Unsexy Infrastructure: Lock and Dam

by on November 27, 2016 at 12:35 pm in Economics | Permalink

The NYTimes has a good piece on dam infrastructure:

Built in 1929, Lock No. 52 sits in a quiet corner of southern Illinois that happens to be the busiest spot on America’s inland waterways, where traffic from the eastern United States meets and passes traffic from the Gulf Coast and the Mississippi River. More than 80 million tons of grain, coal, fuel and other goods — worth over $22 billion — move through here each year.

The problem is that the old dam is crumbling and a new one is way behind schedule:

The average delay at No. 52 in October and November was 15 to 20 hours. At the moment, No. 52’s sister dam downriver, No. 53, is adding 48 more hours to the wait.

Dealing with both dams, it can take five days to travel just 100 miles on this stretch of the Ohio River.

It’s not just dams, there is a lot of room for relatively simple infrastructure projects which aren’t sexy like high-speed rail but are valuable. As I wrote in 2012 (no indent):

Rail congestion in Chicago, for example, is so bad that freight passing through Chicago often slows down to less than the pace of an electric wheel chair. Improvements are sometimes as simple as replacing 19th century technology with 20th century (not even 21st century!) technology. Even today (2012, improvements are being made, albeit slowly AT), for example:

…engineers at some points have to get out of their cabins, walk the length of the train back to the switch — a mile or more — operate the switch, and then trudge back to their place at the head of the train before setting out again.

In a useful article Phillip Longman points out that there are choke points on the Eastern Seaboard which severely reduce the potential for rail:

…railroads can capture only 2 percent of the container traffic traveling up and down the eastern seaboard because of obscure choke points, such as the Howard Street Tunnel in downtown Baltimore. The tunnel is too small to allow double-stack container trains through, and so antiquated it’s been listed on the National Register of Historic Places since 1973. When it shut down in 2001 due to a fire, trains had to divert as far as Cincinnati to get around it. Owner CSX has big plans for capturing more truck traffic from I-95, and for creating room for more passenger trains as well, but can’t do any of this until it finds the financing to fix or bypass this tunnel and make other infrastructure improvements down the line. In 2007, it submitted a detailed plan to the U.S. Department of Transportation to build a steel wheel interstate from Washington to Miami, but no federal funding has been forthcoming.

Longman points out that:

Railroads have gone from having too much track to having not enough. Today, the nation’s rail network is just 94,942 miles, less than half of what it was in 1970, yet it is hauling 137 percent more freight, making for extreme congestion and longer shipping times.

…. And it’s not just rail, sewers and the water supply are another example. Consider:

The average D.C. water pipe is 77 years old, but a great many were laid in the 19th century. Sewers are even older. Most should have been replaced decades ago.

Does that sound like the infrastructure of an advanced nation?

1 Kevin Burke November 27, 2016 at 12:38 pm

Trump’s promising an infrastructure bill. Realistically what are the odds this will target these types of projects?

2 Art Deco November 27, 2016 at 3:50 pm

The federal government is not and should not be responsible for fixing local sewer pipes.

How much of this is impeded by environmental-impact-statement-mania-cum-judicial-meddling and how much is impeded by local officials who are otiose except in a crisis?

3 albatross November 27, 2016 at 10:55 pm

This was my question, too. It has become enormously more time- and money-consuming to build infrastructure in the US, I think due to the ability of almost everyone to tie you in legal and regulatory knots to protect their sightline or property values. I wonder how much this affects the crappy infrastructure all across the US.

4 mulp November 28, 2016 at 2:43 am

Yeah, paying factory and construction workers middle class wages is way too expensive. Bring in more illegals like the Chesney cronies government contractors did for the Katrina cleanup!

And respecting property rights is way too costly in the excess labor required to avoid destroying private property. The best solution is government picks a path or method, let’s it be know among the 1% to give them a chance to bribe government officials to reroute to crush the enemies or victims of the 1%.

I’m sure you will appreciate the savings to worthy American when your house is bulldozed by illegals, and if they get the wrong address, well, don’t expect to be allowed to sue for damages. Lawsuits are way too costly to society, and it better if individuals sacrifice for the greater good of the 1%.

China, India, and many other nations understand that 99% of the people are worthless and need to sacrifice for the elites.

5 Ray Lopez November 27, 2016 at 12:39 pm

Right on. Scott Sumner doesn’t think we have an infrastructure crisis but the American Association of Civil Engineers do. That said, lots of our crumbling infrastructure is in the boondocks, where nobody but the rich and poor live, no middle class. Let the rich of WY build their own roads?

