Realism on Infrastructure Investment

by on March 10, 2013 at 7:31 am in Economics, Political Science | Permalink

Keith Hennessey has an excellent post on government infrastructure investment. Here are his key points:

  1. Capital investment by government often pursues multiple policy goals, some of which conflict with maximizing productivity growth. If you’re investing for long-run growth you’ll invest differently than if you also have goals to maximize short-term job creation and to change the future balance of energy sources to reduce greenhouse gas emissions (for instance). The pursuit of multiple policy goals lowers the expected economic growth benefit of public capital spending.
  2. Geographic politics distorts and often dominates government investment in physical infrastructure. Highway funds and airport funds especially are allocated in part based on which Members of Congress have maximum procedural leverage over the spending bill. Even if you could somehow get Congress to stop earmarking infrastructure spending (good luck), and even if you could rely on the Executive Branch not to allow their own political goals to influence how they allocate funds, local geographic politics would come into play at the state level, since much federal infrastructure spending flows through State governments. This is where reality most falls short of a valid theoretical starting point for increasing productivity and long-term growth.
  3. Non-geographic politics can distort government capital spending. This is principally an Executive Branch concern, as we saw with the Obama Administration’s decision to throw good money after bad to postpone Solyndra’s failure. And rent-seekers come out of the woodwork, looking to leverage their connections to government officials to win infrastructure investment contracts.
  4. Once “investment” is favored, everything gets relabeled as investment. The Obama Administration has been particularly guilty of this; almost every spending increase they propose is an “investment” of some sort. We should allow them some rhetorical leeway, and we should recognize that government has other reasons to spend money than just to maximize future economic growth. At the same time, it’s misleading when they claim that increased government spending that serves other policy goals (some quite legitimate) also increases future economic growth.
  5. There’s a difference between government investments in the commons and government spending that primarily benefits individuals.  A new airport benefits all who use it. A scientific research grant benefits the researcher and society as a whole if his research advances our understanding. A subsidized student loan is an investment in human capital, but the return on that investment accrues mostly to the student and his or her family. That’s not wrong, it’s just having a more limited effect on increasing long-term growth for society as a whole.
  6. Government investment in physical infrastructure is slow. The Administration learned this as they tried to force money out the door in 2009 for “shovel-ready jobs” that turned out not to be there. This doesn’t mean you don’t build roads and improve ports and airports, it just means the short-term fiscal stimulus argument for this type of spending is weak.
  7. Government investment in physical infrastructure is intentionally expensive because of “prevailing wage” requirements, championed by construction labor unions, that mandate the government must pay more for workers than an aggressive private firm might be able to find in the labor market.
  8. We should evaluate the marginal productivity benefits of additional investment. The President sometimes argues that building the national highway system was good for growth, therefore his specific proposal to increase highway spending is good for growth, too. But those are different investments, and we need to examine the marginal benefits (and rate of return) on the specific incremental investments he is now proposing. The transcontinental railroad definitely increased national economic growth, but that doesn’t mean the feds should subsidize a costly California bullet train with questionable growth benefits.
  9. International comparisons of government infrastructure are silly. U.S. government capital spending should be determined based on what will most increase U.S. productivity without comparison to what other countries are doing. If American ports are clogged and that is harming our trade and slowing American economic growth, then we should upgrade our ports. We shouldn’t instead improve our airports because other countries have shinier ones. We have a different geography, a different economy, and different infrastructure needs than does China, or Japan, or Dubai or France. It is crazy to suggest that the U.S. should build bullet trains because China is doing so.
  10. Government investment faces no market discipline. Capital investment in a private firm can face some of the above challenges—a CEO, for instance, might want a new facility built in his hometown rather than where it will produce the highest rate of return. Or a firm might reject an investment that would maximize its’ workers’ productivity because that investment is inconsistent with the firm’s broader strategic goals. But these firms ultimately face the discipline of the market to curb their excesses. Government does not, and in some cases policymakers are rewarded by their election markets to distort infrastructure investment even farther from its growth-maximizing ideal.
  11. Government capital investment financed by raising taxes on private capital investment will slow long-term economic growth. While in theory there probably are government infrastructure investments with very high rates of return, all of the above reasons suggest that in practice the actual rate of return on government-directed investment is going to be lower than in the private sector. If you advocate raising capital taxes (on capital gains and dividends, for instance, as Senate Democrats appear poised to do) at the same time you argue for increased government capital spending, you’re shifting capital investment from the private sector to the public sector. That will slow long-run economic growth rather than increase it.

