Making America Great Again–Infrastructure

In this post I put aside the negatives of a Trump presidency and focus on some of the positive things that President Trump could do that are still consistent with his stated goals and ideology.

First, and most obviously, infrastructure development. Trump has said he wants to invest a trillion dollars in infrastructure, mostly through public-private partnerships (PPP). As I said in Launching the Innovation Renaissance we need more and better airports, for example. Ironically, New York Governor Andrew Cuomo’s $4 billion PPP to replace LaGuardia’s Terminal B which has as a leading partner Swedish multinational Skansa, is an important model. Around the world there are a number of other successful examples of airport PPPs including in India, Australia, New Zealand, Canada and South Africa.

Fortunately, the FAA already has an airport privatization program. To date, the program has had only limited success but the tools are in place if Trump wants to push.

Governments eager for cash sometimes structure PPPs with big up front payments and low future payments. Trump could find such a bargain tempting as it would let him raise cash and encourage building today while pushing low future revenues decades into the future. Bear in mind, however, that when someone such as Paul Krugman says that now is the time to invest because interest rates are low, a corollary is that is now is the time to sell because asset prices are high.

Speaking of air travel, Trump seems like just the person to Make America Boom Again and he could do it with a small directive to the FAA to drop the ban on supersonic aircraft and replace it with a reasonable noise standard.

We also desperately need an update to our electricity grid. We have more blackouts than any other developed nation. It is a national embarrassment when millions of US residents our thrown into the dark by grid failures.

Improving the grid is not just an economic issue it’s an issue of national security. Our grid is under constant low-level attack, and some of these attacks are likely probes for an attack similar to that which brought down the Ukrainian power grid.

Electricity infrastructure, it’s worth noting, is less amenable to PPPs than airports because it’s more difficult to monetize quality improvements and the grid by its nature involves many externalities so I think Trump is relying too much on PPPs. Newt Gingrich, however, is a big proponent of improving the grid and he may help convince Trump to invest public funds.

An important byproduct of improving our electricity grid would be to improve the prospects for solar and wind power. Solar and wind are intermittent and cost effective in only some parts of the country. The better our transmission lines, however, the more useful these sources of energy become. Indeed, it might be time to begin work on a global super-grid. I could see Trump going for this (just don’t call it a hemispheric open market).

Trump also seems like just the guy to support nuclear energy. Molten salt reactors are very safe and can be much smaller than traditional reactors. These types of reactors were invented in the United States but China is rapidly developing the technology. President Trump don’t let China drink our milkshake! By the way, these types of nuclear reactors pair well with renewables because they can ramp up or down to fill in the intermittent nature of  solar and wind. Nuclear power also pairs beautifully with hydrogen.

The first new nuclear plant in decades just started producing power for commercial use last month. Trump should cut the ribbon at an opening ceremony. It would be a great signal that America is not afraid of technology, that we can still build, and that we can responsibly deal with climate change while increasing the power that drives American civilization.


Where has this Tabarrok been the past eight years? I'm not complaining, just asking. Given Trump's pledge for a trillion dollars in infrastructure spending and Peter Thiel's criticism of the Fed ("bubbles, bubbles, bubbles"), it's likely we will see more fiscal stimulus and less monetary stimulus. "Yes it supports what many of us have been saying for what is now quite a few years".

The trick, as above, is to always work in a "Krugman was wrong" with your new call for industrial policy and infrastructure spending.

If Trump is implementing the Krugman plan, why isn't Krugman happy? Was he wrong about the plan or wrong about Trump?

FWIW, I think it's a bit too early to speak with confidence about what Trump will achieve. Trump might be difficult to distinguish from Clinton on policy, but he still has to work with a unified Republican Congress.

Krugman is probably smart enough to bank the parts he likes and ask for more.

You know, we could also hope this is like the more moderate Bernanke plan. He asked for fiscal stimulus, but as long as Obama was President he couldn't get it.

I would look for Bernanke's advice now.

Regarding Bernanke and infrastructure, this does not age well.

It won't stimulate anything, but it may still be a good investment for its own sake. Probably only if they can do it more efficiently than in the past

Investment! Get behind me Paul Krugman.

"It won’t stimulate anything, but it may still be a good investment for its own sake. Probably only if they can do it more efficiently than in the past"

You mean by importing endless numbers of slaves captured elsewhere and working them to death? Like in places like California and New England...

Or do you mean more efficiently like just bulldozing your neighborhood to build the highway or the oil and gas processing hub and paying you based on "no one would buy land next to a chemical hazard site"?

In the 50s, highways were built right through great working class neighbors to be efficient.

The Big Dig was in your view inefficient because it failed to raze existing historic buildings mixed with the kinds of buildings Trump claims as evidence of how great he is in getting things done. Do you think Trump will support building infrastructure that requires bulldozing his property, or infrastructure that prevents easy access to his property?

But hey, I support you losing your job so your economic sector can be more efficient. You working for $7 an hour is much more efficient, isn't it?

They'll pick up, ironically, the shovel ready infrastructure projects identified by Joe Biden.

It is not any U.S. President's job or authority to build/re-build infrastructure.

How did all this infrastructure get built in the first place over the past century+ ?
Why was it not properly maintained and expanded ?

Perhaps if past Presidents had not squandered Trillion$ & Trillion$ on pathetic military adventures and failed domestic policies-- there might have been a few dollars available to help with infrastructure. But the Federal government is literally bankrupt financially with no hope of EVER honestly re-paying its current staggering debts.

Infrastructure is deteriorated BECAUSE of the government (and a mainstream economics profession that cheerleads a destructive government culture)

Seth, you are right: It is "not any U.S. President's job or authority to build/re-build infrastructure."

You realize the hypocrisy of Congress--or maybe you don't--in opposing infrastructure under Obama and supporting it under Trump.

"It is not any U.S. President’s job or authority to build/re-build infrastructure"

Yeah, right.

Let's arraign Ike in effigy for rolling out the Interstate highway system.


...the only thing Eisenhower did was persuade Congress to 'borrow' the money for 90% of the Interstate Highway System-- that system cost over 400% more than the brilliant Federal government had estimated.

