Friday, January 17, 2014

It's the Infrastructure, Stupid!

Joe Conason urges Democrats to promote a jobs program repairing our long-neglected infrastructure in The National Memo.

Considering how incessantly all politicians blather about jobs and how badly we need them, it is remarkable how little most of them actually do to increase employment. Much of what they’ve done in Washington over the past few years has achieved precisely the opposite, in fact – which leaves voters understandably cynical about government’s capacity to address an ongoing economic calamity.

But what would happen if at least one party’s leadership decided that jobs truly must be created, as soon as possible – and that the perennial crisis of decaying infrastructure must be addressed at the same time?  This year, Democrats ought to seize the chance to find out.

Anyone who has been paying attention ought to know the dire facts about U.S. infrastructure: Far too many of our roads, bridges, transit, schools, pipelines, airports, and seaports are outdated – or even in danger of falling apart. Our estimated shortfall in infrastructure financing is roughly two trillion dollars or so over the coming decade. Once the nation with the best transportation structures in the world, the United States has dropped below a dozen or more competitors.

Civil engineers report that it is nothing short of miraculous that there have not been more disastrous highway bridge collapses like the one on I-35 in Minnesota a few years ago. With jobs scarce, government spending on infrastructure to stimulate the economy is a no-brainer.


Dave Schuler said...

If you haven't taken a look at the ASCE's report card yourself, you should do so. I believe it needs to be considered with a more critical eye.

The ASCE is, of course, an interested party and as such their advice should be taken with a grain of salt. Their report does not evaluate whether a structure is worth repairing, only its state of repair. It includes thousands of bridges that are in essence no longer used. That happens all the time—for example, when new roads are built in rural areas.

Additionally, the Keynesian multiplier on these infrastructure construction projects is much smaller than economists usually estimate. Vendors are restricted to a very small "qualified vendors' list" and the qualified vendors already own all the equipment they need and have the crews in place they need. And the workers are not low wage workers but middle or upper middle. Consequently, the projects produce fiscal stimulus close to the actual amount spent—no multiplier.

We're a developed country. We already have 152 bridges across the Mississippi. Little benefit will be derived from a 153rd. Every city of over 100,000 is already served by an interstate. There isn't a great deal of benefit in connecting every town of 50,000. Using federal money to patch pot holes in big cities when the money has already been appropriated (by the city or state) and scheduled isn't fiscal stimulus and that's a lot of what the ARRA did.

All of that notwithstanding I'm in favor of fiscal stimulus. However, it needs to done more thoughtfully than Washington is capable of and with an eye to long term residual benefits. That's something that can only be done at the state and local level.

Ballard Burgher said...

Thanks for the thoughtful reply, Dave. You hit on an important point in the last graph. The scale of a problem (like stimulus) pretty much requires the federal government address it. Whether the government as it currently functions is capable of adequately addressing the issue is another issue altogether.