The decline in American infrastructure proficiency

That is the concern of a new paper by Ray Fair, here is the abstract:

This paper examines the history of U.S. infrastructure since 1929 and in the process reports an interesting fact about the U.S. economy. Infrastructure as a percent of GDP began a steady decline around 1970, and the government budget deficit became positive and large at roughly the same time. The infrastructure pattern in other countries does not mirror that in the United States, so the United States appears to be a special case. The overall results suggest that the United States became less future oriented beginning around 1970. This change has persisted. This is the interesting fact. Whether it can be explained is doubtful.

Is it not the rise of interest in spending more money on medical care?


Maybe infrastructure is an "inferior good" and countries spend less on it as consumption rises? The opposite of Random Critical Analysis's theory that healthcare is a "superior good" and its high share of US GDP is explained by high US consumption (both as a share of GDP compared to high GDP/cap competitors, and in absolute terms compared to states with lower GDP/cap, which between them account for pretty much every other economy).

Also ask how do you control for the US having more "done" construction that is still good?

Overall, it may be worth plotting infrastructure investment where countries are matched for absolute consumption levels, rather than comparing the US against other nations in a time series.

Also, it's worth calling into question the wisdom of sustained infrastructure investment, when it seems the most "forward-thinking" countries in infrastructure are until recently poor Asian countries which are leap frogging into the top tier. Doesn't it make more sense to invest heavily in cycles of, say, 50 to 70 years instead of continuously and uniformly over the same period?

I anticipate a new era of smart cars and smart roads for urban transport, and some form of supersonic interurban transport arriving in the next 20 or so years. Perhaps compared to what's coming, an expansive subway system and "high speed" rail network would look rather antiquated.

That's the danger in any such investment. But doing nothing is also a danger, the next-big-thing can always be just over the horizon. These technologies could turn out to be real or just vapor-ware that are always just "one step away" from being perfected. So investments are always deferred and the longer they are deferred the stronger the argument for continuous deferment becomes since the transformative technology is "just about to be perfected". The "next 20 years" or so seems like it could be a long time.

Is the risk that great given that there is always a faction in America eager to invest in playing catch up? The Dems have been championing HSR for 20 years now, and after a few false starts, they might get a Green New Deal. If tommorow never materializes, the faction screaming for yesteryear's tech will become ascendant.

This is because politicians decided to use the public treasury to give free stuff to indigents in return for votes. End all forms of welfare.

Making things doesn't pay. Slinging bits on Wall Street or slinging bits in Silicon Valley is the least riskiest way to reach the upper/middle class. Work a crane or swing a hammer and taxpayers scream that you are overpaid for a job any Mexican can do for much less. Given these options, it is clear where the most ambitious should focus their attention. That leaves the cronies to pick up the slack.

We have infrastructure to deliver Netflix at 4k.

That's not nothing.

In other words, there are no incentives to build. We have incentives for elite industries centered on the coasts but for everything else we have at best a hole in our collective pockets.

A lot of things changed around 1970. That year looks like a major historical fulcrum for the USA.

1970 was approximately (within a few years):

1. The year manufacturing employment started to stagnate (later to decline).
2. The Great Compression reached its peak.
3. The Great Stagnation began.
4. Roe v. Wade was passed
5. Women entering workforce en masse.
6. Historic increase in immigration begins.
7. End of Bretton Woods.
8. Beginning of large trade deficits.

1982-1999 sure did not feel like the Great Stagnation to me.

I blame increased medical and social spending. One should not forget high interest rates, which forced the government to refinance low-interest debt at high rates, increasing the share of government revenues devoted to debt service and decreasing the share of all other government activities.

Between 1982 and 1999, the national debt exploded 4x under Reagan, another 1.5x under Bush and 2x under Clinton. If you spend money with your credit card, you feel rich today but you are actually stagnating.

" The infrastructure pattern in other countries does not mirror that in the United States, so the United States appears to be a special case."

