I was doing a bit of research last night on California’s high speed rail project and eventually stumbled upon a bunch of articles* detailing how America spends between twice and ten times as much as other countries for the same infrastructure.
The explanation as to why can’t be boiled down into a single factor and common explanations like higher wages, unions or corruption only appear to explain a small part of the puzzle. Instead, the common consensus seems to be that America is simply violating every single good practice when it comes to executing upon infrastructure projects.
This, to me is an astounding situation. Other areas where America is not cost competitive with the world like healthcare or internet access seem to receive abundant coverage and yet I haven’t seen anything about how far we lag behind on infrastructure. In discussions comparing transit systems between American and international cities, I’ve never seen it once come up despite it being perhaps the most relevant angle of the discussion.
Personally, I think part of the reason why is because the numbers just become so big that you start to lose a sense of scale and perspective. It’s hard to truly comprehend, for example, how much bigger $15 billion is than 800 million (nearly 20 times bigger) and the numbers all sort of meld together and become kind of boring. Also, there’s no clean Left-Right split on this issue and the problems and solutions seem to fall on both sides of the aisle.
To me, this is a really big deal and explains so much about how America has evolved in the direction it has but I can’t see it changing until people become aware of the issue and lobby for significant change. I don’t see how they can do that when it’s not even an issue on most people’s radars.
Because it’s an article of faith among most of the population that America is the best at everything. And because infrastructure spending is “socialism” and therefore intrinsically evil as far as most Americans are concerned. They’re less worried about its efficiency than about it existing at all.
Ironic that reducing funds to government agencies, ostensibly to save taxpayer money, ends up costing taxpayers more. This has been well known for some time, and demonstrates what rationalists already know: Politicians defunding government agencies are generally not doing so for taxpayer benefit.
Concentrated benefits and diffuse costs.
The labor unions that build the infrastructure benefit greatly from the increased costs, as do the companies that do the planning and the building. The lawyers benefit from the environmental lawsuits. The inefficiency of the process means millions of dollars to those involved.
Who does this cost? The taxpayer and since the average taxpayer does not know how much he pays a year, let alone how much extra he is paying as a result of this inefficiency, he has no incentive to lobby for reform. And since individual votes are meaningless he has no incentive to even learn about the situation.
But, all of that would apply (to the extent it applies at all) in any country; it does not explain why “America spends between twice and ten times as much as other countries for the same infrastructure.”
“My boy, as you and I stand here watching the ground being broke on this massive eight and a half mile tunnel, be aware, that although I will be long dead by the time it is finished, and you also, our ghosts may hang around to watch that magnificent completion, and proudly watch your great-grandchildren frolic with dizzy joy at the opening ceremony.”
This will be anathema to many people but infrastructure is probably someplace where socialism works better.
Any company that builds highways only has one customer - it’s not like you or I are going to buy an expressway. So we have private businesses that work exclusively for the government. So why not just have the government build the roads directly instead of contracting the work out? All contracts do is open the door for corruption. We have a Highway Department to maintain the roads, why not extend their operation to building the roads as well?
If we removed the lowest bid incentive and had one entity paying for both the cost of installing the road and taking care of it after it was installed, we’d end up with better constructed roads. Instead we build the cheapest possible roads and then assume the cost of maintaining them.
Why? Let’s say the government is building a wooden structure and is deciding between making it out of pine or mahogany.
Now if they choose mahogany, the supplier will make a lot more money. And the contractor who’s making a profit based on the total cost will make more money. But why will the labor union? Wood’s just wood to the guys putting up the building. They don’t get paid more for using expensive wood.
I think another factor, I believe I read this on Matt Yglesias’ blog a few years ago, is that in most of Europe there is no earmarking. Career civil servants make the decisions about where the infrastructure is needed and they do a pretty darn good job of it. Infrastructure is actually maintained first, new infrastructure built second. We do the opposite, because politicians like ribbon cutting ceremonies and more jobs are provided for new projects.