As Hennessey notes and as I second this is not a denial that “smart government capital investment can increase productivity and contribute to faster long-run economic growth.” Instead, it’s an argument for caution but also for more thought about how to make government investment smarter. See also Tyler’s related comments.

Bill March 10, 2013 at 8:09 am

It’s funny how no one discusses subsidies to businesses framed as “investments” but only items used by the general public.

For example, the post did not raise these issues:

Do you count as “government investment” industrial development revenue bonds to support a private business? What if states compete to issue these bonds to attract businesses?

Is tax increment financing to support a real estate development a “government investment”.

I am sure you can add more to this list: but, these are overlooked because these are tax expenditures.

I am not surprised, however, that they were not listed on this post. Funny how we don’t discuss some issues. Only public infrastructure, not private infrastructure supported with government assistance.

prior_approval March 10, 2013 at 8:17 am

And don’t forget those who are working or elderly are actually ‘special interest groups’ in this blog’s view, and not actually a majority of the citizens of a Western democracy.

Alex Tabarrok March 10, 2013 at 5:40 pm

Bill,

Obviously corporate welfare is welfare of the worst kind and it’s often denounced on this blog. I suspect the reason Hennessey didn’t mention it specifically in this post is that this post is about what we all agree is the best spending, infrastructure investment. Thus, he is looking at problems with the best case.

Alex

Bill March 10, 2013 at 8:26 am

Forgot to add “enterprise zones” and baseball and football stadiums to the mix of public “investments” in private enterprise.

Why did the post leave out public investments in private businesses? It’s an easy target.

Slocum March 10, 2013 at 8:40 am

It could have been featured more prominently, but:

“And rent-seekers come out of the woodwork, looking to leverage their connections to government officials to win infrastructure investment contracts.”

Bill March 10, 2013 at 8:45 am

Nah, there is no mention of what I mentioned, not by a stretch. Wonder why.

Brian March 10, 2013 at 10:38 am

Without rereading, I immediately had the same reaction with the same passage in mind as Slocum. More generally 1) industrial development bonds seem broadly within the scope of what the quoted article is talking about; 2) maybe the author comes from a part of the country (as I do) where industrial development bonds haven’t been used for quite a long time, so it wouldn’t be the first example to come to mind as an illustration, particularly as the author seems to be more focused on the federal level; and 3) not many readers of this blog would read the post and come away thinking that industrial development bonds would be a magic bullet that would avoid most of the problems that Hennessey argues affect government infrastructure investment.

Bill March 10, 2013 at 11:00 am

Brian,

IDRBs have many many many progeny, so they may not be called that in your state, but I can assure you that your state and local government issues bonds that underwrite buildings, build parking ramps for adjacent private buildings, lure businesses with lower property tax discounts, and a whole host of gimmicks, like enterprise zones. In my state, the former Republican governor was a big pusher of this stuff, and, low and behold, the companies that got the credits and special deals were campaign contributors or clients of his campaign managers law firm.

I don’t know how you can read the sentence that covers “infrastructure investment contracts” to cover the same thing.

Let’s be honest in the discussion: if business benefits, there is silence. No one wants to talk about the elephant in the room.

Andrew' March 10, 2013 at 11:35 am

Bill, what are you talking about.

Politicians use “investment” for positive spillover connotations. Alex points out the often misuse of the term and now you think “investment” is a derogatory term.

The first thing that came to my mind was the opulent primary school Taj Mahals that are built using bonds to illegally circumvent bonding limits. Just because builders benefit, this is still a government operation.

I don’t know why you think you know what we are or are not thinking.

Slocum March 10, 2013 at 1:50 pm

“Let’s be honest in the discussion: if business benefits, there is silence. No one wants to talk about the elephant in the room.”

Huh? If you think Alex, Tyler, most commenters here or libertarians in general are supportive of corporate welfare and cronyism you really haven’t been paying attention.

Bill March 10, 2013 at 2:14 pm

Andrew and Slocum,

Nowhere can you point to any of the items I mentioned re business incentives in the 11 point piece that Alex posted. Nowhere. No matter how hard you try.

This isn’t an oversight.

It’s blindness.

Andrew' March 11, 2013 at 6:03 am

Of course it is there. Government doesn’t build bridges. They contract that out. So, what you are talking about is some 3rd degree of separation where the contractors get their union members to vote for Democrats.

