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Crumbling

Posted By Russ Roberts On September 5, 2011 @ 9:25 am In Stimulus | Comments Disabled

Whenever someone writes about infrastructure or bridges, they always use the word “crumbling” and say that we have neglected our infrastrucutre. We have to spend more, we’re told.

It is good to remember this picture from David Leonhardt’s November 2008 column [1] on infrastructure that shows that federal spending on infrastructure as a proportion of GDP was actually higher in 2008 than it had been any time since 1981.

Here is Leonhardt’s assessment of the problem. This, of course, is before the stimulus passed. But Leonhardt was prescient about the problems:

The House recently passed a bill that would allocate $18 billion for new construction projects. Barack Obama has signaled that he will sign a version of that bill and probably ask for tens of billions of dollars of additional spending to create badly needed jobs and help fix up America in the process. Money is going to start flowing.

And yet when it comes to the nation’s infrastructure, money isn’t the main problem.

A lack of adequate financing is part of the problem, without doubt. But the bigger problem has been an utter lack of seriousness in deciding how that money gets spent. And as long as we’re going to stimulate the economy by spending money on roads, bridges and the like, we may as well do it right.

It’s hard to exaggerate how scattershot the current system is. Government agencies usually don’t even have to do a rigorous analysis of a project or how it would affect traffic and the environment, relative to its cost and to the alternatives — before deciding whether to proceed. In one recent survey of local officials, almost 80 percent said they had based their decisions largely on politics, while fewer than 20 percent cited a project’s potential benefits.

There are monuments to the resulting waste all over the country: the little-traveled Bud Shuster Highway in western Pennsylvania; new highways in suburban St. Louis and suburban Maryland that won’t alleviate traffic; all the fancy government-subsidized sports stadiums that have replaced perfectly good existing stadiums. These are the Bridges to (Almost) Nowhere that actually got built.

They help explain why our infrastructure is in such poor shape even though spending on it, surprisingly enough, has risen at a good clip in recent decades. Spending 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.

So if you talk to people who spend their lives studying infrastructure, you’ll hear two reactions to the attention that Mr. Obama, Nancy Pelosi and even some Republicans are now lavishing on the subject. The first is: Thank goodness. The second is: Please, please don’t just pour more money into the current system.

“The system is fundamentally broken. We send a blank check and kind of hope for the best,” Robert Puentes, the infrastructure maven at the Brookings Institution, told me. “We need an extreme makeover.”

We’re always being told that we need to spend more money to fix the problem. That is much easier than fixing how the money is spent.

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[1] David Leonhardt’s November 2008 column: http://www.nytimes.com/2008/11/19/business/economy/19leonhardt.html

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