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Infrastructure fact of the day
Spending [on infrastructure] is up 50 percent over the last 10 years, after adjusting for inflation. As a share of the economy, it will be higher this year than in any year since 1981.
That's from another excellent column by David Leonhardt. The real problem, of course, is the quality of our decisions on infrastructure.
Posted by Tyler Cowen on November 19, 2008 at 01:13 PM in Data Source | Permalink
Comments
The more stuff we build, the higher maintenance we build in for the future.
Posted by: odograph at Nov 19, 2008 1:27:17 PM
Infrastructure is big in Japan!
Posted by: Mike Linksvayer at Nov 19, 2008 1:55:56 PM
Anecdotally, this seems like a great example of the distinction between "easy" and "hard" problems of government waste and inefficiency. We spend a lot of time worrying about the hard problems, like unintended consequences, regulatory capture, and so on. These problems are hard to design solutions for even with relatively sophisticated approaches. Then there are the easy problems, where we're not even trying to do things in a sound way. Why do so many areas of waste that seem like low-hanging fruit still exist? Every presidential candidate promises to cut waste, and it never seems to happen. Is the problem simply the amount of political capital needed to enact change?
Posted by: Greg at Nov 19, 2008 1:56:17 PM
i agree with odoqraph or what ever his/her name is....Our country is growing constantly and we are building lots and lots of facilities. it take lots of money also to maintain those faciilties to insure them and keep them running....so i can see why they are increasing continiously...
Posted by: Josh Wright at Nov 19, 2008 2:05:53 PM
Before the election, he has to please the voting constituency. After the election, he has to please the bureaucratic constituency.
Posted by: Andrew at Nov 19, 2008 2:07:05 PM
This could also be Baumol's cost disease. Construction seems labor intensive, and so gets more expensive as the economy gets more productive even if the sector itself does not.
Posted by: OneEyedMan at Nov 19, 2008 2:48:57 PM
Good column but this bit is rather silly:
"One intriguing idea is for the government to subsidize basic renovations to make houses more energy efficient. This would have the added benefit of putting unemployed construction workers and contractors back to work."
If my house is inefficient then it is in my own interest to fund those renovations. If the savings are outweighed by the costs, however, I won't. Promoting policies where costs outweigh savings (and the time horizon is obv a huge factor here) only makes us poorer.
Of course it would be great if home water and electricity costs would rise and decline based on market conditions, enabling us to make better determinations about whether to undertake such energy saving renovations.
Posted by: Colin at Nov 19, 2008 3:04:48 PM
How much of that infrastructure spending was on the Big Dig?
Posted by: Xmas at Nov 19, 2008 3:05:23 PM
"Why do so many areas of waste that seem like low-hanging fruit still exist? Every presidential candidate promises to cut waste, and it never seems to happen. Is the problem simply the amount of political capital needed to enact change?"
Greg, I think the problem is that there isn't enough incentive for politicians to put their efforts behind this kind of stuff. In contrast to issues like abortion, and war, and economic recessions, infrastructure isn't an issue that inspires a lot of passion in people. A politician could make vast improvements in our national infrastructure and receive very little credit for it. Better to put your weight behind something that will get more attention if you're looking at reelection.
Posted by: Matt at Nov 19, 2008 3:25:55 PM
I wonder if even though total real spending is up, the spending density (spending per unit area in areas we actually spend in) is down. There has been a lot of expansion from cities in the last 25 years.
Posted by: jsalvati at Nov 19, 2008 3:31:41 PM
It might help if people would realize the induced demand is the whole point of infrastructure investment, not a symptom.
Posted by: aaron at Nov 19, 2008 4:26:13 PM
A politician could make vast improvements in our national infrastructure and receive very little credit for it.
Huh? We still talk about Eisenhouwers Interstate Highway System. Or Hitler's Autobahn for that matter..
Posted by: JSK at Nov 19, 2008 5:30:45 PM
I can't help it -- reading this kind of thing, I have to go check the numbers behind the chart. Where'd he get them? Translating % on the chart to $, 1966 looks about like what the BEA for government investment in "structures". The chart's % for 2007 translates to something a lot larger than the corresponding BEA number. That doesn't challenge the real point of the article, but........who knows?
Posted by: TA at Nov 19, 2008 5:56:08 PM
A politician could make vast improvements in our national infrastructure and receive very little credit for it.
Huh? We still talk about Eisenhouwers Interstate Highway System. Or Hitler's Autobahn for that matter..
Or Al Gore's Internet...
Posted by: at Nov 19, 2008 7:31:09 PM
or Robert C. Byrd's highways to nowhere, or Stevens' bridge to nowhere...
(on the positive note the "Appian Way" still memorializes Appius Claudius Caecus and he was a politician...)
Posted by: Neal at Nov 19, 2008 8:00:36 PM
Spending on infrastructure is way up. Actually completing infrastructure is way down, at least in California compared to a half century ago when the freeways, the California Aqueduct, and many of the U. of California campuses were built. In the last 40 years or so, only one new UC campus has been built. That took 17 years to open, in part due to some Endangered Species that nobody had ever paid attention to before forcing the entire campus to be moved.