Yi March 11, 2013 at 1:50 am

Bill’s clearly a nutter.

prior_approval March 10, 2013 at 8:15 am

‘It is crazy to suggest that the U.S. should build bullet trains because China is doing so’

Well, that list is actually the Japanese, the French, the Germans, the Italians, and the Spanish. Plus fascinating Swiss plans for high speed rail freight.

Jonathan March 10, 2013 at 8:45 am

What about the Shanghai Maglev train? http://en.wikipedia.org/wiki/Shanghai_Maglev_Train

Brent March 10, 2013 at 8:55 am

The Maglev is a bad example. Unless you mean to use it as an example of wasteful expenditure. It doesn’t go anywhere. In fact, they were going to build another one to Hangzhou, but the Chinese givernment nixed the idea (I wonder if California would have done the same).

TallDave March 11, 2013 at 11:39 pm

From what I’ve read only the Japanese one actually makes economic sense.

Apparently the calculus is something like needing to double California’s population before it works there.

prior_approval March 10, 2013 at 8:19 am

‘But these firms ultimately face the discipline of the market to curb their excesses.’

TBTF comes to mind to dismiss that idea as being realistic in modern America.

derek March 10, 2013 at 2:27 pm

They only exist because of government support. Another illustration of the foolishness of government ‘investment’.

prior_approval March 10, 2013 at 2:40 pm

Banks do not only exist because of government support. We have explicitly created a policy that has determined that market discipline should not function in the case of the institutions formerly known as money center banks.

maguro March 10, 2013 at 4:00 pm

Who’s “we”? The government, right?

The Anti-Gnostic March 11, 2013 at 1:25 pm

None of the welfare state’s vast, social-engineering schemes would survive if they had to be strictly funded out of current receipts. That’s why we have central banks and primary dealers’ networks. That’s also why you’ll never see any prominent Democrats out there with Occupy Wall Street.

Rahul March 10, 2013 at 8:25 am

How is #1 specific to the Government? Isn’t multiple and often conflicting goals a ubiquitous problem? Even for individuals?

Ed March 10, 2013 at 9:30 am

I had the same reaction about #1. The goal of private firms, using funds raised entirely from private sources, isn’t to “maximize economic productivity”. It is to maximize the returns to their shareholders.

Really, its a good list, but you could compile a list just as long of all the reasons why private investment doesn’t maximize economic productivity, and the first item on both lists would be the same, because it are not supposed to. Though I get the impression these days that most investment is some sort of public-private hybrid.

Ray Lopez March 10, 2013 at 9:25 am

A good synopsis of the article by Alex T. It’s so good I will not bother reading the original. As for airports to nowhere (an exception to Alex’s rule, that proves the rule), see: http://en.wikipedia.org/wiki/Johnstown%E2%80%93Cambria_County_Airport (“John Murtha” airport, cost $200M and has three commercial flights a day).

Jan March 10, 2013 at 10:14 am

But it seems that it is mainly a military airport, and those funds were used to support its use as a military facility. The article says that the airport had 55,715 aircraft operations in 2009 and 62 aircraft were based there. It doesn’t really seem like an airport to nowhere…

Ray Lopez March 10, 2013 at 10:19 am

Point, counterpoint. The ‘military’ is the Pennsylvania National Guard. I don’t think the Indian Wars are relevant anymore. From every account I’ve read the Murtha airport is a white elephant, but I suppose even the taxpayer paid Laurence Welk museum has its supporters. Another reason the USA is going to perdition IMO.

Jan March 10, 2013 at 3:07 pm

Just raising it because you were implying that the airport isn’t being used for anything. PA National Guard is part of the US Army National Guard. Maybe they are totally useless–I’m not bombs person. I actually support reducing most types of military spending, but they are doing _something_ with this airport.

Bender Bending Rodriguez March 11, 2013 at 8:52 pm

How much of the $200M was runway and tower, and how much was passenger facilities? The latter have absolutely no utility to the PANG.

CMOT March 10, 2013 at 9:52 am

THOMAS L. FRIEDMAN’s entire effort to make people forget that he used to pass himself off as a Middle East expert depends on his passing himself off as an greentech/infrastructure expert. You do realize you’re pretty much telling him to go to hell, right?

Andrew' March 10, 2013 at 9:59 am

Government defines investment as “we guarantee you will not see any benefits whatsoever any time soon.”

Jan March 10, 2013 at 10:15 am

Just like parents investing in their kids’ education….suckers.