But why does this apply to the US and not elsewhere? Western Europe does not appear to have the cost explosion in infrastructure projects the US experiences. Do they have less social spending?

Military spending. The establishment of both the right and left will continue to deflect and say it is social spending and entitlements that they want to cut because of their contempt for everyday Americans (#therealgreatforgetting). But their arrogance guarantees Trump's next election. Only in 2024 when the Nationalist Populist GOP squares off with the Democratic Socialist Dems will the establishment cronies change their tune. But with #therealgreatforgetting they will forget again because like the scorpion and the frog it is their nature to forget and coddle incumbent power.

Do not forget:

0.5. The Advent of the Boomers (which also explains all the domestic expenditures for cocaine and crack through the 1980s which helps explain poor American parenting practices through the 1980s and 1990s).

Roe v. Wade was passed

All that is wrong with RvW in 5 words. Yeah, it was passed--the vote was 7 to 2.

For infrastructure, a big one was:
On January 1, 1970, the National Environmental Policy Act (NEPA) was signed and became law. That's the law that requires findings ranging up to Environmental Impact Statements for anything with federal funding or permitting (including a lot of state and local projects.)

That itself was influenced by the highway revolts of the late 1960s. I think those two things had a lot more to do with infrastructure trends than anything you post.

Maybe the cause is not healthcare spending bit civil rights legislation and the riots and racial violence of the 60s. Lack of homogeneity in the voting class and racial animus (cf Perlstein’s Nixonland) undermined cohesiveness and exacerbated problems of the commons. “We” can’t have “nice things” (viz infrastructure) if “we” don’t believe in “us.” (Also, haven’t read Fair’s paper but the DC metro opened in 1976 although plans were drawn 10+ years before, and maybe it was the last major public transit system until LA.)

May be the rise of aeronautical industry made ground people transportation infrastructure less useful, once you have a basic highway and railway network already build.

Fewer airports provide scheduled air service than in 1970.

When the Airline Deregulation Act was passed in 1978, there were 746 communities with scheduled airline service, including 237 in Alaska. Airlines were then free to determine their own service points.

A "temporary", i.e. 10 year subsidy for Essential Air Service was included in the law. About 300 communities received subsidies at some point. Today (40 years later) 174 communities still receive subsidies.

"Over time, Congress has tightened the conditions under which communities can receive subsidized air service. Nonetheless, program expenditures have increased, more than doubling in inflation-adjusted terms between 2008 and 2018."

You'd think with the real estate moguls in the White House we'd know what to do with infrastructure. Instead the Kushners and the Trumps sit back and rake in the profit from their time in office. This can't bode well for the republic.

They haven't figured out how to borrow a trillion from the Russians, then not need to repay by threatening bankruptcy. Trump's solution of simply defaulting on Federal debt was not well received even by the GOP.

As someone who has worked and lived in multiple countries, it always seemed to me that the US has the best infrastructure in the world, when considered on an overall basis. Of course if to you infrastructure means trains, then this is not so, but that seems a narrow definition to me. I can pretty much get anywhere I want in the US on a mix of cars and planes, much faster than I could go via a train.

Do you really feel that the US has the best airports? It takes forever to get in and out of those things. Poor designs and baggage handling is usually in the next zip code. In Turkey, of all places, it took me only 20 minutes to get in and out including screening. That never happens in the states. With regard to trains, yes, the USA lacks there but also light rail and/or subway for intra-city transit. Europe and Asia has the US beat for all these things. That is why they have much denser cities while America NIMBYs itself with another form of critical infrastructure --- housing.

Europe isn't great on housing though either.

Maybe but they beat us on airports, trains, subways, and rails. Commercial ports too like in Rotterdam are automated to a degree we can only look at envy in the States hamstrung by our longshoremen unions and shortsighted politicians. We have better military infrastructure like for example San Diego's Naval Base and our carrier groups are like amazing floating cities but would our federal government please throw us civilians a bone to make our daily lives more enjoyable and efficient?

