Government Don't Know Jack: Infrastructure

This is a multi-part series examining inherent conflicts in government and the ultimate goal of avoiding the Confucian Cycle.

The first article in this series listed a number of ways the government can increase the amount of action in the economy if the politicians actually want the economy to grow.  This article discusses infrastructure improvements.  Infrastructure such as highways, canals, bridges, the telephone system electric power, etc., have a huge effect on the economy.

Investments in better transportation can improve efficiency, but we may have reached the point of diminishing returns.  That's what we'll discuss in this article.

Early Successes

The government's early efforts to improve transportation infrastructure paid off handsomely.  Building the Erie Canal, and later the transcontinental railroad, opened up the West.

Like the automobile business today, the railroads were subsequently crippled by government regulation, management mistakes, and union featherbedding to the point that most railroads yearned to get out of the passenger business.  Early societal benefit turned into a constant drain as Amtrak loses money year after year.

My grandfather had a bottling plant in Winston-Salem, NC. early last century.  He ran trucks about 80 miles to his distributor in Charlotte.  When the government first paved the road, his trucking costs fell so much that his profits went up noticeably.  He paid taxes on the increased profits, of course; the government made money from having paved that road.

Recent Failures

During most of the 1900s, new roads, canals, and other transportation infrastructure usually increased economic efficiency, but not always.  The 374 km canal between the Tennessee and Tombigbee rivers, known as Tenn-Tom, was known to be a money-loser from the first, but there was so much money to be made building it (cost) and so little traffic for it (benefit) that the people who wanted to build it fudged the cost / benefit analysis to make it happen.  This article says:

The Tenn-Tom Canal is the most recent (and perhaps the last ever) of the major U.S. navigation projects to be completed (1984). ... While this canal has not realized its promise of a major commercial waterway, it does create a great cruising opportunity. [emphasis added]

"Not realized its promise.." is a very polite way of saying that the cost/benefit analysis was a total crock; the contractors and politicians who wanted the canal lied like rugs.  There's been so little commercial traffic that even the most ardent canal fans have to admit that Tenn-Tom is "perhaps the last ever."

The cost/benefit for infrastructure projects can be calculated if people are honest, but the math can get subtle.  Northern Virginia commuter railroads lose money, for example, but if the trains weren't there, they'd have to build more highways which would cost much more money than the railroads lose and take up more space.  In terms of direct costs, it's cheaper to lose money on railroads than to build enough highways to replace them.

The Big Dig and Other Fiascoes

The general consensus is that Tenn-Tom wasted so much money that nobody will finance a canal ever again.

Anybody who reads newspapers knows about the Boston highway project known as the "Big Dig" which was supposed to cost about $4 billion.  It ended up costing at least $16 billion and the lawsuits are still running.

The Denver airport was years late, had huge cost overruns, and they never did get the wonderful new baggage system to work.

There's been talk of building the Washington DC Metro out to Dulles Airport but the project is mired in controversy and may never happen.  The fact that the metro extension might not happen is particularly galling since its funding has been assured.  The state turned the toll road from DC to Dulles over to the airport authority so they could build the metro extension.  The airport authority quickly planned to double the tolls, of course, but there's no guarantee that the rail line will ever be built.

Some Successes

It's interesting to compare the disaster of the Big Dig, which cost way more and took way longer than we were promised, with the stellar success of rebuilding Rt. 3 from Nashua, NH to route 128 just outside Boston.  As the Big Dig's cost overruns kept mounting, the feds finally lost patience and told Massachusetts that the state would have to pay the last few billion themselves.  That wiped out the state budget and non-Dig road construction essentially stopped.

The road builders realized that there wasn't any more money and they'd have nothing to do.  They cut a deal with the state to rebuild Rt. 3, which had been discussed for years, with their own money if a) the state would get out of the way and just let them do it and b) the state promised to pay for the road later.

Instead of taking the better part of a decade, completing the Rt. 3 project took less than a year, and it's a very nice highway.  With the state inspectors and bureaucrats tied up with the Big Dig, the Rt. 3 project went like gangbusters.

We saw the same phenomenon after the California earthquake.  The governor called in the road builders, told them, "This is an emergency.  Fix it. You know what to do.  We'll stay out of the way."  The roads were back in shape in record time at about half the expected cost.

The skating rink at Rockefeller Plaza was rebuilt the same way.  Donald Trump got tired of all the nifnawwing about fixing the skating rink, so he told the city, "I'll do it, I'll pay for it, just stay out of the way."  He told his guys, "This is our chance to show what we can do."  Without city inspectors standing around with their palms out, the rink came back on line in record time and it was a quality job.

Common Elements

The projects which worked had a common element - the government got out of the way.  Construction people will tell you that government inspectors from OSHA on down have the power to shut a project down for essentially any reason, or for no reason, and there's no penalty to them for being wrong.  This is an invitation to delays and bribery.

Not only that, the amount of paperwork needed to get a project going has multiplied amazingly over the last decades.  There's environmental impact statements, which have pretty much killed off the prospect of new large private-sector projects.  Even projects with government support can be delayed forever - a new highway access bridge to the Manchester, NH airport was delayed for a decade because of one bald eagle in a tree.

With any project large or small, there's protests from people nearby who are opposed to any changes.  In a recent meeting about constructing a new cell tower, someone who lived miles away protested, "It's in my view-shed, I should be compensated!"

In the past, politicians realized that they could do better by actually accomplishing something, rather than by standing in opposition to new projects and pandering to protesters.  The equation has shifted to talking, studying, and hiring consultants as opposed to getting anything done.

It's possible that nobody will ever be able to build anything of significance again.

To be continued...