Andrew' March 10, 2013 at 11:16 am

No, nothing like investing in a real education.

Jan March 10, 2013 at 3:09 pm

So you’re saying there are investments, which you generally oppose, and there are investments, which you seem to support.

Andrew' March 11, 2013 at 6:04 am

Let me explain the humor. The only similarity between a good investment and a government investment is that the government mistakes the benefit being that no benefits are available at the beginning.

Some people don’t even consider those investments, but speculations. Investors often demand an immediate divident on a real investment.

Andrew' March 11, 2013 at 6:13 am

I’ve mused before about how some Keynesians even view immediate and permanent losses as a feature.

Andrew' March 11, 2013 at 6:28 am

I’m not being as condescending as I sound. I’ve said before that the defense of government investment is not that it is good investment. The proper defense is that it is supposed to be speculative and probably wasteful. That is why we have more government involvement in education. It may be wasted, but at least it is wasted on kids.

derek March 10, 2013 at 2:29 pm

No, like government ‘investing’ in education.

TommyVee. March 10, 2013 at 6:13 pm

“Government defines investment as “we guarantee you will not see any benefits whatsoever any time soon.”

So on your planet, the Federally funded US Interstate Highway systems was not built, the space program did not develop transistors and eventually computer and the internet, and citizens “will not any benefits whatsoever any time soon”.

Because the experience on planet Earth has been quite different, only a blind and ignorant person could avoid seeing examples of successful government investment all over this planet (roads, sewers, schools, ports, transit systems, educational and research institutions,etc.,etc.).

But I guess parroting thoughtless and false generalizations is much easier than engaging with reality.

Ashok Rao March 10, 2013 at 10:02 am

Alex,

There was a San Francisco Fed Study which tried to consider the effect of unanticipated increases in infrastructure funding on local economies and employment that I talk about in a discussion of Jeff Sachs’ response: http://ashokarao.com/2013/03/10/some-thoughts-on-public-investment/

The paper itself can be found here: http://www.frbsf.org/publications/economics/letter/2012/el2012-35.html

There seem to be pretty significant short run gains, medium term losses. Structural supply-side effects begin 6 to 8 years down the road.

For me, I’d rather consider infrastructure from a physical, material point of view, forget the economics. We can’t have crumbling roads or antique power grids. And we might as well borrow long-term when rates are low.

derek March 10, 2013 at 2:33 pm

Bending the yield curve to do routine maintenance on infrastructure is the epitome of foolishness. This is a line item cost, yearly and part of the cost of operation. If there isn’t money it is utter mismanagement and the suggestion that giving these fools more money to solve the problem is laughable.

Same with power grids. These are regulated monopolies guaranteed a profit. You would almost think that these entities are doing exactly as the incentive system is designed. If they really screw up someone else will show up with a pile of cash to fix it all. Then they can start the cycle of milking the cow dry again.

Rahul March 10, 2013 at 3:59 pm

What do you mean “Forget the economics”? Then you are in the realm of fantasy.

Ashok Rao March 10, 2013 at 6:34 pm

I mean it in this sense… If a man is dying on the spot, it’s a pretty good idea to save him (whether paid for by him, family, friends, govt doesn’t matter) not because it would cause some multiplier effect because of extra consumption, but because it’s a good idea.

Fix the roads to fix the roads. Fix the power grids because our country is ages behind. Will this push AS? Yeah, sure… it’s sad if that’s the main argument in favor, though.

oriol March 10, 2013 at 10:26 am

Let me the bad guy for a moment; does not quoting the whole text qualify as property rights infringement?

Dan Weber March 11, 2013 at 11:49 am

Possibly. If Hennessy wishes to complain, he’s free to, and should Hennessy do so then Alex ought to cut out his quoted segment. Damages would be extremely small, though.

john personna March 10, 2013 at 10:49 am

I agree in general but am surprised by the thread woven through that education is not a good investment for the wider community. Surely state universities have had net return in tax base. Silicon valley. Route 128. Etc.

I suppose once you have lots of education, that one added student, at the margin, gains mostly benefits for himself, but that is poor framing.

Andrew' March 10, 2013 at 11:18 am

What are you claiming other than gathering many of these individuals in one area?

Doug March 10, 2013 at 11:20 am

1) By and large Silicon Valley is there not because Stanford took a bunch of average people and turned them into geniuses. It’s because Stanford used its prestige to attract a bunch of already smart people to a given location. Had Stanford never opened those same smart people would have still been smart and went somewhere else like Harvard, MIT, Columbia or Chicago. From a local perspective Stanford was a gain, but from a national perspective it was merely a transfer. Hence Stanford was not a net national gain, and should not be funded nationally.