The individual states built, own and operate those "interstate" highways within their territory; actual design and construction was accomplished by the private sector. The individual states could have easily cooperated and built the system without any US President or Federal dictates.

The US electricity grid was built almost entirely by private business, starting with Thomas Edison.

If Maryland/Virginia/DC can't cooperate to keep a metro system from killing people, what makes you think they'll be any better at an interstate highway system?

As for the Edison example, Chicago's L and NYCs metro system were both built with private money. Then they went bust and with no buyers, the choice was either let the system decay or subsidize. I think Hong Kong is the only city with a private, profitable metro, and that's largely because the gov gave MTR Corp tons of real estate concessions above the stations

"The individual states could have easily cooperated and built the system without any US President or Federal dictates."
But they hadn't and wouldn't.

yup, the most important function of government is to make people do things they wouldn't do otherwise or do right away among other priorities to them and money is free from the federal govt so it's always win-win

Menlo Park

"How was the Interstate Highway System funded? How is the federal-aid highway program in general funded?

The Interstate Highway System was funded with 90% federal funds from the Highway Trust Fund (stocked with motorist fuel and excise taxes) and 10% state DOT funds. It was built on a pay-as-you basis from already collected revenues, and no debt financing was used. However, about 2,300 miles of state-built revenue-bond-financed tollroads were built separately from the Interstate Highway System, and later incorporated into the System, and no federal funds were used on these. Today the entire Interstate System is almost 45,000 miles long" [snip]

Pathetic - I have to explain your own country's history to you.


Indeed. It takes someone competent to actually get things done.

I suspect one of the first things to happen is when Trump finds the ridiculous and expensive Federal rules for projects consuming almost all the resources he has will be to change them. He has both houses, and the Democrats can defend to the death the New Deal rules that were constructed to exclude blacks.

+1, agree, AlexT knocks a home run with this post. But arch-uber-meister-Monetarist Scott Sumner recently said on his blog in the comments section that there's no infrastructure deficit in the USA, even when a leading civil engineering lobby gives low marks to US infrastructure, and I had to spend three hours on the tarmac in a trip from DC Reagan to JFK a few weeks ago (I'm in the USA at the moment), so who's right? I know one thing, as Socrates might say, and that's Sumner and his fellow monetarists know nothing... The only bad thing from a 'fiscalist' / Keynesian point of view is that it is said infrastructure spending (and military hardware spending) gives less bang for the buck than either a tax cut or simply paying Paul to go on welfare so they can spend their money on liquor and fast food, which supposedly stimulates the economy more (bigger Keynesian multiplier).

I'm sure the Meat Packers of America grade our beef consumption D+, as well. No conflict of interest there, right?

He can only support beneficial economic policies when a Republican's in power.

Oh, I didn't realize that Obama and liberals favored nuclear power and privatizing airports. In any event, the airport privatization program that AT links to was expanded in the 2012 Reauthorization Act, so I guess Congress wasn't that obstructionist after all.

That's an amazing example of FDA overreach.

Of course Alex confused the FDA with the FAA, perhaps he needs to reeducate his typing fingers. It's a false issue anyway. The Concorde died because it was not economical. It's passenger to fuel consumption ratio was very bad and as a result seat costs were prohibitive. The FAA can change all the regulations they want but it's not going to improve the efficiency of the plane which is governed by laws of physics and engineering. It's much like removing all the environmental regulations governing coal burning in power plants. Only a ban on fracking is going to bring coal utilization back.

It will be interesting to see if a Republican government would go so far as repeal of the clean air and water acts, and not just reducing enforcement at the margin.

All we have to do is reduce the funding to the EPA and everything will work itself out.

I'm really looking forward to it.

Add funding to Justice then. Several environmental laws allow citizens to sue if standards are not met.

True, but technology has advanced since the Concorde. In any case, if it's not feasible, it won't happen, so the ban is redundant.

If the economics and the physics are against it, fine. But that doesn't make a ban on supersonic passenger aircraft within the US make any sense.

So, you're getting your bowels in an uproar about something that's completely irrelevant?

Something that might be irrelevant. Very different


Infrastructure seems to be the only thing everyone agrees on and is widely regarded as an obvious good, but my impression is that our track record of developing infrastructure, particularly transportation, is plagued by massive delays, cost overruns and design flaws driven by political rather than commercial decision-making. I have wondered if Democrats liked infrastructure development because it acts as a hand out to unions.

However, I have very little visibility on any of these issues. I do understand that American infrastructure is a mess because I live in a developing country, where it is quite good.

So, as part of the cheerleading for more infrastructure, can you give me some comfort that we are able to make decent infrastructure decisions, deliver them on time and on budget, and not just blow through more taxpayer money.

Good questions. I would add, is it just a category thing, that "infrastructure" is good, or do specific plans need ROI?

Is a bridge good, even when it goes nowhere?

According to Keynes, yes bridges to nowhere are good. But he was likely wrong about that.

The problem with the 'interest rates are low so let's borrow a ton to spend on infrastructure' is that rates are skyrocketing and may not be that low once we start blowing out the deficit with a big tax cut and new spending.

Rates are skyrocketing? Do elaborate.

In the last week the 10 year treasury is up from 1.78% to 2.21%, or about 25% higher.
Rates are higher in many other countries too.

"I have wondered if Democrats liked infrastructure development because it acts as a hand out to unions."

Has more infrastructure been built when Dems are in power? Are unions a substantial portion of the infrastructure workforce in most of the country?

A broader question, given the ever-shrinking power and influence of unions: what will be the Republican/Conservative whipping boy when unionization gets becomes negligible, which should be just another decade or two?

Public sector unions?

I'm not sure which question you're answering. I guess it's the last one. Yes, public sector unions are currently framed as one of the great evils. So let me ask, what is the current trend there? My impression is that public sector unions seem like a large factor in the total workforce only because private sector unions are now a tiny, and shrinking, portion of the workforce. Over the last few decades, while the ratio of public/private unionization has grown, it appears that's only because the denominator is shrinking, not because the numerator is growing out of control. When I try to look up numbers on this, I see lots of articles from conservative/libertarian organizations, and they only seem to harp on the ratio, and not on actual numbers.