Infrastructure spending is one area where we have too much democracy, one of many. Some things should be left to experts, with the broad outlines and the oversight being directed by Congress. We do that with the Fed, because lawyers don’t know shit about the money supply. We should also do it with infrastructure, because again, lawyers don’t know shit about it.
Several of the factors mentioned affect infrastructure building in Spain, too, where it’s a debate that comes up often in private but rarely in public (although it can be considered part of the whole “politicians are thieves” pack).
Corruption? Check. Coded bids? (Not mentioned here but I read about it recently re. the US phone market) Check. Bids tailored knowing what other competitors are offering? Check. Rules to “always choose the lowest bidder, even if you already have three ongoing suits against them for shoddy work”? Check. Buying seven smartphones of a type which actually doesn’t make any sense for the place that needs 6, but hey, the General Manager wants one? Check. This last one is a real example from one of those companies which used to be part of the government but which have been “privatized”, and which now combine the worst vices of the private and public sectors.
Subcontracting processes often mean:
a bidding process to choose the designers,
then the design,
then bidding processes for the contractors,
then the building,
then bidding for the QC team,
then the QC,
by which time you’re having bids to see who’s going to do the regular maintenance, and who’s going to reinforce them when needed, and a suit with one or more of the suppliers for shoddy work…
Every new team that joins involves a bidding process, training, room. Often, teams overlap, but of course they’re not going to collaborate: instead, you get territorial fights worthy of a cop drama (“what are the Feds doing here?”). There may be at some point a team who, after a bidding process, gets hired to analyze and figure out how to get your other teams to collaborate; the proposal may involve putting yet another team in place… of course that means another bidding process, which by the way if the organization involved has a lot of wheels to grease will need to get greased as usual…
It’s pretty depressing. Mostly the part where you can’t take the people greasing and being greased out back and shoot them.
It’s called a ‘public(or quasi public really) good’, and capitalists who know what they’re about will readily acknowledge that public goods are not within the domain of capitalism.
That said, government paying for or building infrastructure is not, in any shape or form, socialism.
I usually am. I’m not one of those who thinks that our society and economy can be managed by experts. The market and people making free choices is superior to any planning. However, in the case of public goods that are complex to manage, experts are superior to politicians.
You may be using the term incorrectly. I was using ‘public good’ in the sense of ‘goods and services’, and not ‘good or bad’. Public good - Public good - Wikipedia
Infrastructure is not a perfect public good. Hence ‘quasi’.
I question the premise of abysmal efficiency. There are some entities like the Port Authority that are cesspools of corruption, but by and large public agencies do the best they can. The state DOTs are held pretty accountable by the FHWA and by their own states’ legislatures on how they spend their money and what the results are, how they will make their performance goals, etc. The whole process for planning an infrastructure budget is pretty much corruption-proof.
American Rail transit has some uncommon features that lead to greater expense than those of the rest of the world. I’m not an expert in rail so take this comment with a pinch of salt- but as I understand it the US has a unique way of building trains thanks to it’s safety legislation. American trains are at least double the weight of those in the rest of the world. They are built like tanks so as to minimise the death rate in accidents. This is partly due to the fact that in a country with lots of freight trains (which safety-wise are less regulated than passenger transit) there is an increased danger of serious collisions. Therefore American trains are in theory safer than those of the rest of the world. Sounds great, right?
There is a downside to this though. Because these trains are so heavy they are much slower than they are in other countries, less fuel efficient and less profitable. This inability to attract passengers (trains too slow or expensive to compete with cars) while still breaking even (including with generous subsidies) means the passenger train coverage of America is piss poor. So what do people do instead. Drive to work. And we all know that car travel is massively more dangerous than train travel. As far as I know car travel does not have to conform to the same level of safety standards as rail. So it’s a weird situation where the excessive health & safety legislation which is designed to save lives is actually killing more people in the long run, as it’s hindering the growth of a relatively safe transit mode (trains) for a relatively dangerous one (cars). This paradox also happened soon after 9/11 where people elected to drive long distances instead of taking the plane as “air travel was dangerous”.
This article and the comments in it explain why ‘the feds’ drive up the price of railways.