It's just different priorities. These things aren't important to most Americans.
I don't think it comes down to unions or social spending, the usual types around here want to ride their hobby horses but there aren't have strong labor-movements and social spending in western Europe? Seems news to me.

'trains, subways, and rails' are necessary when you pack your people in. Inferior goods. You are right about airports though.

That's not true. Poor countries tend not to have those things. "When you pack your people in" is more a question of land and space in a country not wealth. Tonnes of trains in Switzerland. Visit the Balkans, basically no trains. I guess by your logic the Balkans are wealthier?

"When you pack your people in" is choice, but that choice was made when the country was poorer and had fewer options. Rail lines don't move easily so they must live with it.

There's limited space, not every country can have US style suburbs and exurbs. People pay an awful lot to be packed in to certain places like Paris, London, NYC, SF. Many of these people could easily afford a place in middle-of-nowhere Ohio or where-ever you prefer. I think this is just like...your opinion man...

Imagine that! Opinion on a comments page.

The US had a very comprehensive network of interurbans and passenger rail at the turn of the twentieth century. Those rights of way by and large still exist (even if they haven’t had active rail lines in some time). See the Rails to Trails Act.

Airports seem nice when they are overbuilt for their actual traffic.

Now that I think about it, highways too.

'that the US has the best infrastructure in the world'

When was your last power outage?

'The U.S. electrical grid has been plagued by ever more and ever worse blackouts over the past 15 years. In an average year, outages total 92 minutes per year in the Midwest and 214 minutes in the Northeast. Japan, by contrast, averages only 4 minutes of interrupted service each year. (The outage data excludes interruptions caused by extraordinary events such as fires or extreme weather.)'

This study is even more illuminating - 'The United States ranks toward the bottom among developed nations in terms of the reliability of its electricity service. Catastrophic events, such as the August 14, 2003, blackout that put 50 million people in the dark, are well known, but that is only the most visible evidence of a problem that is pervasive in the U.S. electric system. Frequent small outages are endemic throughout the country. Although these might seem to be relatively minor inconveniences to homeowners, they can create serious problems for businesses. (See sidebar, “The Effects of Power Outages”). Other countries demonstrate that much greater reliability is achievable, and the U.S. nuclear power industry has demonstrated over the past three decades how vast improvements can be made in the United States.

The average U.S. customer loses power for 214 minutes per year. That compares to 70 in the United Kingdom, 53 in France, 29 in the Netherlands, 6 in Japan, and 2 minutes per year in Singapore. These outage durations tell only part of the story. In Japan, the average customer loses power once every 20 years. In the United States, it is once every 9 months, excluding hurricanes and other strong storms.

Despite decades of sober technical reports written by investigation teams in the aftermath of blackouts, the frequency of electric power outages in the United States is no less today than it was a quarter-century ago. Whether measured in terms of city-sized blackouts or smaller events, the statistics show that reliability has not improved. Indeed, if the data show any trend in the past few years, it is toward lower reliability.

The causes of outages in the United States show there is considerable room for improvement. If outages from major storms are excluded, the causes of each hour of outage include equipment failure (24 minutes), as in the 1965 Northeast blackout; untrimmed trees near power lines (6 minutes); and mistakes by power company personnel (4 minutes), as in the 1977 New York blackout and the 2005 Los Angeles outage.'

It also helps to be familiar with the term SAIDI when looking at this area - it is a measure that excludes weather related outages. 'More renewable energy means less grid stability – this concern is often repeated by critics of renewable energy. But how is the stability of the grid actually measured?

It can be done with the SAIDI. The System Average Interruption Duration Index calculates annual power interruption. It is compiled using the time, duration, extent, and cause of a supply disruption, providing the average duration in minutes of a supply disruption per connected end consumer. A power outage can be caused by many different reasons. For example, natural disasters and the general influence of the weather can lead to interruptions in supply. Power outages caused by natural disasters and weather are increasing, according to Germany’s Federal Office of Civil Protection and Disaster Assistance, but are not included in the calculations for the SAIDI.'

