17.1.17

THE IMPORTANCE OF A STATE OF GOOD REPAIR.

Harvard's Larry Summers and Ed Glaeser go around on infrastructure.  There are several good points covered therein.  I wish to highlight one.
I was struck many years ago by the young teacher who approached me in Oakland after as Secretary of the Treasury I gave a speech about the importance of education. She said “Secretary Summers—that was a great speech.  But the paint is chipping off the walls of this school, not off the walls at McDonald’s or the movie theatre. So why should the kids believe this society thinks their education is the most important thing”  I had no good answer.

As with potentially collapsing bridges, prevention is cheaper than cure and in many cases the return on “un-derferring” maintenance far exceeds government borrowing rates.  Borrowing to finance maintenance should not be viewed as incurring a new cost but as shifting from the fast compounding liability of maintenance to the slowly compounding liability of explicit debt.  It should also be noted that inevitably one maintains what has been used, so maintenance investment is much less likely to turn out a white elephant than new infrastructure investment.
There's more to his argument than ribbon cuttings are newsworthy, painting and patching are not.  Sometimes the pressure to bring a project in "under budget" leads to corner-cutting, and that can be as subtle as a cheaper grade of paint or as serious as thinner insulation.

Note, also, sound economics is part of sound policy.  That's whether the infrastructure is the conventional public spending Professors Glaeser and Summers focus on, or private investment in such things as electric transmission lines and capacity improvements on railroads.
There is too much pork barrel and too little cost-benefit analysis in infrastructure decision making.  Projects should be required to pass cost-benefit tests and proposals like a national infrastructure bank that would insulate a larger portion of decision-making from politics should be seriously considered.  Ed Glaeser is right that new infrastructure investment in declining areas is often a terrible idea as declining population means that these areas have if anything too much infrastructure.  And Field of Dreams — “build it and they will come” approaches do not have a very good track record.  Ways should be found to make the costs of procrastination on maintenance more salient and to institutionalize resistance to low-ball cost estimates from advocates of more visionary projects.
Rent-seekers gotta seek rents.  But a Strong Towns post suggests now is an opportunity for new thinking.
Replacing a system of failing, insolvent infrastructure with an identical (but newer) system of failing, insolvent infrastructure not only doesn't solve the underlying math equation, it doesn't scale to the size of our actual national problem. We need to think differently.
The scale the post focuses on is Flint, Michigan's water mains, which originally served the dual purposes of supplying fire hydrants and supplying drinking water.

More generally, though, whenever there is talk of spending money on internal improvements, the advocates of Best Practice and the fraternity of Wise Experts are sure to follow.  That might be the worst possible thing, compounding, as it is likely to do, the decisions that brought us to where we are.  "The values of post-war American development are embedded in our current approach -- efficiency over resiliency, large up front expense over ongoing maintenance expense, comprehensive over incremental, one-size-fits-all over tactical -- and they keep us from seeing the opportunities that sit right in front of us."  Perhaps I will have to continue to object to misuses of "efficiency."  Too often, it's misinterpreted as attempting to do more with less, as in the quote.

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