The Boondoggle of Infrastructure Spending
History has a sly sense of humor. It caused an epiphany regarding infrastructure projects — roads, harbors, airports, etc. — to occur on a bridge over Boston’s Charles River, hard by Harvard Yard, where rarely is heard a discouraging word about government.
Last spring, Larry Summers, former treasury secretary and Harvard president, was mired in congealed traffic on the bridge, which is being repaired, and he suddenly understood “American sclerosis.” Repairing the bridge, which was built in 11 months in 1912, will take about five years. The problem, he concluded in a blog post, is “a gaggle of regulators and veto players” — Massachusetts' government, contractors, environmental agencies, the historical commission, etc. — “each with the power to block or to delay, and each with their own parochial concerns.” Summers' sunburst of understanding continued:
“I’m a progressive, but it seems plausible to wonder if government can build a nation abroad, fight social decay, run schools, mandate the design of cars, run health insurance exchanges or set proper sexual harassment policies on college campuses, if it can’t even fix a 232-foot bridge competently. Waiting in traffic over the Anderson Bridge, I’ve empathized with the two-thirds of Americans who distrust government. … We seem to be caught in a dismal cycle of low expectations, poor results and shared cynicism.”
There is a trope for these times: “I’m a progressive, but … .” Barack Obama should have understood this in 2009 when he serenely promised “shovel-ready projects,” the scarcity of which was one reason his stimulus barely stimulated.
Groundbreaking for the Empire State Building was on March 17, 1930. Construction soon began and the building officially opened May 1, 1931 — just 410 days, during the Great Depression. The Pentagon was built in just 16 months, during wartime. After seeing reconstruction of Manhattan’s West Side Highway take 35 years (construction of the George Washington Bridge took 39 months), Sen. Daniel Patrick Moynihan despaired that whereas America once celebrated people who built things, it now honors those who block building.
Today’s long lag between the conception and execution of infrastructure projects is one reason they are dubious as countercyclical economic stimulants, and as jobs programs for the unemployed. The economist Milton Friedman said that once, while he was taken to see a canal that was being dug, he expressed astonishment that there was no heavy earth-moving machinery, only men with shovels. A government official said that was because the project was a jobs program. Well, then, Friedman replied, shouldn’t they use spoons rather than shovels?
New Deal public works gave the nation splendidly useful engineering marvels, including the Golden Gate Bridge and the Hoover Dam. It did not, however, significantly reduce unemployment, which never came below 14 percent until prewar military spending began.
Both presidential candidates endorsed huge increases in infrastructure spending, so we are about to relearn that bipartisanship, whatever its many merits, usually means a recklessly open spending spigot. Will there be wasteful projects? Indeed, boondoggles are transaction costs of democracy. As is the inclination to direct infrastructure spending to stagnant regions, where it is unlikely to stimulate growth, rather than to regions where economic dynamism is putting pressure on, and being dampened by, inadequate infrastructure.
Besides, the economic bang from every infrastructure buck is biggest in a society that is starting from a low base, as America did in the first half of the 19th century. Princeton historian James M. McPherson in “Battle Cry of Freedom” noted that before 1815 — before all-weather macadamized roads — the only efficient means of moving goods long distances was sailing ships and down-river floats. “The cost of transporting a ton of goods 30 miles inland from an American port equaled the cost of carrying the same goods across the Atlantic.” So, “America’s transatlantic trade exceeded internal commerce” and “the economy grew little if any faster than population.”
Then came the Erie Canal and the frenzied funding of emulative projects, many of which failed, but the successes redeemed the rest. Next came railroads, and soon Americans regarded infrastructure — then called “internal improvements” — as emblems of national greatness. When the Marquis de Lafayette toured America in 1824, a couple of years before the 50th anniversary of the Revolution, his New York banquet table groaned beneath the weight of a 75-foot model of the Erie Canal, which opened in 1825.
Americans hoped that commerce, ignited by infrastructure, would weld the nation’s sections, defusing the danger of disunion. Actually, this would require a railroad lawyer from Illinois.
© 2016, Washington Post Writers Group