Maybe the others are too reliable. Every study I've seen suggests that the US electric system is too reliable in that the marginal cost of adding capacity far exceeds the marginal benefit.

'Maybe the others are too reliable.'

Well, that is a fascinating perspective. It almost suggests you are either an economics students, or you are under the age of 35 or so, and fully accept that the reliability of the American electrical gri8d has been declining for much of your life.

However, you may still want to read the links, to get a view of how other countries are wasting their money - like Japan, where a power outage every 20 years is normal for a typical customer, compared to 9 months for an average American customer.

"It almost suggests you are either an economics students, or you are under the age of 35 or so, and fully accept that the reliability of the American electrical gri8d has been declining for much of your life."

Almost certainly a econ student. Electricity is very expensive in other countries. There is a lot of variation in the weather in the US. The US is also significantly less dense than the other countries mentioned, with many more miles of power lines. Good bang for the buck in the US. Then again, I've only lost power for a few min in the last couple of years.

'There is a lot of variation in the weather in the US. '

SAIDI as a measure deals with that, however.

'The US is also significantly less dense than the other countries mentioned'

Not in the Northeast Corridor.

'with many more miles of power lines'

With just about all of them above ground, which is a striking feature to German visitors these days, as they think only 3rd World countries still have above ground residential electrical wires on poles.

We did help them rid themselves of antiquated infrastructure in 1942 -1945.

Lots of between US state variance in power outage -

Averages are also a weird thing to consider here; power doesn't often tend to go out fore.g. an hour for everyone, but for some people for many hours.

Would it be better if it never did? Yeah, but if you can get hooked up to a generator on the power company's pocket for a day or two, then if that's vastly cheaper then preventative maintenance, its not such a big deal.

Thats what Milton Friedman argued circa 1970. By the mid 70s he "won" and Carter pusheed deregulation, and PURPA. Conservatives and anti-nuke forces united behind it.

PURPA essentially killed the nuclear power industry in the US and provided the roadmap elsewhere: deregulation of utilities.

All utilities stopped investing, thanks to Milton Friedman. Water systems have fallen into decay, leaking pipes, often water sources polluted. Power utilities lack redundancy and don't have a say in power generation except by kludges like regional power authorities. Telephone utilities are trying to shed customers in rural areas, giving them away to small under capitalized operators who qualify for Federal welfare aka rural utility subsidies.

Note, the latter applies to all forms of transportation. Rail service to rural America has been abandoned, with lines turned over to hedge funds who milk them until decaying tracks makes service so poor customers fail, or switch. Rural highways decay, some turned from paved to gravel intentionally - cheaper to repair, grinders chew up whatever surface and then compact it. Bus service ended. Airports lose scheduled service.

Lacking rural telephone service upgrades, cell service is slow to upgrade until Federal welfare pays utilities to run fiber.

5G will require 5-10 times the cell sites, but that requires even more fiber in rural America. Don't expect 5G in 80% of America any time soon.

Paying workers costs too much, the high costs destroys wealth - (profit from high profits from capital asst scarcity), and its the wealth that funds jobs in high density areas delivering imports.

The high profit from capital scarcity economy Milton Friedman argued for instead of the efficient zero capital scarcity, zero profit, economy of Keynes.

Those are bad metrics for power delivery. Use either Mean Time Between Failure or Percent Uptime. Here's an interesting comparison for old Prior:

In 2011, Germany set a record with a downtime of only 15.31 minutes (as measured by SAIDI—System Average Interruption Duration Index—a common measure of reliability used in both the U.S. and Europe).