6 Ray Lopez November 27, 2016 at 12:54 pm

As for water pipes, Egypt has 100+ year old pipes, so it’s not a ‘big deal’ since pipe “pigs” will crawl through old pipes and repair them (Google this). Also DC uses chemicals to remove lead from the water (Ph levels, trapping heavy metals using polymer filters, precipitates), more info here: https://archive.epa.gov/region03/dclead/web/html/treatment_news.html as is routine. Lead from old municipal pipes in the DC area are deemed ‘too expensive’ to replace. Penny wise, pound foolish? Possibly but most people don’t get too impacted from Pb (recall back in the 1960s and 70s when they used lead paint, and had leaded gasoline), plus the Romans used lead to no great ill effect. Yes, I’m aware of the literature and read the books on lead. Leaving your taps on in the morning for 1 minute will clear out any lead that’s leached into your standing water overnight, simple.

7 JWatts November 27, 2016 at 1:02 pm

“that said, lots of our crumbling infrastructure is in the boondocks,”

That’s not true and even a casual reading would have disabused you of the notion. Generally, infrastructure projects in rural areas are both cheaper and more likely to be welcomed by the locals because the spending is going to bring higher per capita spending than in a more densely populated area.

8 Ray Lopez November 27, 2016 at 1:08 pm

@JWatts, who apparently lives in the country: Cheaper? Maybe (~doubtful) yes. But for sure per capita not cheaper. One hick in the boondocks who is pleased about a simple Fed funded asphalt bike path set up for him and his wife is not the same, J. Bentham would agree, as a more expensive bike path, with pedestrian overpasses, like the C&O canal or the Dominion Power one here in No.VA, that services tens of thousands, if not 100s of thousands. Urban alliance.

BTW, on dams, the Corps of Engineers is fighting to keep the Mississippi from changing course at Atchafalaya, which happens about once every 1000 years. It’s an “uphill battle” as in water does not run uphill easily…. good book, read it years ago:


writer John McPhee … turns his attention once more to geology and the human struggle against nature. In one sketch, he explores the U.S. Army Corps of Engineers’ unrealized plan to divert the flow of the Mississippi River into a tributary, the Atchafalaya, for flood control

9 JWatts November 27, 2016 at 1:18 pm

“Cheaper? Maybe (~doubtful) yes.”

Yes cheaper, both logic and experience indicates this is true. It’s far cheaper to build roads, rail and lay sewer lines, etc, through rural areas than through urban areas.

“But for sure per capita not cheaper. ” Well, since I said that they would be higher per capita, yes this is true.

10 Ray Lopez November 27, 2016 at 3:19 pm

@JWatts – well we agree then. For the USA, it’s per capita cheaper to build in the city, but possibly (I’ll take your word for it) cheaper in total to build in the countryside. My experience with prices in the Greek countryside is that it’s more expensive than the city to build anything, due to lack of competition, about 50% to 100% more expensive. As for the Philippines, construction is a make-work crony enterprise where prices are inflated, in part due to bribes, everywhere but especially in the countryside, where there’s little if any public scrutiny (no newspapers), by about 2-3x I’ve been told by knowledgeable people.

11 Sam Haysom November 27, 2016 at 2:26 pm

For some perspective Ray Lopez lives in the Philippines and has to pay for sex. Don’t let him phase you.

12 Ray Lopez November 27, 2016 at 3:21 pm

At least I’m getting some, paid or otherwise. Good luck to you here in the good ole (old) U.S. of A.

13 Thor November 27, 2016 at 3:32 pm

There is no free sex. There is no free lunch. And there is certainly no free lunchtime sex.

14 Thiago Ribeiro November 27, 2016 at 3:52 pm

So what are my coworkers doind during lunch break? I can ear the sounds.

15 Thiago Ribeiro November 27, 2016 at 3:52 pm

* hear

16 Careless November 28, 2016 at 11:49 am

There is no free sex.

Spoken like a male

17 Lanigram November 27, 2016 at 1:02 pm


“…. Scott Sumner doesn’t think we have an infrastructure crisis but the American Association of Civil Engineers do…”

Well, they would say that, wouldn’t they?

“…where nobody but the rich and poor live, no middle class…”

Sounds like the rest of US.

18 Lanigram November 27, 2016 at 1:04 pm

ooops! I meant “Ray” and not “Kevin”.

19 Jan November 27, 2016 at 5:46 pm

So if we aren’t allowed to trust the civil engineers on this one, who is your unbiased authority on whether we are having an infrastructure crisis?

