Some Economics: Infrastructure Folly

I used to tell students that someday interstate highways would be torn up and not replaced. A generation off in the future sometime would look at them and say, “What a waste of land and money.”

I can’t, of course, know that will happen but steps in that direction are happening. Some towns are letting asphalt streets and roads return to a gravel mix. Many cities are reducing four lane streets to two lane. Publicly subsidized parking ramps are coming down.

Economics explains this though we already know it instinctively. It is diminishing marginal benefits. That is, each added unit of something adds value but less than the unit before. Lots of family’s have two cars. They don’t have a third because the benefits of the third are less than the second.

Speed for airline travel was once thought very important. But, supersonic speed had diminishing marginal benefits compared to its cost so the iconic Concorde was eventually dropped from service.

There is a field of economics called “Transportation Economics.” Years ago a young professor told me transportation was so valuable it should not be subjected to the same rules of public benefit as other public expenditures. It was as laughable then as it is today. That even though politicians really like airport and highway ribbon cutting ceremonies.

Ironically, many political conservatives really like big public infrastructure projects and liberals are often skeptical. Our country simply has more infrastructure than it has money to maintain it.

 

6 Responses

  1. Trump wants to spend $1 trillion on infrastructure. Another $100 billion to upgrade our military. That would make it a “defence” (actually a global occupation force) bill of over $700 billion a year. More than the next 25 nations combined. We are running a deficit of of $600 billion/year (http://www.usdebtclock.org/) and this after 9 years of positive economic growth. What would another recession bring? I don’t want to think about it.

    1. Kenvin 10:52 The interstate was originally proposed by President Eisenhower as part of national defense. Shall we return to the days that proceeded that?

      I recall the interstates were for “national defense”. I wonder what role they play now. My guess is most personnel and equipment is moved by airplanes. The interstates probably help some moving people out of danger like in New Orleans, etc.

      Whether its national defense, evacuation, commuting, economic development, recreation or whatever, people do not have the money to pay for them or do not want to pay taxes for all the infrastructure we have built. You need to start parading on the sidewalk with a sign, RAISE TAXES. Will you be popular?

  2. John Phillips

    Michael Ross. its GDP/person that matters most, and its purchasing power parity that matters more than just raw GDP.

    A declining infrastructure is a sign of a declining country. A country is its people. The people matter more than natural resources. Third world people, third world country. The country deteriorates under its own weight.

    Empires never last forever, whether its the British empire, Roman empire or US empire. What accelerates the decline is the unwillingness to give up world control. I agree with Michael Ross on the global occupation force bit. It helps to hollow out our economy.

    1. John 7:36 Thanks for posting.
      Empires never last forever….What accelerates the decline is the unwillingness to give up world control.

      Great observation. That was exactly the reason given by former North Dakota Senator Kent Conrad for his vote against the Iraq invasion.

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