Infrastructure: The Deficit We Should Be Talking About

January 16th, 2013 at 1:27 pm

It’s fair to ask if the new release by the American Society of Civil Engineers calling for trillions in infrastructure investment is analogous the American Society of Barbers calling for everyone to run out and get haircuts.  But while I need to learn more about their methods, their results—we seriously need to upgrade our public goods—strongly resonate:

 

ASCE’s report focuses on the electrical grid, water and wastewater, surface transportation, and airports, waterways and ports.  All are obviously critical inputs to the nations productive capacity, they’re all aging, and according to the report, the expected investment levels are well below what’s needed, most notably in surface transportation.

It is widely agreed upon by economists of all stripes that the private sector will underinvest in such public goods; no firm or corporation can raise or recoup the costs of national systems of roads, waterways, airports, etc.  Of course, this insight far from guarantees that the political system will optimally or efficiently invest in public goods—oversight is as critical here as elsewhere.

But the current mantra of “Washington has a spending crisis” is divorced from both the reality of our fiscal accounts and importantly, our infrastructure needs.  I can’t vouch for every number in here re the loss of GDP and jobs, but they’re clearly pointing in the right direction.

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4 comments in reply to "Infrastructure: The Deficit We Should Be Talking About"

  1. Bearpaw says:

    The infrastructure deficit has been growing for years. A quick veracity check would be to look at the increase in percentage of bridges classified as “structurally deficient”.

    It’s worth noting that the ASCE is focussing on *physical* infrastructure, correctly, as that’s their area of expertise. But non-physical infrastructure counts, too — health, education, financial systems, environment, etc. All of these things suffer in the long-term when resources for appropriate maintenance and upgrades are slashed.


  2. PeonInChief says:

    Perhaps they’re overstating it some, but here in California, where we’ve been in a cold snap for more than a week now, 80-year-old water mains are freezing and breaking all over the place. Local governments here don’t have enough money to do what needs to be done.


  3. Scott Supak says:

    I understand a small start to the infrastructure bank idea, which used to be bipartisan, is in the President’s jobs bill. I wonder what the chances are that the bank could be structured in a bill of it’s own? I like the infrastructure bank idea because it kind of takes the politics out of picking the projects, so we have less of a chance of getting those bridges to nowhere.


  4. Antiderivative says:

    It is also worth pointing out that solid investments in public infrastructure crowds in the private sector, not crowds out. It reduces the cost of doing business, despite higher interest rates (which I doubt would happen).

    Plus, it also alleviates our structural job problems regarding the erosion of middle skilled jobs. It doesn’t cure it, but alleviates it.

    It also alleviates our AD deficiency and right now we can essentially borrow for free.

    I really don’t know why this isn’t on the table as a current solution to our problems, but political paralysis and deflection on curing our deficits unfortunately reigns in D.C.


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