In contrast the United States had a downtime—not including planned interruptions or extreme weather events—of 240 minutes in 2007 (It has been estimated, that grid downtime in the United States costs the US economy around 150 billion dollars a year)

That’s 4 hours of downtime for the average electrical power customer in the U.S.. Or 0,05% of the year, which means that the average non-ups-covered network could not reach an uptime of more than 99,95% in one year. If these 4 hours of downtime are all happening in one month the downtime is 0,6% and your uptime goes down to 99,6%. Ouch.

He says ouch, but 99.6% uptime seems "glass pretty full" to me, and it might be an indication that every 0.1% higher is going to be very expensive.

(Didn't read the whole thing.)

'He says ouch, but 99.6% uptime seems "glass pretty full" to me'

So glass full that any facility reliant on uninterrupted power needs to invests in UPS systems that have to be able to deal with longer events than mere flickers.

The weather is not to be ignored in this discussion., of course. However, the fact that the U.S. has extensive above ground pole mounted wires means that the U.S. system is considerably more susceptible to weather in the first place.

And it worth highlighting the difference between an American perspective on a full glass, and a Japanese one - ' In Japan, the average customer loses power once every 20 years. In the United States, it is once every 9 months, excluding hurricanes and other strong storms.'

Uninterrupted power is 100.00% uptime. For that batteries and generators are indeed necessary.

The US is a low population density country compared to Western Europe or Japan. The cost of underground power lines everywhere would be prohibitive.

'The US is a low population density country compared to Western Europe or Japan. '

Not the Northeast Corridor - 'The Northeast Corridor region from Washington, D.C. to Boston makes up just 2% of the land area of the United States, yet is home to 17% of the population and 20% of U.S. jobs. If the Northeast Corridor region were its own country, it would have the fifth largest GDP in the world, just ahead of France, and a population of over 50 million people. From 2000 to 2010, major cities along the Northeast Corridor saw widespread population growth. Many cities, such as Philadelphia, Newark, and Bridgeport, saw their first residential growth since the 1950s, reversing decades of urban to suburban exodus. Compared to the United States average of under 100 persons per square mile, the cities and suburbs within the broader Northeast Corridor region average a density of almost 1,000 persons per square mile.'

Germany has a population density of 601 sq mile, and France has 310 per sq mile, by the way.

Airports are generally pretty bad in the US. Within-city public transit tends to be poor or non-existent, high-speed internet coverage.
By the sheer amount of space relative to many other developed countries, it should be much easier for the US to build many highways with a huge number of lanes as compared to like the Netherlands or something so it isn't hard to see why getting around by car in the US would be easy. But in many other realms of infrastructure there feels to be a lag.

many highways with a huge number of lanes

Yes, the US needs to cover as much as possible of its once fertile soil with concrete and bitumin to alleviate the incredible traffic jams that occur on every Sunday morning when the Christian population flocks to church.

No, I was responding to why people might drive around Europe and think that the road infrastructure is "bad" compared to the US - narrow streets, fewer lanes on the highways but there is a large, basic, geographical reason why it should be much easier to build big roads in the US.

I don’t know how anyone can drive in Europe and think the US has “better” roads. More lanes maybe, but European roads have fewer potholes, require less maintenance and the highways usually have banked curves to accommodate high speed driving. I routinely drive 100 mph on Czech highways without feeling at all out of control. On most US highways at any speed over 80 mph you start to notice how uneven the road surface is.

Personally I'm just guessing here. I'm largely familiar with maritime modes of travel.


Western Europe also has better roads than the US. I can cover the distance from Vienna to Munich much faster than I could drive from Boston to New York, a shorter distance. I have seen roads in Maine that would embarass a Pole.

And France has nicer roads and bridges than Germany. Houses in Europe are much quality than American woodframe and drywall, just smaller.

Curious what you mean by quality. I've seen the opposite. Houses have small rooms and a lot of walls breaking everything up. Also seem damper or just less environmentally managed. Fixtures are nice though. In the US they are more open and a greater number of windows, maybe a product of the greater size.