20 Sam The Sham November 28, 2016 at 10:45 am

You’re allowed to trust your own eyes and ears. (civil engineer here) As much bellyaching people do about the roads here, they ain’t bad. More concerned about bridges and railways and yes, sewers, where problems tend to be more invisible to the average. Joe. Not concerned about roads specifically.

Unfortunately my mayor thinks Myname Airport and Myname Trolleycars is a better legacy than Myname Sewers. I wish I had a mayor willing to let his name carry my poop far from me…

21 Sam The Sham November 28, 2016 at 10:52 am

A good opportunity to examine the bridge/rail problem is a float trip. Every bridge you go under, look up and count all the cracks and exposed rebar. Because people don’t usually see it, means there’s no problem and like such as.

22 Adrian Turcu November 27, 2016 at 7:16 pm

Old water pipes are in fact a problem. My father replaced some installed in the 1920s and said there were whole segments devoid of any metal at all, just a channel of compressed earth remained. This causes leaks and loses to the system, not to mention contamination.

23 Bill November 27, 2016 at 12:43 pm

Who should pay for shippers who use the lock and dam.

You or the users.

Who should pay for railroad upgrades.

You or the railroads.

If there are externalities, fine; but why not set a market price and recover the costs.

24 ChrisA November 27, 2016 at 1:00 pm

Right – reference this “they……submitted a detailed plan to the U.S. Department of Transportation to build a steel wheel interstate from Washington to Miami, but no federal funding has been forthcoming.” Why can’t the users of the railway provide the funding if it is so valuable?

In the UK they privatized the railway system in the 1990’s – this was the result in terms of passengers numbers -https://en.wikipedia.org/wiki/Rail_transport_in_Great_Britain#/media/File:GBR_rail_passengers_by_year_1830-2015.png

Maybe they should learn this lesson and get the Government out of the railway business in the US.

25 Bill November 27, 2016 at 1:35 pm

Just to be clear, the part they are talking about is not Amtrack passenger service, where there probably an externality, but rather a commercial shipping bottleneck. I agree. Railroads can pay for their own upgrades and charge their customers, particularly where there is intermodal competition and the subsidy affects other industries as well.

On the subject of lock and dams, there is also strong evidence that we should be using the market to pay for and allocate traffic. This is a great piece on the experimental design of market mechanisms for locks and dams: https://www.researchgate.net/publication/4822925_Congestion_at_locks_on_inland_waterways_An_experimental_Testbed_of_a_policy_of_tradable_priority_permits_for_lock_access

26 Unanimous November 28, 2016 at 1:36 am

Rail in the UK is still subsidised. Privatisation and subsidisation are two different things.

If rail has to pay its own way, then everything else should too. Rail used to be able to pay its own way until the government built a very large road system for trucks and cars to use, mostly for free.

27 Seth November 29, 2016 at 11:19 am

Mostly for free? Do they not pay the same taxes on gas?

28 Troll me November 27, 2016 at 2:10 pm

The bridge will build itself if it is economically optimal.

Things work that way, as proven by the example that once upon a time there was such profit to be had in building a bridge that it happened without government involvement.

29 Bill November 27, 2016 at 3:17 pm

Not if there are externalities.

30 Thor November 27, 2016 at 3:38 pm

“The bridge will build itself if it is economically optimal.”

When you are not writing four paragraph long posts, your insights are graspable. However this is just plain wrong. The point was that these bridges are not being built, even when significant economic advantages would accrue.

31 Troll me November 28, 2016 at 1:50 am

As an historian, you should not be excessively intimidated by agglomerations of text ranging into the fews of paragraphs.

32 oh please November 28, 2016 at 2:15 am

It has nothing to do with his intimidation and everything to do with your incessant babble.

33 Urso November 28, 2016 at 3:42 pm

Interesting post from Bill, our resident anti-government anarchocapitalist.

34 Seth November 29, 2016 at 11:23 am

Agreed. The market does a good job of paying for things if it truly passes the cost benefit test. I thought rails were privately owned. I don’t know why the Federal government need get involved.

35 Lanigram November 27, 2016 at 12:55 pm

I love the smell of crumbling infrastructure in the morning. It smells like, sniff sniff, … opportunity.

36 cabrey November 27, 2016 at 1:44 pm


‘Our Infrastructure is Crumbling ! …. Our Infrastructure is Crumbling ! …. Lord Save Us! ‘

Yawn. We’ve been hearing this refrain for 35 years. Tabarrok conveniently fails to mention why it’s crumbling and what options might fix the problem.

Who built all this infrastructure to begin with…and how did they do it? Might we learn something useful from that?

Who was supposed to maintain this infrastructure and why did they fail?