Larry Summers' view. I'm more concerned about the risk of a financial crisis and a politically weakened Fed unable to implement an appropriate monetary response. Financial crises are usually caused by a combination of economic imbalances/excesses and a loss of confidence, the latter the fuse that sets off the crisis. For the past eight years, "many of us have been saying" that "uncertainty" was the cause of the weak economic recovery. Trump promises change/disruption/uncertainty. Cowen now says change (uncertainty) is what's needed to prevent complacency. For the past eight years, "many of us have been saying" that fiscal stimulus isn't stimulative, but only increases the size of government and government debt. Tabarrok now says fiscal stimulus is what's needed. Whether all this change/disruption/uncertainty/debt triggers a financial crisis is a question best not asked today. Maybe later.

No man differs more than another than he does from himself at a different time.

No man differs more from another than he does from himself at a different time.

Bill, can you explain how much you changed in the 7 minutes between your two posts?

Is it a bigger difference than that between you and, say, Kim Jong Un?

You didn't notice the word "from". There are some folks, perhaps you, that didn't notice the grammar difference and absence of the word, but maybe I'm writing for what I thought was a more intelligent audience. Sorry.

Well, your sense of humor is right there with Kim Jong Un's, so it looks like your theory was right all along.

Original, I know you are a fat North Korean sitting on a bed writing content to support Kim Jon Un by comparing him to me.

There are different kinds of uncertainty. A wrapped present under the tree is one kind. A cancer screening is another. There are people who see this election each way.

Crowding Out also calls from 2009 and says it is lonely.

This will be my last comment about Cowen's new book and his call for "change" to prevent "complacency". For the astute readers of this blog, it's quite clear that Cowen wrote a book assuming that Mrs. Clinton would win the election; her policies would merely continue the Obama policies, with very little change, very little uncertainty, perhaps too much complacency. What we get is Mr. Trump, with a whole lot of change, a whole lot of uncertainty, and no room for complacency. Cowen could reverse himself with calls for more certainty and complacency now that a loose cannon has won the election. But he'd get no invites to the White House if he did. I once wrote a law review article based on my assumption that the courts would rule on the issue covered in the article in a certain way. I think I'm a pretty good lawyer, but I'm a lousy soothsayer. I feel Cowen's pain.

Have you read the book? It's not available, is it?

Most discussions of infrastructure focus on transportation and the electric grid, but overlook water supply and wastewater treatment, where aging systems result in huge losses of drinking water, poor water quality and poorly treated wastewater.

Nor does the discussion talk about raising gasoline taxes to fund highway programs.

Where are the Friedman republicans who would extoll the benefits of financing infrastructure from user fees, including gasoline taxes.

You lost the election. Sorry.

Thank God that n*gger party will be gone soon!

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Those Republicans are sick of having gas taxes that should be spent on roads going to subsidize mass transit, bike paths and parking garages.

Milo, Have you ever heard of the concept of avoided costs? If someone takes their bike and lessens congestion, reducing the need for more highways, that's an avoided cost. Similarly, with regard to mass transit, have you considered how much a new superhighway would cost through a congested area? How much transportation capacity can be increased on a train by adding a car versus adding another lane to a highway.

Evidently not.

I paid under $2/g.

A modest increase is ok.

What I really want to see is a consolidation of the summer blends of gas.

The last I read, years ago, was that there were 95 different summer blends. That's nuts.

An interesting thing happened in my province when the Liberals took over from the NDP. Three or four terms ago, I don't remember. They looked at departments swollen with people and said that what these 100 people are doing 25 could do it. So they did. They got rid of bureaucrats and changed the rules so that 25 could do the work.

The US government takes a high 30% close to 40% of the economy. If they can't build a bridge with that amount of money, they surely don't deserve to get more.

This sort of thing isn't uncommon:

What is to be done about this kind of infrastructure failure?

Alex assumes regulation is what impedes development in aviation. However, there's an interesting experience from the Boeing's Sonic Cruiser. The idea was to design a plane cruising at Mach 0.98 instead of 0.75 or 0.8 of conventional fuel saving planes. In theory, it could save 1 hour in flights crossing the Atlantic or NY-SFO. But...

"the Sonic Cruiser was a dumber-than-dirt idea. The industry’s shared, consistent experience of supersonic flight was that you did not want to cruise at Mach 0.98..... Boeing knew this, and admitted that the Sonic Cruiser would need to have bigger engines and burn more fuel than a classic subsonic jet, but the company argued that passengers would pay the premium fare necessary. How much more would they pay?"

Perhaps air carrier CEOs are risk averse and they don't want faster planes

Perhaps what keeps present equilibrium is not regulation but passengers looking for cheaper tickets, risk averse air carrier CEOs and profit thirsty air carrier shareholders. Those 3 groups of people are the ones who decide which plane is successful or not.

So the law against them should be lifted b/c it is not important?

Saving an hour in a trip across the Atlantic is an illustration of the modern world's incredible and nutso fixation on time as a commodity. If time is indeed that valuable what's the cost of a trip to the restroom? Maybe business titans should wear "piddle packs" like fighter pilots do, eliminating their costly need to urinate during a day of concentration on shareholder value. When the CEO of a major corporation stops for a glass of water can it be entered on a ledger?

And what's with this worry about travel anyway? With VR, it's no longer necessary. The would-be traveler can attend Khumba Mela, the Burning Man or the Stanley Cup playoffs without leaving the McMansion.

"And what’s with this worry about travel anyway? With VR, it’s no longer necessary."

Indeed. People need to try to think further into the future before starting big infrastructure projects.

I'm sure DT won't do it, and I doubt people who support him will do it either, but before spending money on transportation infrastructure, they should be trying to imagine transportation 20+ years from now. What are the trends now, and what will they potentially be in the future? It's silly to build fleets of airplanes that can fly at supersonic speeds, and the airports to support them, if people will simply be strapping on virtual reality goggles.

...or the low-cost carriers gaining a larger part of the transatlantic market share. Supersonic travel depends on the assumption people will pay more while low cost carriers are proving travelers prefer to pay less even if the flight takes longer.

Right now the US DOT is delaying the approval of Norweigan airlines to fly from the UK to the US. It seems the "market" has more interest on $400 transatlantic return tickets instead of supersonic travel.

