they? If they refused to give you the rest of the money, what they had given you would be wasted, and that would make them look bad in the eyes of the public. And if they said you had misled them, well, they were not supposed to be misled. If they had been misled, that would mean that they hadn’t investigated the projects thoroughly, and had therefore been derelict in their own duty. The possibilities for a polite but effective form of political blackmail were endless. Once a Legislature gave you money to start a project, it would be virtually forced to give you the money to finish it. — Robert A. Caro, The Power Broker, 963

Categorization

• DEEPTHINKING: A precise, generalizable mechanism for infrastructure cost escalation everywhere — legislators who approved a small initial amount become hostages to their own reputation.
• CANDY: “The classic cost-overrun trick, named baldly: tell legislators a fraction of the real price, spend what they gave, then tell them the rest or admit they were misled.”
• XREF: connects to: Moses legally financed park projects through disguised line items in other departments’ budgets. — Robert A. Caro, The Power Broker: Robert Moses and the…, 934; First-round base funding becomes a slippery slope to much larger costs; Lease-construction contracts shift base construction costs onto future Congresses. (+4 more)

Broader Connections

• First-round base funding becomes a slippery slope to much larger costs #expands (0.85)
• Lease-construction contracts shift base construction costs onto future Congresses. #exemplifies (0.82)
• Open-ended projects still require closure and stakes to be political #complicates (0.80)
• Institutions promoted flawed property-titling projects as successes to secure further funding #exemplifies (0.78) — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin, 1933