(there’s plenty of evidence identifying the guilty parties for this infrastructure mess– round up the usual suspects from government offices)

37 Troll me November 27, 2016 at 2:12 pm

Why? Time.

Options? Many.

38 cabrey November 27, 2016 at 5:55 pm

…you mean neglect over time

maintenance is required on just about everything to keep it functional and achieve its cost effective/economic life span… from your own teeth to the Brooklyn Bridge

but it’s easy to skip required maintenance — the consequences often don’t show up for a long while. if you’re a relatively short term politician the easy route is to divert maintenance funds to more glitzy purposes… and dump the problem on your successors when it hits crisis levels

good management plans & budgets for proper maintenance

bad management delivers crumbling infrastructure

options are few when government has already squandered its resources and is deeply in debt

39 celestus November 27, 2016 at 12:56 pm

(from the NYT article) “Authorized in 1988, the project is now wildly over budget and decades behind schedule. What was supposed to cost $775 million and be finished in 1998 will now most likely cost $2.9 billion and be operational in October 2018 at the earliest.”

Color me unconvinced that this is a problem best addressed by a trillion dollar infrastructure bill.

40 Lanigram November 27, 2016 at 1:15 pm

Rich contractors sucking gobs of money from the public treasury teat is good for economy. They will, in turn, spend that money to build really big houses really far apart with really big lawns. Think of all the jobs for illegals in construction followed by jobs for illegals in leaf blowing, lawn care, and domestic services. New services, markets in everything, and all that. It’s tinkle-on economics.

Get with the program! Anyone that opposes this is racist, xenophobic, and misogynist. In fact, they are not even nice! /s

41 Jan November 27, 2016 at 8:10 pm

You’re right. It probably needs to be more like 2 trillion dollars.

42 Alan November 28, 2016 at 6:16 am

I owe 1/300 millionth of $17 trillion. Keep throwing those trillion dollar coins around.

43 Agammamon November 27, 2016 at 1:04 pm

“Does that sound like the infrastructure of an advanced nation?”

“. . . but no federal funding has been forthcoming.”

Actually it sounds very much like the infrastructure of an advanced nation – one that relies on government funding of what are basically private utilities.

Maybe cut the thicket of regulation and control the Federal government exercises over railroads and allow them to build what they need and not what a politician thinks will get him elected?

That rail tunnel you mention – the Howard Street Tunnel. Its pretty insane that in 2016, after well over a century of operating trains in the US, that there is no incentive to open an alternate route to capture some of the revenue that is traveling through that chokepoint. When you see situations like that it either means that there is too little money running through to be worth the effort – in which case *more* infrastructure is not needed – or its because of government regulation stifling competition – therefore favoring a small subset of producers at the expense of the rest of the country.

44 Mark Thorson November 27, 2016 at 1:19 pm

Maybe these chokepoints exist because somebody is profiting from their existence. That is not unknown.


45 chuck martel November 27, 2016 at 1:48 pm

Private property rights, eminent domain, lots of complications.

46 Agammamon November 30, 2016 at 2:16 am

And its typically with government collusion preventing competitors from setting up competing alternatives.

In the cases where its genuinely not worth the money to set up an alternate route – then its not worth *the government* funding the alternative either.

Natural monopolies (as contrasted to the sort created by state interference) will normally keep profits down to just below the level that would incentivize the creation of an alternative – if prices are raised above that point a competitor appears and forces them back down.

47 McMike November 30, 2016 at 9:45 am

One theme of comments is along the lines of: the government should not subsidize improvements that don’t have an (obvious, immediate) payback to the benefitting entity, or that interfere with natural competition.

I do agree that the government should not subsidize without gaining something in return. Something, anything be it a stake, a royalty, firm commitments about providing jobs, whatever.

But isn’t it that case with the small tunnel example that this is precisely where the government should step in? This bottleneck is creating disruptions that are region wide, local businesses suffer, etc. the ripple effects may even be national. Isn’t this exactly where the government should step in and say: we’ll open that mountain a little wider, or we’ll (god help us) use eminent domain to break the logjam? Thus unraveling a region-wide long-term cluster, to widespread benefits. Yes, this interferes with competition, but sometimes a “reset” is warranted. In this case, an entire region grew and developed around this natural constriction. Isn’t this precisely the case behind national rail expansion, or canal building for that matter – be it Eastern US, or Panamanian. The Panama Canal destroyed the ship traffic around the southern continent. So be it.

And for infrastructure like airports, is there any cost-benefit analysis that can be done in advance, when the government steps in and builds an airport in a sleepy town out on the plains? Then, a couple decades later, that airport is a hub, and there are businesses and housing crowding in on all sides. Who else would build that airport, if not the government?