Just like video teleconferencing eliminated the need for people to travel for business

"Just like video teleconferencing eliminated the need for people to travel for business."

To me, this is like someone sarcastically writing in 1907, the year before the Model T came out, "Just like cars eliminated the need for trains and horses." The simple fact is that videoconferencing is improving rapidly, and business travel is not. So it's a matter of when, not if, video conferencing/virtual reality will replace a substantial amount of business travel.

It's also like Henry Ford in 1925 thinking that flying cars were just around the corner, and he would design the "flying flivver" -- and he did.

90 years later, we're still waiting for the flying cars.

90 years from now, in-person meetings will still have a pronounced advantage over virtual meetings, enough of an advantage that people will still be flying across counties and oceans to make them happen. Because the videoconferencing technology is indeed improving rapidly -- but the problem is it's been doing that for 80 years. And we're still waiting for a videoconference that can be even 90% as good as an in-person meeting.

Videoconferencing will continue to grow of course. It will even replace some (but not most) business travel.

When MOOCs were the latest tulip-mania craze three or four years ago, I offered a Julian Simon-style bet: that contrary to the predictions of the "disruptors", there would be more bricks-and-mortar classrooms 20 years from now, and more students in those classrooms, than now. Finally after a couple of years of silliness, most people realized that online education -- though clearly growing in importance, no one disputes that -- is going to be replacing only a fraction of bricks-and-mortar education.

I similarly predict that 20 years from now, there will be more business travelers, and they will be traveling more aggregate miles, than there are now.

"Because the videoconferencing technology is indeed improving rapidly — but the problem is it’s been doing that for 80 years."

Really? How many people were videoconferencing in 1936? And what technology were they using?

"I similarly predict that 20 years from now, there will be more business travelers, and they will be traveling more aggregate miles, than there are now."

I'd be willing to bet against that...certainly as far as *U.S.* business passenger airline miles go. Videoconferencing is just getting too good:

Unfortunately, I can't find any reference that reports U.S. airline business passenger miles over time.

It all depends on what you mean by "infrastructure."

When Dems say it, they are usually trying to sell the lie that the economy is crappy because no one can ever get to work, because they can't drive two miles without finding "crumbling bridges." Solution: several hundred billion dollars for wildly overpaid Dem union boys to pave the highways they just paved. Yay! (Forget the fact that NOW you can't get to work, because paving.)

If Trump, or anyone, means hardening the electric grid and/or the internet/fiber-optic grid... then we should all thank God that someone has a clue. Because it's been a long time.

Alex: it would be nice for you to have cross-referenced the excellent Ed Glaeser piece you linked to a few weeks ago.


The Glaeser piece sums up the issues extremely well, and while I'd agree with a lot of this post here, the primary tool to achieve all of these outcomes seems to me to be privatisation and better regulation. Airports can be privatised relatively quickly - and I don't see any call for any PPP once that's happened. Likewise on the electricity grid objectives: mostly achieveable with privatisation.

In fact, I'd almost argue that a widespread privatisation program could be a cash generating activity for the Treasury and be very supportive of economic growth. I can see the political reasons for a call for public funds in infrastructure across this menu, but I can't see any policy or economic reason for it. I have no idea whether Trump can be pro privatisation though.

Appreciate the "There Will Be Blood" reference, but unlike an oil deposit, nuclear know-how is not a rival good.

Well, if it's protected by patents it will be.

I'm sure the Chinese will be happy to come here and build our nuclear plants in a PPP.

But what ought the tariffs be such that America wins in the deal?

There's some low hanging fruit to be grasped here. Ben Lindley has developed a way to retrofit existing reactors to burn thorium While not walk away safe like a dedicated molten salt reactor, the redesign is safer than current reactors and has all the benefits of the thorium fuel cycle: very low nuclear waste production, a nearly inexhaustible cheap fuel source, and proliferation resistance.

Existing reactors could be converted much faster and much more cheaply than building new MSRs even if their design was ready for roll out.

Not a fan of blowing a bigger hole in the budget. Also, for whatever reason, the US doesn't do infrastructure nearly as efficiently as many other developed and developing countries, maybe because too many interested parties simply view these projects as honeypots.

I'd be on board with the idea of a $1 trillion infrastructure budget tied to repealing Davis-Bacon, though. (h/t Morgan Warstler).

Does Davis-Bacon matter in a highly industrialized world? I would think equipment operators are near full employment.

The problem with off-on spending is that you have no time to scale with apprenticeships. This is not a slow build to a new steady state. This is blow the dam.

While I have little expectation this will occur (partially because I'm not convinced the spending will materialize), I'll trot out my advice to Obama when he was considering ways to spend the stimulus, other than padding crony's pockets:

Address global warming. In four years you could have ground broken on a substantial nuclear power plant in every state; in eight years they could be operational. The normal construction timelines are dictated by regulatory and legal delays, and a serious federal push could overcome them. Loosen up drilling, transport, and export regulations to compensate the fossil fuel industry - you'll still come out ahead.

It's an "Only Nixon can go to China" situation. We'll never get a real solution from Democrats, as people rightfully suspect they're just trying to tax their enemies and payoff their friends.

If solar and wind output had stayed at 1990 levels you would have a stronger case that it was farce. Actual accomplishments deny that they were "just" trying to tax their enemies and pay off their friends.

Solar and wind are a slow motion robbery. Particularly solar.

The interesting thing to me is that growth is international, and thus cannot be laid at the feet of any one regime.

Heck, the Saudis buy solar.

If solar is slow motion robbery why are many people installing solar panels on houses and eliminating electric bills? do you think this does not make economic sense?

And this is only the downstream subsidy...

For what it's worth, I have always wanted to cancel the subsidies, while keeping the research spending. And to the extent that other energies have subsidies they too should be discarded.

Nuclear or solar, which can actually self-fund and self-insure?

Nuclear energy should be too cheap to meter; it's only regulatory and legal costs that keep it down. That could be fixed with the stroke of a pen. Solar has the opposite problem.

I worry a bit about private profit socialized risks with nuclear. As an example, all our schools had evacuation plans for San Onofre.

And now of course we have the shutdown costs, which I realize are only actual and not theoretical.

