Does America Underinvest in Infrastructure?
posted by Frank Pasquale
The Minnesota bridge collapse has sparked a number of inquiries about the state of America’s infrastructure. According to the WaPo,
[T]he overall national infrastructure is stuck in a “death spiral,” as states repeatedly fail to maintain the status quo condition of their transportation networks . . . . Maintenance standards slip further as the money is spread thin. Diminishing tax revenue and surging costs have put a double squeeze on state transportation departments, transportation experts said. While federal gas tax rates have remained at 18.4 cents a gallon since 1993, construction costs have been increasing 20 percent a year in some areas.
As law prof/infrastructure theorist Brett Frischmann has noted, “For public goods, the market mechanism may fail from both the supply and demand sides, even if markets are competitive.” So the government can intervene–but a 1998 CBO study concluded “additional federal investment spending is unlikely to have a perceptible effect on economic growth.” Of course, as the bridge tragedy shows, there’s a lot more to life than economic growth.
Economist Robert Frank tells a very different story than the CBO report in his book Falling Behind: How Rising Inequality Harms the Middle Class. He makes the following points:
Roughly half of the nation’s roads are in backlog, meaning that they are overdue for maintenance. Our bridges are in a similar state of disrepair. The deaths of ten motorists when a bridge collapsed over Schoharie Creek on Interstate 90 in New York prompted an emergency inspection of all the state’s bridges. More than one-third were found to be structurally compromised by deferred maintenance. Road maintenance postponed costs from two to five times as much as maintenance done on schedule. And in the meantime, damaged road surfaces
cause an average of $120 in damage each year to every car and truck in the country.
Why is America investing so little in infrastructure? Frank relates it to the positional spending pressures common in so many areas of life:
Why doesn’t the average voter realize that if we elect a Congress that raises taxes to fund basic public services, the extra tax burden won’t be very painful? After all, a direct consequence of the tax increase will be an across-the-board reduction in consumption, one result of which should be, according to my argument, that the consumption context will shift, so families won’t feel they need to spend as much as before.
[Unfortunately,] from a psychological perspective, this conceptualization of the problem is totally unnatural (and not just because mainstream economists never call attention to this side effect of tax increases). If I am carrying $5,000 of credit-card debt and thinking about my needs for the next month, and somebody then proposes a tax increase, I am going to say I just can’t afford it, even though I am fully cognizant that public services are underfunded.
I generally agree with Frank, and I think we need to assure the safety of our roads and bridges–especially the “75,000 of the nation’s roughly 600,000 bridges — 13.1 percent — [that] were rated ’structurally deficient’” in 2005. Whether this is to be achieved by tolls or general taxes is a difficult issue; given what Republican Congressman Roscoe Bartlett has said about “peak oil,” I’m in favor of the former. But I think we can all agree this episode highlights the shortcomings of a reflexively “anti-tax” & “anti-toll” approach to government.
August 3, 2007 at 9:46 am
Posted in: Economic Analysis of Law
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Responses (4)
Daniel Goldberg - August 3, 2007 at 10:54 am
We damn well underinvest in public health infrastructure.
Mark McKenna - August 3, 2007 at 11:45 am
And perhaps the single biggest example of underinvestment in what could be thought of as infrastructure: public schools. I’m witnessing that right now in the town where I live. Despite astounding increases in achievement (for example, going from 2.4 percent of third graders scoring at an advanced level in math in 2004 to 34.2 last year), we’re facing significant opposition to a proposed tax levy that amounts to less than $6 a month for virtually every homeowner in the district.
The consequences of failure would be a $1 million shortfall in a $13 million budget. Since 80% of the budget goes to teachers’ salaries and benefits, that amount of money can only be made up by reducing the number of teachers and significantly increasing class size. I’m struggling to see any rational explanation for opposing this, particularly in a district where 53% of kids qualify for free or reduced lunch and need, more than just about anything else, a high-quality school system.
Theda - August 3, 2007 at 3:39 pm
Why of course we under invest. Hey, the wealthy can afford their health care and their children’s education. Besides, most of them get into their private helicopters to fly to the airport where they park their private jets, so as long as they can keep pouring huge amounts of money into the GOP coffers they will have the tax structure that benefits them in spades. The poor don’t need looking after and once they completely dismantle the middle-class, they’ll have us just where they want us. Welcome to third-world nationhood folks. Just keep sucking down that GOP kool-aid and one day you won’t have to worry about the condition of your roads, bridges, or anything else. They’ll be in such lousy condition you wouldn’t be able to travel on them. Much of our infrastructure is being sold to foreign nations which means whatever profit is being made will now go overseas instead of being recycled back into our economy. Between toll roads and the high cost of gas, and decent paying jobs being shipped overseas, who cares? You won’t have a job anyway to pay for anything so don’t worry, just be happy that the corporate conservatives are in charge. Hey, if you can’t afford it, you don’t deserve it. Right?
Theda - August 3, 2007 at 3:40 pm
Why of course we under invest. Hey, the wealthy can afford their health care and their children’s education. Besides, most of them get into their private helicopters to fly to the airport where they park their private jets, so as long as they can keep pouring huge amounts of money into the GOP coffers they will have the tax structure that benefits them in spades. The poor don’t need looking after and once they completely dismantle the middle-class, they’ll have us just where they want us. Welcome to third-world nationhood folks. Just keep sucking down that GOP kool-aid and one day you won’t have to worry about the condition of your roads, bridges, or anything else. They’ll be in such lousy condition you wouldn’t be able to travel on them. Much of our infrastructure is being sold to foreign nations which means whatever profit is being made will now go overseas instead of being recycled back into our economy. Between toll roads and the high cost of gas, and decent paying jobs being shipped overseas, who cares? You won’t have a job anyway to pay for anything so don’t worry, just be happy that the corporate conservatives are in charge. Hey, if you can’t afford it, you don’t deserve it. Right?
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