48 JWatts November 27, 2016 at 1:05 pm

Is the core issue money or is it massive regulatory tape and the ability of environmental groups to tie up infrastructure upgrades for years with a series of legal actions.

49 We live in interesting times November 27, 2016 at 1:13 pm

Environmental groups who can, by law or regulation, use the US Taxpayer as their deep pockets.

That needs to change.

50 ColoComment November 27, 2016 at 1:47 pm

Ummm, they don’t even need law or regulation, just a mob of [unemployed?] protesters who don’t mind camping out.


What honest investor, public or private, will commit billions of dollars to upgrade “infrastructure” (however defined or limited) when the actual costs incurred can be rendered open-ended by a mob enabled by federal government, notwithstanding 100% compliance with laws and regulations on the books?

51 We live in interesting times November 27, 2016 at 2:00 pm


true believers or useful idiots.

let’s see if the Sioux have a price.

52 Alain November 27, 2016 at 3:04 pm

Price? Why should they be given anything?

This needs to stop and hopefully it will under a new administration. Putting the leaders into a federal maximum security prison would likely dampen their enthusiasm for these types of shenanigans.

53 chuck martel November 27, 2016 at 3:54 pm

Why not handle them just like Phil Sheridan did during the 19th century? If they object get rid of them.

54 Thiago Ribeiro November 27, 2016 at 4:09 pm

Before or after locking Clinton there? American politics is getting weirder by the second.

55 Alain November 27, 2016 at 6:13 pm

Politics in the US have been getting weird for decades.

The notion that property rights are only as strong as one’s inclination to defend them has to stop. It destroys trust in property, which reduces incentives greatly. If I were looking for one reason behind the great stagnation, this would be it. Luckily we were bailed out by moore’s law (which avoided the issue nicely) but when it ends we’re going to in for a reckoning.

56 albatross November 27, 2016 at 11:01 pm

I think Alain is right–without the explosive innovation in computers in the last 30 years or so, the stagnation in the US would be fwr worse and far more visible.

57 Troll me November 27, 2016 at 6:19 pm

There is a theory that people demand a higher quality environment as wealth increases. For example, people earning $500 a year are unlikely to demand regulations for scrubs and filters on a local coal-powered electricity generating facility, whereas those earning $500 a day might easily get behind such an idea, in particular with full knowledge that some way or another this will be built into the up-front price on the market.

So, the demand for a cleaner environment probably comes more from the wealthy than the unemployed, regardless of who has time to show up for a protest.

Consider who’s funding legal challenges relating to environmental issues – I don’t think that money is coming from the unemployed.

58 Cliff November 28, 2016 at 12:51 am

But the “environmental” challenges are all fake NIMBY shit, right?

59 Troll me November 28, 2016 at 2:04 am

My back yard is part of my environment, so from the perspective of locally representative democracy, etc., it’s good to have avenues for local actors to counter influences from above. The courts are one way to achieve this.

But yeah, it’s probably worth explicitly separating between NIMBY-ist motivations and more general concerns for being able to enjoy a clean, healthy and safe environment.

60 rayward November 27, 2016 at 1:22 pm

Wealthy people travel in private jets. Do they need infrastructure? Apple produces its goods in China. Does Apple need infrastructure? Google and Facebook sell advertising. Do they need infrastructure? Autonomous vehicles can safely travel at speeds of no more than 30 mph if they share the road with non-autonomous vehicles. Do autonomous vehicles need infrastructure? You betcha. [Don’t tell anybody, but “autonomous vehicles” is a euphemism for “transit”.]

61 LNM November 27, 2016 at 1:56 pm

The NYT article about rail in Chicago is out of date. Both the railroads and government have been working well to fix the problems and have completed many of their projects, including almost all the low hanging fruit like new switches. See for the current status: http://www.createprogram.org/linked_files/status_map.pdf

Some of the larger projects have also been completed: http://www.chicagotribune.com/news/ct-metra-englewood-flyover-20141023-story,amp.html?client=ms-android-google

Rail in Chicago is an example of infrastructure repair going fairly smoothly (altho much work remains).

62 Alex Tabarrok November 27, 2016 at 3:49 pm

Thanks for the reminder. So noted.

63 Art Deco November 27, 2016 at 3:54 pm

Rail in Chicago is an example of infrastructure repair going fairly smoothly (altho much work remains).

Chicago pols know who you pay off to get co-operation.

64 msgkings November 27, 2016 at 5:33 pm

Sounds like Chicago pols know how to get things done. Why don’t pols in other cities do that?

