History profs Larry Schweikart and Burton Folsom make an interesting point: infrastructure spending is a lagging indicator of private capital investment rather than a leading one. I think it’s probably both. The interstate highway system may have been the political response to decades of private investment in automobiles and automobile production capacity but it also spurred lots of new private capital investment, this time in real estate.
My complaint about government investment is that it is so often a device for picking winners and losers and, mirabile dictu, the winners are very often political allies, donors, and rainmakers.
As for our infrastructure needs, IMO we’re enormously over-built as it is. Every city with a population over 100,000 is already served by an interstate and building until we serve every town with a population over 50,000 will bring practically no economic benefit. The same is true of building yet another bridge across the Mississippi. There are already more than 150 of them.
What we have now is a maintenance problem gravely aggravated by the over-building. Before we plow more billions into infrastructure we might want to think about what we actually want and need. And spend a moment thinking what we would need if we weren’t subsidizing the use of all of that infrastructure.
What we have now is a maintenance problem gravely aggravated by the over-building.
That reminds me of the former Mayor Villaraigosa’s promises to fix all the potholes in Los Angeles.
One of the purposes of the Interstate Highway was to allow the speedy movement of military equipment and personnel. In 1919, Eisenhower had lead a cross country convoy that took two months to complete, and in Germany, he saw the Autobahn.
In many places, build it, and they will come. Better roads allow more traffic, and more traffic require better roads. Eventually, you get Houston or Los Angeles.
The Sunshine Bridge across the Mississippi originally connected two sugar cane fields, but it has caused the surrounding areas to expand. It was connected to the interstate allowing easy commerce access. This development took a long time to begin. For a long time, many people were crossing as a “Sunday drive”.
“Better roads allow more traffic, and more traffic require better roads. Eventually, you get Houston or Los Angeles.”
One of the great historical ironies — or lunacies — was in creating all those freeways in LA, they destroyed one of the, if not the, greatest public transportation systems in the world. See, Pacific Electric. And it was privately owned. Now LA is trying to recreate what it originally had. Go down that wiki page and click on the graphic “Los Angeles Pacific Electric (Red Cars) network” to see what they had. I was able use that system as late as the early 60s when I was in Marines, traveling from Long Beach to my home in LA (Redline and electric streetcar).
I was just in LA and I spotted several square feet not yet coated in concrete. So, Dave’s wrong, there’s work yet to be done.
The historians have a point, but I think they play a little fast and loose with the points they select.
The never-entirely-consistent Jeffersonian opposition to “infernal” improvements merely resulted in state governments taking much of the lead role. That’s not really an argument against government. Also many of the nineteenth century “private” developers were public corporations operating under special government charters, not entirely private, nor entirely public. Its very difficult for entirely private developers to build roads or install pipelines or transmission wires across private property without government involvement. I would love to see examples of highways/canals/railroads that were built without use of government property or eminent domain.
I think the history suggests a few cautionary notes though. Not all improvement can be uttered in the same breath as the Eerie Canal, the Transcontinental Railroad, or the Interstate Highway System. The canal fever that followed the Eerie created a lot of duds, connecting rivers few have heard of. Technological obsolescence can be a problem, and while I don’t think internal improvements are a zero-sum game, they succeed partly by diverting traffic/business from other places. The Eerie Canal took business away from Baltimore and Philadelphia. The Illinois Michigan Canal and the Union railroad shifted commerce away from the Mississippi River system to the disadvantage of traditional river ports. These are hidden costs that are not distributed evenly.
Of course, investment in new infrastructure isn’t the same thing as maintenance of existing infrastructure. Partly because it ins’t as sexy, the contracts aren’t as lucrative (and sometimes done by gov’t employees), we HAVE lagged in that area somewhat (though it isn’t as bad as that annual ‘Engineer Report Card’ that gets press every year). I think as a country, we could probably use a couple more ounces of prevention for parts of our infrastructure.
I agree with Sam’s point regarding L.A.’s Red Cars. I’ve heard many fond stories about them, and it seemed like a short-circuited idea to retire them…the same goes for the electric cars going to and from Venice to Santa Monica.
Furthermore, I have never understood why city planners could not have projected our traffic problems more into the future. Why we couldn’t have developed transit projects earlier, or at least left room for them in center roadway areas, seems so short-sighted. Now, the problem of moving cars involves tearing apart roadways, taking backyards away, and the like in order to massively widen freeways. I’m thinking about the 405, which is undergoing a transformation like no other I’ve ever seen.
Those guys have a distorted view of the Lincoln Highway I believe. It was brilliant marketing by the guys who thought it up, mostly guys from the auto industry. However, it was not a toll road. They never had a way to maintain it. The highway mostly used existing roads. It was actually government entities who ended up making the improvements that made the highway viable.
Their observation that “infrastructure spending is a lagging indicator of private capital investment rather than a leading one.” is banal. When large scale solutions are needed for the problems or opportunities presented by private discoveries, it necessitates public involvement. No car company was going to build roads that some other company’s cars were going to use. Collecting tolls on every road has never been possible.
Steve
In a recent WSJ article Larry Schweokart and Burton Folsom make some historical corrections for Obama’s false history of public investment.
Henry Joy of Packard Motor Car Co., Frank Seiberling of Goodyear and Carl Fisher, as early as 1913, were the auto entrepreneurs involved with piecing together the first transcontinental Hwy referenced by Steve, and known as The Lincoln Highway. These were some of the first seeds of highway travel forged and introduced by the ideas and finances of the private sector, not the government.
A case is also made for the construction of private investment in railroads and airports, over government’s helpful and often disastrous monetary intrusion:
jan, I guess you didn’t notice that the op-ed you cite in your comment is the same op-ed I used as a point of departure for this post.
@sam
Trucks replaced a lot of train usage, and buses were going to replace streetcars/trolleys. Buses are cheaper to maintain than the cars, rails, and overhead electric wires. Nonetheless, the Great American Streetcar Conspiracy seems wrong.
On the private v. public city services, a private fire department may seem like a great idea, but when your house burns down because you missed a payment, you might think otherwise. On the other hand, private police departments could be sued for knocking down the wrong doors.
That wasn’t the only issue. Private fire companies were diseconomic for the insurance companies that ran them Fires have a nasty way of spreading from uninsured homes to insured ones.
I think there’s an analogy between public fire companies and police departments and public health requirements for immunizations, a sort of “herd immunity” issue.
Dave
A big “oops!” Obviously I read your comments, and the ones that followed. But, breezed by the article you posted, which originated the thread. BTW, I did enjoy the WSJ piece, although read on another site than this one. I’ll try to avoid a similar faux pas in the future.