If I understand it correctly there is no risk to the new reactors. The legal and regulatory costs are completely unnecessary.

The heavy subsidies on solar panels have lowered the cost of production of solar panels down by quite a bit, thanks to economies of scale. That was important, because it's the only way to really find out how low the prices can go on the panels, and that will ultimately determine how useful solar power is.

Two important things you got wrong. Our grid is far more robust than the picture you paint of it. First of all did you ever actually live in the midwest??? Storms everyday. And there are indeed times when these storms cause temporary blackouts. These blackouts are not the entire midwest as you imply but small pockets in rural areas. It is the inevitable result of our country's weather patterns and spending a trillion or so won't change that.
Second; PV and wind power is NOT cost effective. Given the realities of physics it is unlikely that they will ever be cost effective on a large scale. The ONLY reason we dabble in them is because some politicians choose to reward some supporters with huge contracts at the tax payers expense. End all PV and wind subsidies and you will quickly see how expensive they are.

We would be better off to place a moratorium federally funded infrastructure. Most of it is simply payola and many projects are built that were never wanted or needed. Our first priority should be to live within our budget; stop bleeding dollars..

Picked the wrong president then. A Rep Congress is gonna go bananas now on the spending (and tax cutting). Hello deficits.

President Hillary under this Congress would have been stonewalled twice as much as Obama was, when not fighting off impeachment. Way less deficit spending.

All congressmen want to spend money in their home state. That's why we need to drain the swamp.

As for deficits in case you haven't noticed we have had 8 years of $trillion plus deficits.

Taxes should be cut for individuals and businesses. The correct way for the government to accommodate that is to reduce spending.

But clearly REDUCING spending is not what's going to happen, increasing it will. So clearly you have no problem with deficits if you support Trump, who will be increasing whatever deficits we had under Obama.

It would appear you are pulling your predictions out of some dark place. We don't know what the ongoing deficits will be. However I will heartily agree that if we continue with high deficits we will destroy the economy. We need to cut spending, cut the size of government and end unconstitutional programs/spending.

GWTW: the dark place I'm pulling them from is Trump's twisted brainpan. Read the papers, cutting spending ain't on the menu, but big tax cuts are.

Just as an aside, I experienced far fewer storm-related blackouts when I lived in mid-Missouri (with plenty of impressively dramatic Midwestern storms) than I do now, living in Suburban Maryland. So I don't think storms are the explanation.

And where I live now I experience zero blackouts of any kind. When I lived in the midwest outages were not common but did occur to small segments of the grid and in all cases due to storms.

The problem with this argument is the author implied that the grid has these blackouts because of general weakness in either the design or age. Neither are true. The argument the author is making is typical of those who simply want to spend the money. Either they as government or private workers expect to benefit or they are working in behalf of someone who does.

I worked as a consultant to the largest generator and distributor of electricity in this country AND I worked for a smaller electric utility. I know the grid, I also know it's weaknesses and problems. For the most part it is solid. The problems it faces are: 1. local utilities and governments preventing new power generation mostly related to the AGW issue. 2. Some cities have grown too fast and have not expanded their grid to match. 3. We have large rural areas that other countries in general do not have. Rural areas with long distribution lines and often small utilities have problems with natural causes like tree limbs and slides.

These are not 'grid' problems they are local problems some caused by politics and some caused by cost benefit issues.

"While customers in Japan lose power for an average 4 minutes per year, customers in the American upper Midwest lose power for an average 92 minutes per year, and customers in the upper Northwest lose power for an average 214 minutes per year, according to Amin’s analysis. Those estimates exclude extreme events like severe storms and fires, though those have been increasing the past two decades."

I agree 92 minutes or 214 minutes is not terrible, but it's more than customers in other developed countries.

"Second; PV and wind power is NOT cost effective. Given the realities of physics it is unlikely that they will ever be cost effective on a large scale."

I predict that prior to 2050, worldwide electrical generation from photovoltaics will greater than any other electrical source in the world. (But I agree that rapidly phasing out subsidies for photovoltaics, as well as renewable electricity mandates, are a good idea.)

Oops. The full link for that quote is:

I can't predict where PV and wind power will be in 2050, it all depends on the continuation of massive amounts of tax payer money into the pockets of the manufacturers and plant developers. But the simple truth is it takes more energy to manufacture, transport, install and maintain a PV or wind power system than it ever generates in it's lifetime. It simply is not self sustaining. What is worse is that every windfarm or PV farm generation facility MUST be backed up by a fossil fired generation facility because wind and PV are not dependable. IF anything PV and wind make our national grid less dependable.

This is going to be fun. Balanced budget guys are now "on board" with a trillion in new spending.

Whereas I get to stay where I was, a moderate who wanted to know details, to see that the programs actually make sense.

.. I wonder what they are doing at the Heritage Foundation today.

Understand that in the event of an increase in the national debt associated with increased infrastructure spending I will also be increasing my balance sheet reserve to reflect additional debt incurred, like any responsible grown-up, and I won't be happy about this, but I will be less unhappy than if the money were spent on a boondoggle with a negative ROI.

This is practical politics. Trump won, and his supporters will get something, and it won't be all the jobs that no longer exist (and it certainly won't be any of the fevered imaginings of the left), but there is a general feeling that this would inure to the benefit of regular folks, so there it is.

It's important to keep in mind that conservatives were generally against Trump. When Romney came out early and hard against him, it wasn't because Trump was some super-conservative as election time caricatures made him out to be.

The people who won this election for Trump were somewhere in the middle, and often people who voted for Obama four years ago.

I called it a new coalition yesterday. I saw Jeet Heer(*) call it a fragile coalition this morning.

* - definitely left of me.

".. than if the money were spent on a boondoggle with a negative ROI."

That's the amazing thing, that the expectation of "good spending" has flipped from one party to the other. Of course the Democrats probably didn't ever stop liking spending, and so this leaves us independent pragmatists really alone.

All that amazingness is sadly going on only in your own head.

I'm skeptical that this would be "good" spending, but I do understand that we need to spend money on infrastructure, so please put that bogeyman against whom you continue to argue to one side. We currently spend something like $250 billion per year, and if there is anybody in my community who didn't notice The Great Recession, it's the general contractor down the street with a steady supply of public works projects in any environment.