65 Alain November 27, 2016 at 8:34 pm

“Rail in Chicago is an example of infrastructure repair going fairly smoothly (altho much work remains).”

Assuming that the quoted article is correct it sure doesn’t sound that way. It sounds like the technology was many decades behind the times, and that there were considerable savings to be had if they had been addressed.

The questions that come to mind are: how did this happen? What caused this gross misallocation of resources? Further why was it recently (partially) addressed?

66 Hillary November 27, 2016 at 10:39 pm

How did it come to happen? Market forces. Chicago is the convergence of the BNSF, CN, CSX, and most of the other rail lines that don’t meet in Kansas City. Thank the meat packing industry of the late 1800s. The western conference railroads stop going east in Chicago and the eastern railroads stop going west, the delays are historically from switching from one line to another.

I’m an upper Midwest shipper. It’s cheaper and faster for me to truck a container bound for NJ or MA to Chicago than it is to put it on the rail in St. Paul. It’s being addressed because of the Panama Canal expansion, it’s about to be economical for the Midwest to bring in goods through the East Coast ports. There have also been labor disruptions on the west coast (especially at grain terminals) that’s making east coast expansion more attractive for bulk exporters. To do that Chicago has to be able to handle short lines from Iowa and Nebraska efficiently.

67 Matt2 November 28, 2016 at 7:22 am

When I first got into transportation in the mid 90s containers coming to the northeast out of LA/LGB would arrive in Chicago and pop out on CSX heading east anywhere from two to five days later. The best part was there was no real way to track them during the transfer or anticipate how long any given box would take to make the switch. Much better now.

I’m not sure how much bulk grain will move east. Besides the railroad you have the whole industry on the gulf. Baggers, NCB surveyors that know grain, Ag inspectors, stevedores and labor that know how to trim and strap, fumigator that know what they are doing… lots to replicate if we were to scale up in Baltimore or Norfolk!

68 GoneWithTheWind November 27, 2016 at 3:46 pm

The problem is much of the money ear marked for infrastructure is syphoned off for favored projects and crony payoffs. What ever government needs at every level is a inspector general/forensic auditor who works for and reports to the president/governor/mayor AND whose work is a matter of public record. We waste most of the revenue that the governments receive. The first thing we need to do is repeal the Davis Bacon act and it’s sibling laws.

69 chuck martel November 27, 2016 at 3:48 pm

” Railroads have gone from having too much track to having not enough. Today, the nation’s rail network is just 94,942 miles, less than half of what it was in 1970, yet it is hauling 137 percent more freight,”

Thousands of miles of abandoned track simply weren’t being used.Rail links from towns in the country to smaller cities weren’t as practical as trucks over highways. In urban, suburban and rural areas many of these rights-of-way are now bike and pedestrian paths instead of unused decaying rail lines.

70 Thomas November 27, 2016 at 3:59 pm

The left wants high speed rail on the east and west coasts and wind generators in the Midwest. Won’t someone please think of the rich urbanites?

71 dearieme November 27, 2016 at 4:09 pm

When my father was teaching me economic notions at his knee, he was particularly prone to point to examples of politicians neglecting to spend rationally on maintaining existing infrastructure (as he didn’t call it) but being happy to build new stuff.

One doesn’t actually need the jargon of ‘principal-agent problem’, or even ‘perverse incentives’, to explain these things, useful though the jargon may be.

72 anon November 27, 2016 at 6:24 pm

Universities do the same thing. Huge donors want their names on NEW buildings.

They don’t want their millions spent on fixing up stuff named for last generations millionaires.

73 Roy LC November 27, 2016 at 4:11 pm

I strongly suspect that their is a single navigation dam on the Mississippi-Ohio that isn’t a boondoggle. If you look at Corps of Engineers statistics it is amazing how much they try to combine the inland waters’ stats with the Intracoastal Waterways.

20 years ago this was a pretty widely held opinion, but it is like naysayers just gave up, now it is just Corps propaganda.

Well better on the Ohio than north of Cairo, and better there than on the Columbia/Snake since those are worse than pork, they are pure economic destruction.

74 Barkley Rosser November 27, 2016 at 5:53 pm

There you go again, Alex, putting up a highly reasonable and serious post, that is then followed by a series of some of the dumbest and most ignorant comments I have seen here in some time. Congratulations and keep up the good work.

75 too hot for MR November 27, 2016 at 11:11 pm

Nice contribution yourself. You’re a professor?

76 Barkley Rosser November 28, 2016 at 5:10 pm

Truly insightful contribution yourself. You’re a student?

