Crumbling infrastructure, or crumbling cliché?

SAN DIEGO — America’s infrastructure has been crumbling ever since George Washington crossed the frozen Delaware River on a leaky boat. That seems to be a bipartisan “truth”. And every four years, presidential candidates remind us of the claim. Most recently, Democratic candidate Pete Buttigieg unveiled an infrastructure plan that magically settled on the same trillion-dollar price tag that candidate Donald Trump announced in 2016.

But is America’s infrastructure really so bad? After all, Amazon has figured out how to deliver everything from bananas to cough drops within hours of a customer’s click. No one could do that in George W. Bush’s era, much less George Washington’s.

It is a mistake simply to count up potholes and rusty rivets on bridges and then declare a crisis. In fact, the Department of Transportation reports that the number of bridges deemed “poor” has fallen by 22  per cent over the past decade. Regardless, we should be assessing what I call “infrastructure load”, and instead ask whether more goods and services are being delivered on time.

Under the lens of infrastructure load, we see the gig economy unleashing a slew of new services that work around potholes. Uber and Lyft boost the economy’s efficiency because fewer vehicles are sitting idle. The San Diego International Airport cut the ribbon on a beautiful $128 million parking garage in 2018. You can easily slide into a parking spot, because nearly half are vacant. As a result of ride-hailing options, one-third fewer high-school kids are bothering to get a driver’s license. This threatens automakers in the long-term but provides a revolutionary convenience for those who need a ride home from the pep rally or the pub. For those who prefer to stay home, DoorDash and Grubhub drivers scurry to bring customers hot meals, battling snow, rain and gloom of night, like the heralded postmen of the past. Gig workers are getting the job done.

In the business-to-business sector, railway companies like Norfolk Southern and CSX have recently adopted “precision-scheduled railroading” to pack more containers onto trains, reducing the need for more departures. Norfolk Southern figures it can lay off 500 of its locomotives. UPS, FedEx, and DHL are battling it out on the roads and in the sky to deliver goods more cheaply, aided by tech logistics startups like Convoy, which is backed by Bill Gates and Jeff Bezos. At America’s freight ports, the biggest problems are not structures, but union rules that have stirred up trouble ever since Marlon Brando starred in On the Waterfront in 1954. Meanwhile, passenger terminals are booming. In the 1970s, the television show The Love Boat featured Princess Cruises’ fleet of just two ships. Today, Princess has 19 ships and, along with its competitors, hosts about 14 million vacationers annually, departing from Florida, California, Alaska and Hawaii.

Infrastructure load must also count digital loads, including this year’s rollout of 5G. Our “Golden Age of Television” is made possible by broadband speeds that allow smart TVs and phones to stream innumerable programmes. “Netflix and chill” relies not on a comfy sofa, but on rapid-fire electrons beaming through space. True, streets in the 1970s were plagued with fewer potholes. But most households back then were lucky to receive a few television channels clearly, and when the president gave a speech, he showed up on all of them! If you live in the United States, which infrastructure era do you really prefer?

Of course, America does have too many potholes and too much traffic. For many people, commuting can be miserable. Long-distance commuters are 33 per cent more likely to suffer from depression, according to a RAND study. Radio host Howard Stern once launched a New York gubernatorial campaign by promising to ban daytime road construction. Stern’s plan no doubt lifted listeners’ spirits and drew some voters.

One solution is telecommuting. A Gallup poll reports that 31 per cent of employees now work remotely. Still, something must be done for those who do travel. The answer is not simply more government spending. In a remarkable Boston Globe essay, former US Treasury Secretary Lawrence Summers documented how bureaucratic bungling and special-interest niggling delayed a repair of the 232-foot (71-metre) Anderson Bridge in Cambridge, Massachusetts by five years and inflated the cost by $5 million. The original bridge, built in 1912, took 11 months to build.

There are no “shovel-ready” infrastructure projects when special interests grab hold of the shovels. The NIMBY (“not in my backyard”) mentality that opposes new infrastructure will not subside. When delivery by drone is perfected, NIMBY will become NAMBY: Not above my backyard.

But alternatives exist. For starters, more cities and states should adopt “congestion pricing”, which makes it more expensive to drive during peak hours. A recent study showed that Stockholm’s congestion pricing cut air pollution by 5-15 per cent and reduced asthma attacks, while also making it easier to move around the city. Second, we should repeal laws that unnecessarily drive up construction costs, including the Davis-Bacon Act of 1931, which requires federal contractors to pay “prevailing wages”, usually defined as union wages, even though 87 per cent of construction workers are non-union. The Congressional Budget Office estimates that repeal would free up an additional $12 billion for federal projects over the next ten years.

Finally, to spur construction of new toll roads, which are usually financed through municipal bonds, a special tranche of small-denomination bonds should be issued to local residents. As an incentive to buy the bonds, drivers would be given a lifetime free pass on the new road. This would fund more routes, build civic pride and give investors downside protection. Even if the bond prices fell, bondholders would still get free passage.

Today’s infrastructure projects will not last forever, of course. In 1776, to keep the British redcoats at bay, George Washington’s troops burned down a little crossing in the Bronx called King’s Bridge, built in the 1600s. The bridge crumbled. But somehow the new country survived and thrived.

Todd G. Buchholz, a former White House director of economic policy and managing director of the Tiger Management hedge fund, was awarded Harvard University’s Allyn Young Teaching Prize in economics and is the author of  ‘New Ideas from Dead Economists’ and ‘The Price of Prosperity.’ ©Project Syndicate, 2020.
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