In my column for the October 5th, 2011, edition of the Pittsburgh Tribune-Review I warned against falling for the promises politicians were then making for an “infrastructure bank.” You can read my column beneath the fold.
Don’t bank on infrastructure bank
President Obama wants Uncle Sam to (force taxpayers to) “invest” $10 billion in an infrastructure bank. These funds would be used to “leverage” spending by state and local governments on the likes of roads and bridges into larger and better projects.
Administration officials insist that this $10 billion could result in as much as $200 billion more in infrastructure spending throughout America.
There isn’t room enough here to list the many problems with this proposal, but one troubling fact stands out.
If America’s infrastructure truly is “crumbling,” the fault is the government’s.
Building and maintaining infrastructure is at the core of what even conservatives and many libertarians believe to be government’s responsibilities. So radically opposed visions of the proper domain of government were not in play to prevent it from performing well on this front.
Yet by the admission of activist government’s loudest cheerleaders, government is now failing spectacularly at supplying infrastructure.
This failure isn’t the consequence of inadequate funding. According to a 2010 Congressional Budget Office report, inflation-adjusted annual spending by all levels of government on transportation and water infrastructure (which includes, among other items, roads, airports and harbors) increased steadily from 1982 through 2003. In 2003, that spending was 88 percent higher than it was 21 years earlier.
Between 2003 and 2007 this spending did decrease, but only by 6 percent.
Are we to conclude that such a puny decrease in annual infrastructure spending — coming after a steady 21-year rise in such spending — is responsible for all the crumbling going on? If so, what does this fact reveal about how well government spends taxpayers’ dollars?
There are stretches of years when I reduce from previous years the amount of money I spend repairing and renovating my house. For example, I don’t repaint my house or replace my deck every year. Yet in those years when I spend less on the “infrastructure” of my house, its walls and floors don’t crumble. The reason is that the money I spend on these projects, I spend carefully, making sure that I get top value for the dollar. Not only is it my house; it’s my money.
Government, though, spends other people’s money. And no matter how public-spirited are the government officials in charge, they simply don’t spend other people’s money as carefully as those people would spend their money themselves.
For evidence, look no further than the sorry state of America’s infrastructure, which, if reports are accurate, starts crumbling in the face of the slightest reduction in infrastructure spending.
Yet President Obama wants to give this same failing institution — government — more money to spend on infrastructure.
I doubt that this new round of increased spending will result in sturdier roads, stronger bridges, safer harbors and less-congested airports.
President Obama might reply that, as inefficiently as government spends other people’s money, when it comes to infrastructure, we have no choice: That job must be done by government.
Such a response would be mistaken. The ability of private markets to supply superb infrastructure is greater than is popularly supposed. (Fun fact: The only transcontinental railroad never to go bankrupt — the Great Northern — was the only one built almost exclusively with private funds.)
But let’s grant his premise. Before committing more tax dollars to infrastructure, Americans should insist that government at least stop distracting itself with peripheral tasks (such as nosing around in health-care markets) so that it might do a better job supplying infrastructure.