77 Boonton November 27, 2016 at 7:49 pm

All sound like great ideas but what is the underlying economic theory here? Keynesian demand stimulus? If so then the fact that the fixes do not seem very expensive would imply that they don’t have a lot of demand umph (and, ironically, if the economy is underperforming inefficiency can act as an employment stimulus). Or is it supply side, making it easier for economy to produce more goods and services by doing things like lowering the cost of moving stuff from A to B? But if the potential supply side stimulus is so great why is federal funding needed? For example:

“Owner CSX has big plans for capturing more truck traffic from I-95, and for creating room for more passenger trains as well, but can’t do any of this until it finds the financing to fix or bypass this tunnel and make other infrastructure improvements down the line. In 2007, it submitted a detailed plan to the U.S. Department of Transportation to build a steel wheel interstate from Washington to Miami, but no federal funding has been forthcoming.”

CSX is a huge company and if you did capture a large portion of truck traffic from I-95 (and even some passenger) why would federal funding be needed? Why not simply let them use the tracks or land already there to upgrade as they please with their own funds?

78 Hopaulius November 27, 2016 at 8:21 pm

No, no, no, Alex! Tyler says no infrastructure spending until we have a recession. Let it collapse to rubble, as long as we have .0001% growth.

79 Scott Gustafson November 27, 2016 at 8:31 pm

Would better rail up and down the east coast really be more efficient than container ships?

80 Matt2 November 28, 2016 at 7:31 am

Almost definitely faster.

There are a couple big differences between US and Europe. Most important is that water routes on the coast are usually longer, distance-wise, than land routes in the US. In Europe the water route often is shorter. Euro short sea routes also bypass a lot of national borders. Less of an issue now but imagine the truck delays if they had to stop every couple hundred miles and clear customs going from Boston to Norfolk!

Congestion is bad, but not that bad. Particularly when you consider where cargo actually goes. In Boston for example most of the big DCs are out along 495, so if you sent a container by water from New York, odds are you would then teucknit an hour back towards New York to deliver it. First/last mile is what gets you on the truck cost, never mind terminal charges. And don’t forget the empty! Almost every cost/benefit comparison leaves the empty off.

81 Aric November 28, 2016 at 8:39 am

Trucks in the US currently have to stop every few hundred miles for weigh stations.

82 Martin November 27, 2016 at 8:40 pm

Yeah, even given that this is NYT, why should expanding track or upgrading a tunnel have to rely on federal funding when there’s a big demand for the better services that the company would provide. I don’t understand.

Does the U.S. regulate freight rail fares? Does it force freight companies to subsidize passenger traffic? If it doesn’t – there’s really no justification for a private company to go begging for government money. If those infrastructure upgrades are really necessary – they should pay for themselves in reasonable time. Otherwise – why make them at all?

83 GU November 27, 2016 at 11:56 pm

I think at this point a lot of it had to do with inertia and ego. It’s become so routine for every semi-large project to get funding, tax breaks, or both, that companies think “why not me”? Even more so when your competitor just received a nice deal from the government for their latest project (“hey, we’re better than them”!).

84 Troll me November 28, 2016 at 2:22 am

The private sector knows there are externalities and a broader economic case.

The public sector knows that the private sector will under-invest relative to the optimum as a result.

The private sector knows that the public sector knows.

The public sector knows that the private sector knows.

So the private sector sits there and waits until someone offers some money to get things moving. Sometimes they also proactively suggest the possibility of that, whether or not as a part of interactions with government which occur in the normal course of things over the years.

It would maybe be easier for the government to just do it, but over time we’ve learned that market discipline helps to get rid of the less effective or more pork-inclined ways of doing things in the process.

So, we subsidize for-profit ventures, which sounds dumb, but sort of makes sense in certain conditions.

85 GU November 27, 2016 at 11:59 pm

Regulations and lawsuits are part of it, but let’s not forget the crooked contractors and construction unions either. Name a major project that has been completed on time at predicted cost from the last 20 years. Does one even exist?

86 OregonJon November 28, 2016 at 1:49 am

Building infrastructure is sexy. We love it. Maintaining infrastructure is a drag and probably does not need to be spent when scheduled, after all, what difference does another year make if we delay the upgrade/repave/renew to the lock/road/dam. Most infrastructure is invisible to the public and as such is taken for granted that some responsible official will be doing what is proper.

But because of the invisibility there is more votes to doing things that are visible to the public. Dams and locks are rotting? Hey, look at our new bike lanes, homeless shelters, parks, whatever. These make voters feel good. Ain’t no votes in fixing dams and locks.

An age old problem. The only workable solution of probably to privatize the damn things, make users pay a fee for use and use the income for maintenance. Anyone with better thoughts?