2) The vast majority of universities are not Stanford and never will be Stanford. Stanford might have Silicon Valley, but what does Florida Atlantic University have? Since every top tier school was opened more than a century ago, the probability that a new university, particularly a new marginal university, will be anything like Stanford is nil.

Andrew' March 10, 2013 at 11:37 am

You could argue that freedom of association facilitates tipping points, and I would argue for freedom of association.

Joe Smith March 10, 2013 at 3:13 pm

” From a local perspective Stanford was a gain, but from a national perspective it was merely a transfer.”

That assumes that but for Stanford the students who went to Stanford:
1) would all have gone to another university
2) would have gotten as good an education
3) would not have displaced any potential students from those other schools
4) would have been as productive if they had graduated in another location

all of which seem doubtful.

Andrew' March 11, 2013 at 6:06 am

Your #2 is the only relevant one, and it is very not doubtful. It is highly probable even if you don’t believe in the signaling and screening theories of education. Harvard would just add more seats. So, unless Stanford is that much better than Harvard it is highly undoubtful.

But everyone listen up, please stop pointing to a 1% flaw in a theory and thinking that disproves the theory generally.

john personna March 10, 2013 at 12:48 pm

What does your counterfactual world look like, with no publicly funded higher education? You seem to be thinking only at the margin again, that the same aggregate of educated people would still be there, associate differently, or whatever. (Surely research shows tax returns for state funding of higher ed?)

Andrew' March 11, 2013 at 6:08 am

What you are talking about is somebody doing the studies that noone has really done to figure out how much of education is signaling, human capital, screening, skills learning, associational, networking, etc. I assume it is on one end of the scale and others assume it is the other end.

john personna March 11, 2013 at 10:55 am

I think the original made a strong claim that education broadly speaking is not an investment. For that you have to prove a very extreme assertion, that there is no underlying benefit from improved human capital. That there is some signaling etc. also going on isn’t enough. There really needs to be zero return from education.

john personna March 11, 2013 at 11:17 am

In other words, “we may have over-investment in public education” is much more defensible than “public education is not an investment.”

chuck martel March 10, 2013 at 11:25 am

U.S. government capital spending should be determined based on what will most increase U.S. productivity….

Unmitigated crap. Who determines what spending will most increase U.S. productivity? How do these magical beings evaluate if their seizure and re-distribution of the national wealth has been successful. as opposed to possible alternatives? When they fail, what are their personal consequences? Isn’t “representative democracy” really just a means for a small group of gangsters to divert public funds without accepting the responsibility for any subsequent failure?

Steven Kopits March 10, 2013 at 11:58 am

#12. The government fails to invest is visibly high return projects. Once, sitting in a traffic jam on I-95 north of New York, I ran the ROR numbers on widening the highway the interstate between New York and New Haven. It actually provides an irr in 25-33% range on a social return to capital basis, that is, the level of return associated with investing in a biotech start-up, when in fact the related infrastructure cost of capital for highway improvement is probably in the 4-6% range. So, that’s a huge opportunity not taken.

Again, these problems are easy to remedy if you pay politicians for GDP growth minus growth in debt. I have said here several times that the incentives of the owners (in this case, the political decision makers) will ultimately determine that incentives of the subordinate entity, for example, the DOT.

If you want the government to invest in high rate of return projects, then you need to pay the politicians for doing so.

This is ‘duh’ obvious.

Joe Smith March 10, 2013 at 2:53 pm

Babies are also a poor investment with high costs and many uncertainties so we should all stop investing in them. Our society would be richer if we did not waste money having children.

This would also alleviate calls for infrastructure since not only would we avoid the need to even consider new infrastructure we could plan for a collapse of the existing infrastructure in 60 years and avoid costs of maintenance and repair.

Rich Berger March 10, 2013 at 5:41 pm

Have you spoken to your parents about this? I guess you are not planning to reproduce.

chuck martel March 10, 2013 at 11:04 pm

You still have the option of raising children or not, at least for the present, and there is no rationale for anyone but you and yours investing in them.

NAME REDACTED March 10, 2013 at 3:21 pm

“That’s not wrong, it’s just having a more limited effect on increasing long-term growth for society as a whole.”

Its rent seeking. I thought you were against rent seeking and corruption.