Reiterating now, I am concerned with the US ability to get bang for the buck on such spending commensurate with other countries, but freeing us from Davis-Bacon is a step in the right direction. And based on your presumption that Davis-Bacon won't have much effect, well, I don't see why you'd want to die on that hill yourself. Glad to have you aboard, comrade.

I think a fair definition of a fiscal conservative is that he wants to see the plan before he approves the spending. You seem to be backing off your prior "on board," which you should, until you see the plan.

I asked about Davis-Bacon because I thought you meant the trade wouild be similar value. I don't care if it is kept.

Fair point. I reckon I'm resigned to some kind of infrastructure spending because that's the way the wind is blowing and, as you note, Democrats ain't gonna stand in the way.

So 'on board' is too strong, but as long as this is gonna happen anyway, I'd want it to be as un-boondogglish as possible, and, as a practical matter, if this can be tied to some improvement in the process of actually doing infrastructure in the US, I'll take my small victories where I can get 'em.

BTW- I'm at least as concerned with ANY tax cuts right now for the same reason, particularly something with basically no chance of improving the economy, such as repealing the estate tax.

This isn't hard to understand. There still are some fiscal conservatives out there, but we are clearly not in the ascendancy, so the intergenerational plunder will continue for the foreseeable future.

Just to round this out, I voted for Hillary. My biggest concern with Republicans is tax cuts. There is a lot of evidence to suggest that the Bush tax cuts and crazy spending didn't do much for the economy. I can see a repeat here, and gridlock under Hillary would have been better.

Maybe the GOP surprises me and does something that does help the economy (lowered corporate rates, maybe reduced income tax rates plus a VAT, hopefully close to revenue-neutral), but I'm not holding my breath.

On infrastructure, though,well, we woulda got something like this under Hillary anyway. All congresspeople like to bring home some pork. But, under Hillary, there would not likely be any attempt to reform the process of doing infrastructure, so Trump in the White House is possibly a net positive on this issue.

I recognize your pragmatism. Ultimately we both voted for Hillary because we thought she was lower risk.

I'm with both of you on this discussion. We'll see.

I voted Clinton for your reasons and also because I preferred a serious person as president not a Barnum/Berlusconi. Not happy with the precedent here.

But I'm consoled by how much Trump will benefit my pocketbook as a high income earner. I feel like the guy who bets on his team to lose so if they do at least he gets some money to console himself. I shoulda bought some Trump shares in the betting markets.

"I’m skeptical that this would be “good” spending, ..."

So, Brian, I hope you are paid a maximum of $15,000 per year, because paying more would represent "bad" spending.

And I hope you do not get your money back on bonds you buy, because paying principle and interest is "bad" spending.

Or so I have been taught by conservative political economists.

"the money were spent on a boondoggle with a negative ROI."

Does an investment that returns 4% over its initial capital asset lifetime of 30 years have a negative ROI?

And then reinvestment of half the original investment will extend the life of the investment by another 30 years, likely at a 4% return due to lower prices from all the competing investments creating too much supply to prevent prices falling to costs plus market ROI.

Or do you think investments with high returns that totally wipe out all capital asset value in 20 years with zero investment possible to justify not total abandonment of the asset. Ie, coal mining when energy supply was scarce because of extended low investment in energy production capital assets now resulting in total abandonment of coal mines and power plants in bankruptcy due to cheap natural gas from excessive investment to produce oil at $60 to sell at $80-100. Reinvestment in oil and gas at lower cost will extend those past costly investments asset lifetimes for decades to ensure to killing coal production even without any new costly or even very cheap investment in coal.

Coal industry jobs were 250,000 when Reagan took office and 130,000 when Obama took office, but today coal production tons are still much higher than before Reagan started killing coal jobs in high numbers with only 100,000 jobs. Coal jobs fell from 250,000 to 165,000 while Reagan was president.

@Brian D:

You are really proud of your balance sheet reserve.

Before we spend a dime, we need a much better system for undertaking public works. Comparable projects cost anywhere from 50% to 90% less in Western Europe and Japan. Moving forward before fixing that would be like lighting 3/4 of the money on fire.

Alon Levy at Pedestrian Observations has the best analysis of how bad the problem is and what (some of) the causes are.

Your mean getting rid of all conservatives from US government so liberals can quickly levy taxes and fees to build early and Quickly?

Eg, the Big Dig cost so much because the tax and fee revenue was not raised in the 80s to pay for construction in the 80s. Instead, it was built with borrowed money in the 90s with the debt service requiring the still too low taxes and fees go to paying more for interest than to paying for the actual work. The debt is unlikely to be paid off until 2040, with $7 billion in interest on $14 billion (which includes interest during construction). Meanwhile, the service of other infrastructure is suffering because of simple lack of maintenance compounded by several times the demand over its designed capacity.

You can argue that only Chicago or Illinois should pay for O'hare, because flight delays across the US because of problems at O'hare are caused by Chicago big government. OK, why hasn't the private sector eliminated O'hare from being a network constraint. And to a large degree that have by making Atlanta the alternative to the role O'hare played not only for national air transportation, but also rail transport. But the cost of building up Atlanta's infrastructure has been borne by taxpayers.

" we need more and better airports"

Why? What constitutes a "better airport"? Airports are places where airplanes land, get unloaded and loaded and then take off. It doesn't take much really to get that accomplished. Anything else is amenities. Comfortable waiting areas, fast food purveyors, bars, TV, short walks to the gate. It's not like airports are competing for travelers on the basis of amenities. If someone lives in Denver they'll fly out of the Denver airport instead of the Cheyenne airport because it's closer, not because it has an Orange Julius and a Wendy's. Nobody would drive from Denver to Chicago because there aren't enough bathrooms in the Denver airport.

I don't think this is correct. There are big issues with airports that impact flight delays, etc.

Don't worry about chuck, he's kind of pre-modern. Why do we need airports when we can have horses and teepees?

Yes, the big issue is the lack of sufficient land in places people want airports: densely populated areas.

