Public officials and advocates often suggest infrastructure investment as a way to ignite economic dynamism and growth. But as a mature country with a large and aging infrastructure base, we need to be cautious about how we invest in it to be sure we are doing so where it makes sense.
Building new infrastructure certainly made sense in 1825, when the Erie Canal opened. It reduced transportation costs in the corridor across New York state by 90 percent versus overland cartage. The national electric grid, the interstate highway system, and water and sewer networks delivered immense benefits for both the economy and quality of life.
And new types of infrastructure do arise that require us to build completely new systems. Cellular telephone and broadband data networks come to mind. But what we increasingly have today is less of a need to massively invest in new kinds of infrastructure and more of a need to maintain what we already have and update it for the 21st century.
Yes, there is a need for expanded traditional infrastructure in some places. Where there is high demand and rapid growth, adding incremental infrastructure to support that growth makes sense. This is the case with new transit investments in New York City, for example. The city badly needs an extra pair of rail tunnels under the Hudson River. However, building new subway lines makes no sense if the core subway system is falling apart, which it is. The result is that ridership is declining when it should be growing. Decreasing reliability is chasing riders away.
Infrastructure investment is also not likely to spur economic growth in depressed locales. Where I grew up in southern Indiana, Interstate 64 runs east-west across the state, linking St. Louis with Louisville, Ky. Though it might have made sense to build it as part of a national network, this lightly traveled road hasn’t spurred much economic growth in the rural counties it passes through. Visiting Flint, Mich., it’s hard not to be struck by the juxtaposition of a pristine eight-lane interstate alongside the decayed infrastructure of that economically distressed city.
Today’s businesses care much more about things like an available, quality labor force than they do about infrastructure. That’s because despite its age, our infrastructure is already pretty good.
Prioritizing spending on maintenance is also more equitable. Only the faster-growing places need lots of new infrastructure. But almost every place has infrastructure maintenance needs.
The line between expansion and maintenance is not always clear. Rebuilding of existing infrastructure often and appropriately involves upgrades of various types. The standards and needs of today’s society are different from those of the past. For example, there are many urban streets in America that were built without sidewalks. Cities might want to do more than simply fix potholes, perhaps adding sidewalks and bike lanes. But this need not involve a major reconceptualization of the roadway, such as widening a two-lane street into a four-lane divided highway.
So the first challenge of infrastructure is to be sure to focus on taking care of what we have rather than rushing to build new things. This can be difficult to do politically, because mayors and governors love to cut ribbons on new projects. It’s less sexy to fix potholes or repair aging water lines.
Beyond a “fix-it-first” policy, governments need to start addressing the factors that extend timelines and raise costs. The amount of regulatory red tape needed to build projects, for example, has dramatically risen in past decades. A study by the Regional Plan Association found that the average length of time needed to complete a federally required environmental impact statement increased from slightly over two years in the 1970s to eight years by 2011. A 2008 study found that the length of time needed to complete an assessment was growing by an average of 37 days per year. Not good.
Red tape isn’t the only issue. State and local governments find their own ways to shoot themselves in the foot. In December, The New York Times documented how bad management and featherbedding on an epic scale -- by unions, consultants and contractors -- had led to grotesque inflation in the city’s subway construction costs, resulting in what the Times labeled “the most expensive mile of subway track on earth.”
Lastly, there is the tangle of taxes and fees, levied by multiple levels of government, that finance our infrastructure. These aren’t always aligned with infrastructure needs. The federal and state gasoline taxes, for example, generate a lot of money for spending on roads and other forms of surface transport. This money can’t be spent on other infrastructure, even where critically needed. That’s why Flint is served by a magnificent interstate while having serious water and sewer infrastructure problems. Rethinking our system of infrastructure finance includes not only the distribution of government revenue streams but also the role of private capital and new ways of taxation -- a vehicle miles tax versus a gas tax, for example.
In short, simply pouring more tax revenue into building new infrastructure or expanding what we have is not the best plan. We need to refocus on maintenance, deal with regulatory and other barriers to efficient project delivery, and better align our revenues with our needs. What we need in 2018 is very different from what we needed in 1825.