Housing really varies in Europe. I agree that there are a lot of shoddy apartment blocks, even in Western Europe. And a large percentage of the population lives in shoddy apartment blocks. Actual houses though may be small by American standards but are usually built to last.

'And France has nicer roads and bridges than Germany.'

Depends on whether you are using RN roads or the autoroutes, in my personal experience.

I don't find US airports particularly bad when compared to international airports. Of course there are some really nice airports around like Singapore, but that is more about aesthetics than functionality. Government funded airports are classic examples of people spending other people's money. The main issue with functionality of US airports is the TSA lines, but that is not infrastructure, it is because some clown decided to make the TSA a federal bureaucracy.

On roads, of course some random road in Europe could be better than some random road in the US, but overall roads in the US are absolutely great, the interstate system is marvel really. I visit Houston a lot and the amount of roads added in the last 20 years is amazing, there is no European city that can match it.

'Infrastructure as a percent of GDP began a steady decline around 1970'

Makes you wonder what the U.S. was ramping up on at that time - guns and butter apparently means that infrastructure is easy to ignore in the light of seemingly more pressing needs.

'Is it not the rise of interest in spending more money on medical care?'

Best satire site on the web, though considering what is about to happen in DC this July 4th in striking pompously fashion, is refreshing.

As reflected in these comments, there is no consensus for the decline in infrastructure spending. One possible cause not reflected in the comments is the demographic shift to the south and southwest, a shift that might have contributed to the other possible causes (including Cowen's nomination, the increase in health care spending). I will be sending the holiday weekend with family in Florida. I chose not to travel yesterday (July 3rd) because it is the travel day this year for the holiday. I have driven the highways on that day before, and will never do it again: it's gridlock. I will be driving because unless one is traveling to a large city in Florida, there is no air service. So I am up early to get an early start.

I have spent most of my adult life in a large new city in Florida, a city without public transit (except a few bus routes). When I moved there many years ago, the absence of public transit wasn't an issue because there wasn't that much traffic. Besides, one could purchase a nice house near the business center for a modest price. Today, good God! The place is a nightmare. The houses near the business center are so expensive today that very few can afford them, which means the burbs, which extend several counties to the north and east, with commutes several hours each day. Yet, they keep coming, thousands a month, to take up residence in this crowded, and hot, place with not many high skill jobs; indeed, the economy is mostly low pay, low skill service jobs. Who wants to pay for public transit for them? As regular readers of this blog know, I have a home in the low country, the very affluent part of the low country (although I am not). The most popular means of transportation by my neighbors is private jet from the little airport nearby that has no commercial flights but hundreds of private jets come and go from there. Do the fine folks who travel by private jet want to pay for public infrastructure to make life better for the rest of us? I will be on my way shortly. Wish me luck.

The US population increased from 200 million in 1970 to 325 million today. We have been full for a long time.

Most cities and towns have lost population.

Most cities and towns are, or were in Trump voting, flyover, forgotten, rust belt or left behind, America.

Its odd that the high cost, high tax parts of America are more crowded while thhe low cost, anti-tax parts are less crowded.

Low cost means living in poverty without the high cost stuff produced uin high cost America: transportation, medical care, building materials, equipment, technology.

The price of an F-150 or Cat tractor or MRI or surgical OR is not half what they cost in the coastal States just because the wages are half in rural Indiana, Iowa, Kansas.

200 million was better.

100,000 was better

I did not find in the article is the spending is only for new infrastructure or it includes maintenance costs.

Assuming the article deals with new infrastructure, it would be interesting to see the ratio of new infrastructure + maintenance to GDP.

As the infrastructure grows, more money is spent in maintenance costs. In an extreme case, maintenance costs can be high enough that there's no money left to build new things. Thus, an increase of maintenance costs may explain the reduction in new infrastructure spending.

The explanation, utterly obvious to anyone who follows politics, is the rise of "Reaganomics," also known as the collapse of any sense of taxation to pay for public goods.