O'hare was for decades the busiest airport in the US in large part because it was built in a rural area west of Chicago with plenty of land, so it had the most runways and the longest runways. Today, the area is heavily developed, so expanding the airport to handle more traffic of bigger planes is requiring eminent domain taking of property, mostly residential areas built long after the airport became a major commercial airport.

I lived in the region west of O'hare by about 10 miles under the flight path 90% of the time. Very seldom was time spent outside free of two aircraft noise that would drown out bird sounds.

Chicago has a plan for a second airport built in a very rural area southwest of Chicago. Originally proposed in 1967, the cost and paying for it has delayed progress for decades. In 2002, the FAA approved the site and land purchases began in earnest. they have begun buying land for runways, buildings and to prevent development under flight paths, and the IDOT owns half the 4200 acres required, over 6 square miles. Eminent domain cases for the rest of the land are in the courts. Just buying the land will likely approach $200 million in my opinion. Building transportation access to the airport will be $5 billion. And just to get three airlines using it will cost at least a billion for runways and terminal and mediocre transportation access. My SWAG based on half a century watching big projects get built when the need is obvious but no one is willing to pay for them, in money or reduced quality of life.

"O’hare was for decades the busiest airport in the US in large part because it was built in a rural area west of Chicago with plenty of land"

Well, yeah. West of Chicago, center of business activity with the only competition being pre-jet Midway and Milwaukee, some distance up north. No major airport was built west of Kearney, NB or south of Gallup, NM because only a small number of big businesses were located in those areas, even though there was lots of rural land. The fact that O'Hare was in a rural area isn't what made it busy, the fact that it served Chicago did.

Given what we think we know about what drives Trump, my fear is this. Trump will do anything and everything to make his presidency appear like a success. He seems to care about economic growth as a metric of "success" but not the debt. So he will spend a ton on infrastructure and defense while at the same time cutting taxes, which will explode the deficit/debt with all the attendant issues there.

No doubt, he will be the kick the can-est president ever. Bigly. What does he care about what happens after he's done?

In other words, Trump will deliver what Obama promised to do, begged Congress to do, but was prevented from doing by Republicans, but with far higher deficits.

Dueling blog-mates. Cowen almost but doesn't quite bring himself to say what's wrong with the Trump plan, namely much higher deficits created by very large tax cuts for the wealthy coupled with investment in infrastructure also funded with debt. Give me your tired, your poor, your huddled masses yearning to breathe free, but not a combination of large tax cuts for the wealthy and a trillion dollars in infrastructure spending funded with debt. Trump's economic plan is the Bush plan on steroids. And why on earth does Cowen think Krugman and Summers have a problem with it?

Very sensible, but sadly it almost reads like instructions. Raise nominal GDP, make people happy.

"As I said in Launching the Innovation Renaissance we need more and better airports, for example. Ironically, New York Governor Andrew Cuomo’s $4 billion PPP to replace LaGuardia’s Terminal B which has as a leading partner in Swedish multinational Skansa, is an important model."

The problem with big infrastructure ideas is that most people don't look very far into the future to see possibilities that might affect that infrastructure (including eliminating the need for it). The likely future of transportation is computer-driven vehicles of *all types* (including airplanes). If we have computer-driven airplanes, vertical takeoff and landing (VTOL) aircraft make sense, and that eliminates the need for an airport to be anything significantly more than a big parking lot.

A similar but far more glaring mistake is Donald Trump's big beautiful wall. He says it will cost $10 billion. Everyone who knows says it will cost much more if it's a 50-foot concrete wall, 1000 miles long. But for less than $2 billion (less than one-fifth of what DT says his wall will cost...less than one-tenth of what people who know about such things say his wall will cost), I could come up with a drone fleet that would cover all 2000+ miles and would be almost as effective as the concrete wall (i.e., successful illegal crossings cut from the present ~400,000(?) per year to less than 40,000 per year).

Are you saying you will welcome helicopters taking off and landing in your neighborhood every hour of the day?

You have clearly never lived near an airport or near a heliport.

My office in the 80s overlooked a private heliport in an office park available to us to travel between campuses that was isolated by a half mile of forest from residences. Within a year, flights were being restricted because of complaints about the noise. We knew when every flight arrive or took off, even in the interior computer room where you had to shout to be heard over the fans and blowers.

"Are you saying you will welcome helicopters taking off and landing in your neighborhood every hour of the day?"

No, I'm saying that with computer-driven VTOL aircraft, it's possible to locate "mini-airports" basically anywhere. Just to take a wild example, maybe at the intersection of I-80 and I-55 approximately 45 miles from downtown Chicago. Such airports wouldn't need runways or even large terminals. And with computer-driven cars, they wouldn't need onsite parking or rental car facilities. So spending billions of dollars to expand big-city airports might easily be rendered a poor investment by development of computer-piloted VTOL aircraft technology.

Another thing that could be done would be to build huge (or even yuge) embankments around the airport for noise control. That can't be done with conventional aircraft, but is possible with VTOL aircraft.

Mexicans cross and re-cross the border in droves everyday. The parking lot of the Home Depot in El Paso is filled with pickups bearing Chihuahua license plates. Messing up the border activity would be an economic disaster for both countries.

"Mexicans cross and re-cross the border in droves everyday. The parking lot of the Home Depot in El Paso is filled with pickups bearing Chihuahua license plates. Messing up the border activity would be an economic disaster for both countries."

OK, which messes up border activity more, drones flying a couple hundred feet in the air recording everything, or a 1000-mile-long 50-foot concrete wall? My point is that Donald Trump's whole mental outlook is to look backwards to yesteryear's technologies. He wants to bring coal back. He wants to bring primary steel back. He wants to build a huge concrete wall. It makes more sense to employ modern technologies.

It's a reasonable point of view to say that it would be good to reduce the number of people who come into this country illegally. It only becomes unreasonable when the measures taken to reach the objective cause more hassle/expense than the "problem."

Even with a drone fleet you still need thousands of border patrol agents to apprehended the people spotted on drone cam. From what I understand the border already has lots of cameras. Drones would only help us watch border crossers with more dramatic cinematography.

Now if you could get a drone to autonomously apprehended people, that would be something.

"The first new nuclear plant in decades just started producing power for commercial use last month. Trump should cut the ribbon at an opening ceremony."