87 Melmoth November 28, 2016 at 5:58 am

Was alarmed to learn recently that reinforced concrete only has a lifespan of about 50-100 years.

88 A Definite Beta Guy November 28, 2016 at 9:09 am

Isn’t the Hoover Dam expected to last something on the order of 10,000 years?

89 McMike November 28, 2016 at 9:12 am

Atlas doesn’t shrug; he whines and begs. The railroads, ordinarily stridently seeking to keep the government out of their business, appear on cue with its hand out when it’s time to invest. Was it discussed who would own the rails when the work is done? The taxpayers’ only regret is that we can’t grant vast swath of timber land this time around to encourage the railroads to do their jobs. Perhaps we can look the other way from some stock swindles or something, or maybe ignore them as they use their monopoly power to strangle rural ag and manufacturing.

[I know, I know; because highways]

As for engineers hiking miles to throw switches, previously there was an ancient technology that used to address that, they were called brakemen. Wouldn’t it be groovy if the railroads resurrected cabooses!

90 Jeffery Mewtamer November 28, 2016 at 10:05 am

Even if an infrastructure upgrade could cut operating costs or improve service by enough to pay for itself quickly, the upfront cost to make the upgrade could still be prohibitive.

Let’s say for example:
Company X currently has profits of 10k annually.
Infrastructure Upgrade y would boost profits by 100k annually.
Y will cost 1M to implement.
By these numbers, y will pay for itself in 10 years, but x will have to save all of its profits for 100 years to cover the cost of y.

This is an extremely simple example, but it doesn’t seem that unlikely that a company would find themselves in such a catch-22 that they need an overhaul in infrastructure to improve profitability, but need either a significant boost in profits or a large external contribution to make the improvement to their infrastructure. The extra profits from the upgrade won’t do the company any good if they bankrupt themselves in the process of implementing the upgrade.

Granted, perhaps it would be smarter for governments to hand out loans rather than grants when the infrastructure upgrades will benefit for-profit entities.

As for projects being behind schedule and overbudget, how much of that is due to governments almost always taking the low bid rather than the smart bid and thus encouraging contractors to understate their estimates for time and cost to improve their chances of winning government contracts?

91 McMike November 28, 2016 at 10:25 am

Governments can learn. Increasingly, highway contracts at least around me, have included pretty strict performance standards and early-completion bonuses. The project costs are still high of course, but not necessarily because of overages and delays.

Long tem low interest loans aren’t a bad idea, and the government has shifted many grants towards these loans (such as for rural development for public facility and energy efficiency projects). But many of the debtors will surely find ways to bankrupt themselves out from under obligations, leading to political fallout.

Fact is, it’s a completely appropriate and fruitful role for the government to take front end risks such as pioneering technologies, blue sky basic research, pioneering infrastructure, etc. No one else can or will bear that risk. So, I have no problem with grants, but would prefer if the government was more explicit in taking credit for use of taxpayer funds, for getting a grantee’s skin in the game, and otherwise reducing the amount of downstream anti-regulatory/anti-government/anti-tax BS from heavily-subsidized industries.

What would the world be like if the government licensed the technologies it pioneered (i.e. 99 year leases) instead of gave them away?

92 Albigensian November 28, 2016 at 1:18 pm

The joker in the “crumbling infrastructure” deck is that we aren’t very good at building big things anymore. Despite improvements in technology, building (or re-building) just about anything big takes far longer than it did 50-100 years ago and costs many, many times more.

It’s a shame, but, when it comes to big construction projects we’ve become a can’t do nation, and no one even knows what we’d have to do to be able to do this stuff with reasonable efficiency?

93 Zach November 28, 2016 at 4:54 pm

I’m reminded of an old definition for a mainframe computer:

An obsolete computer, running obsolete software, making obsolete money.

There’s a reason capital infrastructure keeps getting used past the point where it’s obsolete: it’s already paid for! Extending the life of capital goods by using them longer is a major efficiency gain.

The arguments you make about efficiency gains makes me wonder whether the pricing mechanism isn’t screwed up somewhere. Is the owner of the goods not able to capture the efficiency gains for some reason? If not, why should we expect a stimulus project to fix the problem?

94 chuck martel November 28, 2016 at 5:27 pm
95 Zach November 28, 2016 at 5:39 pm

Perverse incentives also enter in: if my obsolete tunnel is attracting federal money, shouldn’t I take steps to ensure it’s the last component that gets upgraded? Certainly you can’t expect a tunnel modernization to do anybody any good without a centralized electronic dispatching office with Aeron chairs for the dispatchers, can you?

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