Seth March 10, 2013 at 6:13 pm

Why can’t the low speed rail problem cited in your previous link be privately funded? I live in a choke point area that solved the problem with a coop jointly owned by several rail companies. I think that coop raised private funds to relieve the choke and improve throughput.

bw March 11, 2013 at 1:36 am

Should have a uniformed corp of officers, similar to the Public Heath Serve or US Army Corp of Engineers who, free from political nudge, develop infrastructure project plans that are finely tuned and optimized for the nations entire benefit. This organization would also marshal end enlist the trained human resources and capital during times of economic decline, and accordingly work on “shovel ready” projects that were already planned, and whose workers were already apprised of and trained on. Basically, this would be like the miltary reserves, except, instead of foreign adventures that eat up treasury, and destroy what little good will this nation has from others, it would be devoted to the intensive development and improvement of domestic infrastructure.

C March 11, 2013 at 5:18 pm

In spite of the “compelling” (I’m being very nice) reasons given as to why we should exercise some arbitrary level of caution when dealing with infrastructure… The fact is, without enough investment in infrastructure, we fall behind, and productivity hits the floor. Case in point? Believe it or not, North Korea.

http://econpapers.repec.org/paper/pramprapa/23498.htm

Take a look at that. You have the most buttoned-down command-and-control economy in the world. And guess what? No amount of pro-market reform will give them a positive growth path…

…Without infrastructure investment.

You can say “B-B-BUT THE NORTH KOREANS!” Sure. America is far ahead of North Korea, with its decrepit and practically-nonexistent (0.8% of gross output) infrastructure spending. However, I think North Korea’s situation highlights a legitimate point. If a nation falls behind in infrastructure spending, after a certain point it seems no amount of pro-market reforms will help.

If you think that, somehow, private enterprise would make up the difference on its own, good luck. I unfortunately know of no such evidence for the notion that deteriorating infrastructure, to the point where productivity starts getting hit, wouldn’t just spark massive capital exodus to a place with more updated infrastructure.

I guess I’m not saying any of the reasons given for precaution are WRONG. I agree with many. My point here is just that we should not take for granted that we have working infrastructure, which is nonetheless deteriorating. If we take these reasons and use them to justify neglecting infrastructure budgets, there probably will be consequences in the long-run that far outweigh the social and economic costs outlined in the post.

TallDave March 11, 2013 at 11:34 pm

North Korea doesn’t need much infrastructure, because it barely has any economic activity. Look at pictures of Pyongyang, they have lots of well-maintained roads and bridges — but they’re empty. Their problems go way, way beyond infrastructure.

It’s not clear why anyone thinks the U.S. has an infrastructure deficit. We have the highest paved miles per capita of the OECD, and compare spending per capita today to the 1980s.

TallDave March 11, 2013 at 11:31 pm

Good points, well-thought-out. Too often the rule is “build it and they will come.” Faith-based investment isn’t a sound strategy.

Mark Skinner March 12, 2013 at 6:26 am

“6. Government investment in physical infrastructure is slow.”

Only because nobody has apparently noticed that there is such a thing as an economic cycle. Were such a cycle to exist, someone could possibly have a bunch of researched, economically evaluated, designed and documented projects ready to go. There is no lack of crumbling infrastructure badly needing renewal. There is a lack of detailed documentation that would allow much of this to be addressed if some spare money were to hand.

“7. Government investment in physical infrastructure is intentionally expensive because of “prevailing wage” requirements, ”

Of course, if those shovel ready projects were undertaken at times of high unemployment, there is at least the chance that these ‘prevailing wages’ could be lower than they usually are. I suspect also that if the work were pushed out using other methods, some of this prevailing wage pressure could be even further reduced. Other countries manage it. But, of course that would conflict with 9.

“9. International comparisons of government infrastructure are silly”
There is some truth in this. However, there is such a thing as re-inventing the wheel. Case in point, there are many new light rail systems being built world wide. One can decide to go it alone and have one’s own designs suitable for ‘our conditions’, and pay twice the going rate overseas for a standard light rail vehicle design (and the associated track and overhead wires), or one can use the accumulated learnings of those overseas manufacturers and pay much less. There needs to be a rational assessment to delimit that point where one is just re-inventing the wheel by ignoring overseas experience. If you don’t know that you can buy a product in Europe for example that is half the cost of a similar one produced locally (or even worse, produced in Europe and they bid a high price because they know that nobody will think to check).

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