That nuclear power plant was built by a government agency created by Democrats and FDR in the 30s to do Chinese style economic development in the depressed region bridging the South and Midwest.

The four nuclear reactors either in construction or authorized since Obama took office are in the conservative mid-Atlantic where conservatives rejected free market energy production and distribution that was supported by economists across the board, retaining government central planning captured by the utility industry.

So, Alex is embracing big government central planning that originated in the heyday of Republican Party power, the era when the Interstate Commerce Commission was created to regulate and price all transportation services, providing the framework for regulating electric and telephone services with public utility commission central planners setting rates and authorizing every investment, and greatly expanded by Democrats in the 30s.

At age 69, I have the benefit of being in my late teens and 20s when Milton Friedman was arguing that the enablers of building nuclear power plants were destructive because they created too much investment and too many middle class jobs. And I remember the dismantling of the means of building nuclear power plants in the Northeast and in California.

This all happened before Alex was 15.

I must admit I was shocked to learn that the conservative South totally rejected deregulation and free markets that is symbolized by PURPA, crafted and signed by the conservative southerner Jimmy Carter.

Alex has argued that economists can't run experiment like physicists can. Well, we physicists can't run big bangs in the lab, but we do look back 14 billion years in history.

Alex can simply look back 50 years to compare deregulation of utilities and moving to markets with not deregulating centrally planned utilities.

Compare the electric utility sector in the Northeast with the electric utility sector in the South Atlantic (Georgia, Tennessee, to Florida) or simply Texas in terms of profitability and electric rates. The still centrally planned regions have lower electric rates than the deregulated power generation market Northeast.

A bigger issue that impacts the infrastructure stuff is the tendency for infrastructure projects to get tied up in decades of legal wrangling, either from the forces of NIMBY or from rent-seekers trying to extract a cut of the project budget in exchange for letting the project continue. I don't see a good solution to this on the horizon, but until we have one, I think talk about building 50 new nuclear plants or whatever is going to remain just talk.

What is the ROI on $4b for a LGA terminal which subjects thousands of people to many years of wasted hours of traffic? And we know $4b is the pre-cronyism budget.

So basically all that racist nonsense on immigration was just what the establishment needed to sell voters on a big fat Keynesian stimulus package.
Who knew that Democrats could appeal to the masses by being racist?

Every time you use that word to describe something not-racist, you create another Trump voter.

It is racist.
Saying the brown people are more socialist than white people is racist. Trump is living proof that is false.
Saying the brown people are more statist than white people is racist. Trump is living proof that is false.
Saying that brown people are less intelligent than white people is racist. Trump is living proof that is false.

That's four. Why don't you try "deplorable"? That's ten all by itself.

When Michael Moore is out there telling you your accusations of racism and sexism are hogwash, you should really reconsider your position.

WHy would I give a fuck what Michael Moore says.

Saying brown people are inherently socialist is racist. FACT.

Hazel, you're fighting a strawman.

@LA: it's not really a strawman. Probably the biggest objection to immigration (legal or otherwise) I read is about Democrats importing new voters. And it ain't the white immigrants they are worried about.

As long as we're in budget busting mode, how about a MISSION TO MARS???


(Fuck it, I want my cut.)

Re: Speaking of air travel, Trump seems like just the person to Make America Boom Again and he could do it with a small directive to the FAA to drop the ban on supersonic aircraft and replace it with a reasonable noise standard.

Huh? Supersonic aircraft are ludicrously expensive, and the old SST mainly served the ostentatious 1%. People who fly are mainly interested in cheap fares an they'll put up with lots of unpleasantness to get them. I don't see any great benefit in being able to get from DC to SanFran in an hour's less time than it currently takes (and a non-trivial amount of that time is the time spent hassling with the airport itself, not on the plane).

"I don’t see any great benefit in being able to get from DC to SanFran in an hour’s less time than it currently takes"

You don't size the bridge for the number of people currently swimming the river. Also, your preferences might not be universal.

I was very skeptical of the Obama infrastructure plan. (By the way, is that considered a success these days? I had the impression that it frittered away its budget on other priorities and didn't end up with enough going to actual infrastructure.) Most of that logic still applies now. And two weeks ago, for that matter, when Hillary was the one proposing it. Big stimulus right after an election campaign seems prone to getting picked off and diverted as political paybacks.

At the same time, we're in a different point in the business cycle now. The problem with stimulus right after a crash is that you're giving money to businesses that really need to downsize -- like blowing air into a bubble right as it pops.

If Trump's biggest failure on the economy is that he embraces dubious stimulus schemes, I think we'd be getting off lightly.

If rural America carried Trump ("Make Rural America Great Again") - - doesn't the infrastructure stimulus package need to be more about rural highway/bridges (which cannot be monetized in a P3 strategy) and less about international airports supporting the elites?

The population of rural America as a percentage of the total population of the country drops on a daily basis. Outside of the interstate highway system and the suburban rings there are probably more highways than the country actually needs. The infrastructure expenditures required are repair and maintenance of existing stuff, decaying city water and sewer mains especially.

Big spending on advanced nuclear, solar and electricity grid modernization is the single biggest thing Trump could do to mitigate climate change long term. Ironical that.

Trump was a builder.

Do you want infrastructure? Let private industry build huge apartment buildings in the most productive cities in the US. The increase in local property and income taxes will pay for any additional government infrastructure required.

How does the Federal government get rid of state/local NIMBY rules? Trump will figure out something I guess. Maybe take their Medicaid or Federal Highway funds hostage or something.

I'm joking, but I guess I also can't rule out something like that happening.

Infrastructure is not inherently a good use of financial resources. Think about the bridge to nowhere in Alaska. To make any economic sense whatsoever, the long-term value of the investment in infrastructure must exceed the amount spent (never mind the possible better uses of the money spent.) There are two aspects to this equation... long-term value and the amount spent. To reduce the amount spent now, should we do away with "prevailing wage" laws? To ensure long-term value, should proposed projects be stack ranked in terms of ROI, where the return is calculated by an independent entity?

Alex, nuclear is a high capital cost, low fuel cost, source of energy. Because if this nuclear plants save very little money by reducing output when wind or other energy production is high. As a result, it does not pair well with renewable energy.

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