On a center-right blog, this shibboleth cannot be spoken of nor named.

If being forward looking is what collapsed, then we would expect that the family, as the embodiment of long term identity and reputation, would also decline as a consequence.

I’m a civil engineer with over 40 years experience working for various major international consulting companies . I’m the guy who actually designs and builds the infrastructure you’re talking about. I started in the 60’s and the change Tyler commented on was very apparent. When I started out my typical clients, mostly public officials at the city and county level, saw major infrastructure projects as a way to demonstrate competence and the ability to “get things done.” There were risks but if you were ambitious a successful large-scale infrastructure project was one way to gain visibility. But the 60’s were also the time of the rise of the Luddite Greens who, more or less, opposed everything. Gradually the risk-reward balance shifted and up-and-comers realized that major infrastructure projects were more likely to end a career than enhance it.

As I learned from this blog, at the margin people respond to incentives.

Why does this explain why the US is an outliers. Other countries don't have environmental regulations? Europe doesn't? Or significantly less stringent labour and environmental regulations in Europe than the US?

'But the 60’s were also the time of the rise of the Luddite Greens who, more or less, opposed everything'

And to think that in Germany, those Luddite Greens were actually partnered with the SPD in the federal government starting in the later 90s. Which undoubtedly explains why there has been absolutely no infrastructure built in Germany for 2 decades.

Germany has actually been a relative laggard on infrastructure spending. I don't know if this has to do with the Green party, it's almost certainly more to do with the general pro-austerity mentality which dominates German politics.

If you look at the paper at Figure 19e on page 20, you'll see that in fact Germany shows a same precipitous decline in infrastructure spending/GDP, it just starts in the late 1980s, unlike the US decline which starts in 1970. 1970 in the US is when the National Environmental Policy Act (NEPA), the most significant environmental law regarding infrastructure spending, was signed.

Your argument, clockwork_prior, is thus very consistent with the environmental law hypothesis.

When was the last time you rode a German train or tried to fly out of Berlin? Germany seems to be succumbing to the same disease as the US. Not sure it’s the Greens, I think it is an aging population with too few children who just doesn’t care.

I'm familiar with Germany and it seems to me like things are starting to crumble there. Once can easily find data showing what a laggard they are compared to other nations on infrastructure spending. It isn't just trains and stuff - housing is very bad; even second tier cities have exploding housing costs relative to local salaries, not enough schools being built, etc. Seems like there is a massive backlog of urgent projects being built up there. I doubt it's the Greens though, more to do with a government obsessed with budget surpluses.

One of the issues surfacing in assessing the value of current pipeline assets (which certainly falls into the critical infrastructure class) is the increasing difficulty, delay, and risk of getting regulatory approvals for new pipelines. This makes existing pipelines essentially irreplaceable and increasingly moaty assets, hence more valuable.

We don’t need pipe lines we got big black cocks!

Nope, its the exponential growth of Green law. Sierra Club vs Calvert Cliffs had a court decide that if you had a federal license (like Calvert Cliff’s nuclear plant license) you had to have a complete environmental review as if it was a government project. This soon extended to pretty much every type of project. The uncertainty, delays and pretty much pointless reviews drove costs through the roof. Add prevailing wage laws and it was all over.

This makes sense as does Blavkbeard’s response above.

The report indicates this as being unique to the US. I know everyone around here likes to ride their typical hobby horse about environmental regulation / labor regulations killing infrastructure but these exist elsewhere too. How does this square with the fact that this is a US phenomenon?

The paper saying that 1970 is the turning point in the US specifically supports the environmental law hypothesis. January 1, 1970 is when the National Environmental Policy Act that started requiring environmental reviews for federally funded (and then federally permitted) projects (including at state and local levels) was signed into law.

According to the papers, other countries show similar trends, but they start at different times instead of 1970. Indeed, other countries later passed laws similar to (and some modeled on) NEPA, but at different times.

