Monday, June 7, 2010

I Shot An Error Into the Air

One of the more sinister inventions in the world of finance, in my opinion, is the idea of compound interest: when interest itself earns additional interest. It's a pretty sweet deal if you're the one to whom the money is flowing, but in most cases it's flowing to a loan shark or a credit card company, and someone can easily be driven into the depths of financial despair by compound interest if they're not careful.

Vaguely similar to that, and extremely damaging in its own right, is the concept of compound mistakes. Here, one poor choice has the potential to snowball, closing avenues that could have led to better choices and taking the subject of the decision further away from what might have been considered the ideal. Whether you're talking about a building or a plan of action the foundation needs to be solid, and if whoever's in charge makes an ill-advised decision early in the process, that decision will echo and, depending on the nature of the project, make it difficult to alter course.

Living in Toronto, I get a lot of opportunities to witness the phenomenon of compound mistakes first-hand. I imagine there are plenty of people who would agree that the plan for Toronto's hosting of the upcoming G20 summit, to take an example that's prominent in the news, was a decision monumental in its maliciousness or stupidity. Every day I run into news that compounds the poor nature of that decision: a tab in excess of $1-billion for security, the virtual shutdown of downtown Toronto in the time leading up to the summit, the economic damage that will result in enclosing the heart of Canada's financial center behind a ten-foot-tall fence. The only saving grace, I think, is the summit's temporary nature - by July 1 the world leaders will be gone, and hopefully so will the fence and the plethora of new CCTV cameras. By, say, 2015, the bruises will probably have faded.

A better example for the danger of compound mistakes is, I think, found in the TTC. Sometimes, when I really think about it, the Toronto subway and streetcar systems strike me as impossible machines: knowing what I know about the back-end stuff, the revenue and lack of support, I have difficulty understanding how they can work at all. Certainly I don't know first-hand any other transit systems that have to work as hard as the TTC does just to stay in the same place.

Although the more immediate cause of the TTC's woes is simple - the provincial and federal governments are completely unwilling to assist it - ultimately, I think, it traces back to decisions made in the 1970s. Fundamentally, the Toronto subway in particular still is a 1970s transit system. Since 1982, the only substantial additions to the system have been the Scarborough RT, the Sheppard Line, and Downsview station - in that same span of time, both Los Angeles and Vancouver built their current rail transit infrastructures from nothing - and while Toronto is having to beg and scrape at the feet of the provincial government for a drastically pared-down Transit Village, Los Angeles is building a new light-rail line and planning a subway extension clear to the Pacific Ocean while Vancouver is set to start building its new Evergreen Line.

Things could have been different. There were plans, even in the 1970s, to ensure the system's smooth expansion into the future. We could have built the Downtown Relief Line starting in the late 1980s, before the system became overloaded to its current extent, but the transformation of what was unused railway land in 1985 to towering condominium towers in 2010 complicates that project significantly. We could have dispensed with the Sheppard stubway and the transfer to the Sheppard East LRT by building light-rail straight through along Sheppard, but we didn't. Instead we're getting an extension of the subway into Vaughan, of all places, and not because it's actually necessary but because of political interest and political interest alone.

You can try to build a mighty tower, but if you're building it on top of a bed of gelatin, it's only going to be able to stand so high before it comes all crashing down. I can only hope the next Mayor is a fan of Tetris, because there's going to be a lot of puzzles for he or she to solve.

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