What Infrastructure Will Support the Economy of the 21st Century?

In his brief critique of President Obama’s infrastructure spending proposals Keith Hennessey asks questions that I’ve been asking around here:

What does China’s infrastructure investment have to do with ours? Our economies are quite different: China is in the Industrial Age, we’re moving into the Information Age. Should we build a bullet train in California because the Chinese are building bullet trains (that derail)? Should we build spiffy new airports because the Chinese are doing so? Or should we instead determine U.S. public infrastructure spending priorities based on the needs of the national and regional economies here in the U.S.? And should we prioritize infrastructure spending relative to other

What’s the allusion here?

We first heard this case from the President in his January State of the Union address. Derived from a line of argument popularized by Tom Friedman, the claim is that because China’s economy is growing faster than America’s, the U.S. should mimic Chinese economic policies and specifically Chinese government investment spending.

But China is growing from a much lower base than the U.S. China’s economy, economic policy, and infrastructure needs are quite different from ours in the U.S. It’s easy to see why a country that still relies heavily on bicycles for transportation would prioritize infrastructure spending, while a more advanced economy might have other economic policy priorities (like paying down government debt).

In principle I have no opposition to government infrastructure spending. It’s the detail that are the problem. Perhaps my thinking is colored by Chicago’s airport experience.

For roughly the last generation here in the Chicago area we’ve been arguing about expanding air service for Chicago. The contours of the discussion have largely centered on whether a new airport should be built and where. The Chicago mayor’s office has persistently demanded that the city maintain control over any new major airport. The airlines have persistently resisted higher fees to pay for a new airport. Those two factors doomed the “green field” Peotone site that was under discussion for a while.

Ironically, an extant major airport in the Chicago area was bulldozed while the discussion was going on: Glenview Naval Air Station. The residents in the surrounding communities didn’t want a major airport near them and developers were slavering over the possibility of prime residential real estate (during the heart of the housing bubble). NIMBY and financial interest prevailed.

The discussion finally turned to expanding O’Hare, the least bad solution. It solved Chicago’s complaints and the Bensenville residents who’ve been displaced by the expansion are too poor and too small in number for their voices to count for much. That the economy downturn has decreased air traffic has removed some of the urgency for the discussion.

The key points that I’m making are that local politics and local needs are dispositive in discussions of infrastructure and there’s simply no way those determinations can be made from Washington, DC. If federal money accelerates road or airport building that’s already scheduled it could be stimulative; federal money replacing local money in the same timeframe as the local money would have been spent is a heckuva lot less effective as stimulus and that’s a lot of what we’ve gotten.

I’d really like to see the enthusiasts for roads, bridges, and airports produce some per capita and need-related statistics when they compare China and the U. S. rather than just noting how nice the Admiral’s Club is in Beijing.

Are roads, bridges, and airports really the infrastructure that most need our attention for the economy of the 21st century? I sure don’t see it that way. I think that energy and information infrastructure are a lot more important. Unfortunately, building the infrastructure of the 21st century won’t employ massive gangs of the unemployed. Neither will building roads, bridges, and airports but that’s a different discussion.

I’ve already pointed out that Chicago’s student enrollment has declined over the last decade. And that, as in other major cities in the U. S., the on time graduation rate has hovered around 50% for the last century. Will refurbishing schools to warehouse bored students do much to change that? Is building new schools really the smart solution for the 21st century? Or is economizing and adaptivizing by making use of pre-fabricated structures a better one? Sometimes smart solutions and smart politics are at cross-purposes.