The US appears to be a special case, but it was 25% of the world economy over the period. Thus, we have proven that there is major error in economic research that aggregates globally; 25% of their data are extreme points.

The debt results from government insurance, in general, everywhere. It is written throughout most government contracts, long term insurance guarantees that are unlikely to be met. From F35 cost plus contracts to COLAS to contract extensions, to political tax exemptions, even implicit guarantees withing the law itself. Mandatory spending priorities, for example.

We're slowing building Interstate 11 in AZ.

Fascinating comments for once. No clear answer presents itself. But I question why the research starts in 1929. America built a lot of great infrastructure in the decades prior.

I am rare in suspecting infrastructure spending is just about right, for the reasons I've given above. It's about right-sized for traffic, very reliable, and not overbuilt.

How many "small government" types fell for it?

Did you demand that "the left" get out of your way and let you do more big government projects?

"right-sized for traffic, very reliable, and not overbuilt" Agreed.

Small govt types didn't 'fall' for anything, they complain about the cost, not about the govt not doing enough.

Are states really borrowing that much? I thought states had to balance the budget? Does that mean borrow before you spend. Like on current expenses? On the local level, isn't borrowing usually for plant and equipment?

They issues bonds and use their annual budget to pay for the interest, so it is relatively cheap to keep fueling that machine. So long as the bond rating looks good, it keeps working.

The decline in infrastructure spending also correlates with the onset of Capital E Environmentalism and it's strongly restricted today by environmentalists.

In fact lots of infrastructure spending is environmental spending, being directed to remediation, research or monitoring, which adds delay costs to projects as well.

Indeed, the thing about 1970 as an inflection point is that January 1, 1970 is when the National Environmental Policy Act (NEPA) was signed and became law. That's the largest single difference in infrastructure policy, and responsible for project schedules taking longer and more spending. It might well be worth the environmental benefits, but it's surely the most significant thing.

I'm of the mind that the environmental spending (and delays, which are just a disguised form of spending) has become so grandiose as to have lost all proportion to the benefits.

It is an interesting question. My first thought was that a lot of infrastructure spending is driven by corruption. Japan and China spend billions on often unnecessary infrastructure because government contracts are handed out to political friends and supporters, or construction companies simply bribe politicians to generate work. This was even true of the highway maintenance work in New Hampshire when I was growing up. It could be that clean government, the decline of unions and, probably most importantly, the shift of financial power to the financial sector, have reduced the leverage construction companies in the US have over government officials. It is easier for a politician to provide a quid pro quo for a contribution from Bank of America or Goldman Sachs via a tax break or creating a loop hole rather than deal with angry constituents fighting eminent domain issues.

On the other hand, other corrupt countries - notably Russia, but to some extent Poland or Romania, seem unable to turn corruption into any sort of physical assets. In Russia the issue would seem to be the continued weakness of the private sector. Even privately owned construction companies are beholden to the State in a way that is not true in China, to say nothing of Japan. There is no real competition for government contracts so it is easier just to send the money directly to a Swiss bank account without doing any work. In China one still has to build something before one can demand government payment.

Ah, the cult of infrastructure! I find the term to be so vague on its own as to be almost meaningless. $1M on a bridge that connects two communities and enables real improvements in quality of life is counted exactly the same as $1M that pays for less than a mile of lane expansion on an existing highway. One is a real asset and the other is a marginal (at best) improvement. We have many state departments of transportation who wield political power solely by letting contracts for new construction and pass as much of the long-term maintenance on to municipalities as possible. In the 50s and 60s, many of those highways were built right through the hearts of thriving minority communities solely for political purposes. Is it bad that this sort of thing slowed down? Is investing in infrastructure on the blind faith that it is all the same and all good really a wise philosophy? If it is an investment, what ROI do we expect? How do we measure that? Until we have compelling answers, a real understanding of quality, why run up ever more debt building highways in the middle of fields?


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