Posted by: Steve Sailer at Nov 19, 2008 9:14:46 PM
Infrastructure is a code word for political pork. The federal taxpayers just forked over $15 billion to expand O'Hare airport when $6 billion would have bought a whole new airport. The airport also protects a lot of political jobs and sweetheart contracts for services there for the Mayor.
Chicago added two lanes to the Dan Ryan X-way at about a billion dollars cost. Meanwhile, mass transit goes begging.
Leave it up to Congress to misallocate investment funds and expend the political pork barrel at the cost of efficiency and impoverishing the taxpayer.
Privatize, privatize, privatize. Government should outsource most services. Get government out of hiring, jobs and pandering to the unions, especially in schools.....!!
I was told most airports outside the US are privately run.
Posted by: jorod at Nov 19, 2008 10:04:06 PM
Every presidential candidate promises to cut waste, and it never seems to happen. Is the problem simply the amount of political capital needed to enact change?
No, waste is a feature of the system, not a problem. What you call "waste", is profit... it is money that leaders can throw around in exchange for kickbacks (direct and indirect), exchange for political support (directly and indirectly). Waste my be undesirable from your standpoint, but the state's function is not to serve you but to serve the ruling class. All members of the ruling class seek to maximize waste in their own favor, and to minimize waste in the favor of their ruling-class rivals.
I wonder if even though total real spending is up, the spending density (spending per unit area in areas we actually spend in) is down. There has been a lot of expansion from cities in the last 25 years.
Also, without some dramatic improvement in technology to make it cheaper, there are limits to growth. Telecommunications infrastructure has improved dramatically in the last 25 years, because there have been unimaginable leaps in technology that allow us to provide exponentially more services with exponentially less labor and materials. There hasn't been the same improvements in road constructions, education, government services, managing labor. At the same time that there have been few improvements in road construction, for example, we have massively increased the pay for labor, the safety requirements, the environmental accommodations involved in road construction, so it only makes sense we will be paying more and more money for less and less infrastructure.
Posted by: Rex Rhino at Nov 19, 2008 10:09:48 PM
Actually, there have been incremental improvements in infrastructure technology. For example, European roads last far longer than ours because they are built better and with better materials. But Mayor Daley likes it when the Dan Ryan Expressway falls apart in 9 or 12 years because he then gives big road repair contracts to his campaign contributors.
Posted by: Steve Sailer at Nov 20, 2008 1:45:44 AM
The more stuff we build, the more there is to maintain.
But that's true in the private sector too. The problem is the public sector is more interested in bright shiny objects that facilitate re-election.
So, the more stuff kept in the private sector the better. When you own something, it pays to maintain it.
When we all own something, it pays to get someone else to pay for it or let it go to hell. Collectivism breeds irresponsibility. But no news there.
Posted by: Alan Brown at Nov 20, 2008 5:12:56 AM
Chicago added two lanes to the Dan Ryan X-way at about a billion dollars cost. Meanwhile, mass transit goes begging.
You think Chicago mass transit would be cheaper to build and operate than new expressway lanes? And more useful? Would you really like to see more of this and less road construction:
"The City Council just approved a plan to spend $213.3 million on a station for new train lines nobody asked for and nobody can afford to build."
http://www.chicagoreader.com/features/stories/archive/superstation/
Posted by: Slocum at Nov 20, 2008 7:33:22 AM
While roads are important, our electrical infrastructure needs some repair as well. If we are serious about being green in the future, there is no doubt that our power grid needs a significant retooling.
Additionally, I find the arguments about waste to be a little short sighted in light of the facts that mis allocation of resources in the financial sector is going the U.S. govt a few trillion. This doesn't include the huge bailout given to the S&Ls just 15 or so years ago.
Waste is part of life and there is no perfectly efficient way to do anything. Perfection doesn't exist except as a fantasy in the minds of 13 year old boys.
Posted by: mickslam at Nov 20, 2008 9:40:00 AM
But mickslam, that's not waste in the financial sector, it's creative destruction, because it is caused by people with expensive suits.
And do not forget side effects. If you waste billions on a highway, all you have is an underused highway. If you creatively destruct trillions on financial products, there are all kinds of positive side effects, such as
Posted by: Zamfir at Nov 20, 2008 9:58:55 AM
Zamfir,
I am a huge fan of your work, and am especially pleased that you liked my analysis.
One thing that Steve doesn't note in his exposure of the waste of that single station is that the brown and red train lines here in Chicago have undergone major upgrades to many stations, particularly in the belmont to Armitage area. This is wasteful upgrade isn't really taking place in isolation but rather part of a gigantic wasteful upgrade of the chicago transit system.
Also, in terms of waste, I bet there are entire towns in California and Arizona that are going to be all but abandonded in the next few years, and we U.S. taxpayers are going to pick up the tab one way or another. If I am going to pay for something, at least I want some representation on how the money is spent. No taxation without representation - right?
Posted by: mickslam at Nov 20, 2008 11:47:55 AM
We can give you the best cabal money and best service.
Posted by: cabal money at Jan 1, 2009 7:26:45 PM
