Why Does American Infrastructure Cost More and Take Longer to Build Than It Used To?

“What forces, then, did drive the cost escalation? One key finding, the authors say, is that if a given community is wealthier, the state will wind up spending more to build a given mile of interstate. This effect increased over time.

To some extent, correlations of this sort might manifest themselves even if affluent neighborhoods do not exert any particular clout. Amenities that attract well-off residents, such as water views, may be the same ones highway builders take pains to avoid spoiling; municipalities may have reason to press for features such as noise barriers in places where property tax collections are high and officials have an incentive to keep property values from falling, and so forth.

Another possibility, however, is that wealthier persons are simply “more effective at voicing their interests in the political process.” The highway route gets diverted in a way that protects their amenity, but spoils some equally valued amenity in a less affluent neighborhood. The unwelcome extension is completed far behind schedule, with concomitant expense, because opponents have been skillful at working the system by stretching out hearings and reviews and then suing.”

“Brooks and Liscow pinpoint the early 1970s as the inflection point for increased spending on highway projects. What was happening around that time? The National Environmental Policy Act (NEPA), which requires environmental impact review for federally funded projects, was passed in 1970. California passed its considerably more stringent CEQA (California Environmental Quality Act) the same year, and it was signed by none other than Gov. Ronald Reagan. In 1972 and 1973, Congress added additional federal laws that provided key leverage in fighting construction projects on the basis of loss of species habitat and wetlands. The U.S. Supreme Court helped out with the 1971 case of Citizens To Preserve Overton Park v. Volpe, which multiplied the chances to go to court over development by curtailing judges’ deference to agency decision making. All of these laws and decisions have made it much easier for citizens to contest infrastructure projects, driving up their cost and delaying their implementation and completion.

Among Brooks and Liscow’s most interesting findings is this: The relationship between local resident income and project expense took off just as these changes in law were coming online. Before 1970, the two were related modestly enough that the correlation failed to score as statistically significant. It then proceeded to quintuple.”

“the new “citizen voice” laws brought some authentic benefits; objectors could bring genuinely useful information to the highway planners about ways to avoid environmental harm.”

How Biden Became the Dollar Sign President

“Certainly, the need for infrastructure spending over and beyond what the federal government, states and localities already spend is oversold.

Infrastructure is obviously important, and building or repairing it can be a good investment, depending on the particulars. But enormous catch-all Washington infrastructure bills aren’t well suited to discerning, nonpoliticized investment decisions, and the endlessly repeated cliche about our “crumbling” infrastructure doesn’t hold up.

A recent paper for the National Bureau of Economic Research noted, “Over the past generation, the condition of the interstate highway network improved consistently, its extent increased modestly, and traffic about doubled. Over about the same time period, the condition of bridges remained about the same, the number of bridges increased slowly, and bridge traffic increased modestly. The stock of public transit motor buses is younger than it was a generation ago and about 30% larger, although ridership has been about constant.”

Shooting money out of a bazooka is not self-evidently what the state of America’s infrastructure calls for. But when the only tool you have is huge reconciliation spending bills, everything looks like a crisis urgently requiring more profligacy.

The bills are also a substitute for passing significant nonspending policy changes, which is seemingly beyond Biden’s power. Unlike FDR, Biden has narrow and tenuous congressional majorities. He’s not getting HR1, gun control, a higher minimum wage, or immigration reform, and perhaps couldn’t even if Senate Democrats eliminated the filibuster.

What he can do, which FDR and LBJ never could, is reach for the word “trillion” as much as possible.”

Big Government Is a Bipartisan Problem

“If limited government is what you’re after, neither political party is your friend, since government expands under both. What’s more, the rate at which it expands depends less on which big spenders are in power than on whether we have divided government.

For evidence, consider President George W. Bush’s presidency, when, for a time, Republicans controlled both the House and Senate. During that time, we saw the creation of a new department (Homeland Security) and of a new entitlement (Medicare Part D), and spending exploded. We didn’t see any restraint during the two years when Republicans were fully in control under Trump, either. Further data confirm that unified government does not keep government restrained, even if the controlling party is supposedly the enemy of big government.

Divided government, on the other hand, encourages more restraint, no matter who is in power or who controls which branch of government. Divided government doesn’t stop the government from growing; both parties are always happy to spend more money on defense, infrastructure, and education, just to name a few favorites. However, the Democrats tend to limit the Republicans’ hunger for wars, and Republicans prevent the worst of Democrats’ fantasies about foisting greater government control on the economy.”

“the incentives for good management in government are very weak, because politicians make decisions using other people’s money. As a result, their exposure to the risk of a bad decision is limited, while there’s rarely any reward for spending taxpayers’ money wisely or providing a service more effectively or efficiently.

Furthermore, each individual voter bears a very small part of the costs of bad government decisions. Politicians can thus shower special interest groups with subsidies at our collective expense, grant costly tariff protection to politically powerful producers, and generally waste our money for their individual political advantage.”

“In politics, decisions aren’t driven by the profit motive like they are in the marketplace. Instead, they’re overwhelmingly driven by the desire to get reelected. Special interests can help with that. In fact, public choice economists have shown that government officials receive more benefits when they act on behalf of special interests than for the public good. This finding doesn’t depend on who is in power.”