MEET THE GROWTH PONZI SCHEME, MATT.

Matt "Dean Dad" Reed and I have been sparring, or educating each other, for years, going back to the North West Frontier of weblogs, long before the aggregators like Pajamas Media or Inside Higher Ed emerged to provide structure.  On occasion, he uses expressions he might have picked up from me, but in the following passage from a commentary on how the troubles in the Texas power grid might have lessons for the troubles in state-tolerated higher education, it might be that I'm a lousy teacher.

Infrastructure is like editing; when it’s done right, you almost don’t notice it. Everything just sort of works. Infrastructure isn’t meant to pay for itself; it’s meant to enable the generation of much greater wealth, both public and private, by reducing transaction costs. We pay for it collectively, though taxes, because the benefits are so diffuse that trying to break them out per user would result in catastrophic underinvestment. I benefit from the existence of roads on which I’ve never driven, because those roads made goods and services cheaper and more available. Good infrastructure generates positive externalities at scale.

I could go all Alfred North Whitehead on him and note that infrastructure or editing might be elements of civilization, and their function is to expand the set of important observations we can perform without thinking about them, which is why their absence can be so annoying.  It's institutions, though, that exist to conserve on transaction costs.  Infrastructure, as conventionally understood, exists to move goods (passenger or freight) or energy (electricity, gas, oil, or water) from locations where their subjective value is low to destinations where their subjective value is higher.  The owner of a railroad, a turnpike, a pipeline, or a power line, is harvesting an arbitrage profit, and if he does it right, he makes money.  If that's generating "positive externalities at scale," those are positive pecuniary externalities, and markets are all about identifying those and harvesting the gains from trade that follow.  That, dear reader, is why ferroequinologists get so stroppy about railroads being lumped in with "infrastructure."  Investor-owned freight railroads do just fine.

It's where people lose sight of those fundamentals that the troubles begin.  The problem with the tax-funded infrastructure, the roads and bridges and airports that good-government types and rent-seekers alike invoke, is precisely that nobody has thought carefully about capturing the value all that construction is supposedly making possible.  (A hint: a lot of it might have better not been built.)

If anything, there is "crumbling infrastructure" today because of an excess of investment in the past.

For several generations, towns and cities in the United States and Canada have aggressively pursued a form of growth—expansive, expensive, unproductive—that doesn’t come anywhere near to paying for itself. We must use new growth today to pay for the most urgent obligations of yesterday’s growth. The maintenance backlogs for all those bridges, pipes, and new roads swell. The unfunded infrastructure liabilities of U.S. cities is measured in the trillions, and the conventional plan for dealing with it—or, rather, not dealing with it—is to grow even more.

That's tempting, as long as there are favorable matching funds appropriated by the national government (or written in by the Speaker of the House) but that sort of thing doesn't concentrate the minds of local officials, who ought be thinking about how best make government symbiotic with commerce (libertarians are not anarchists) rather than becoming parasitic.

Perhaps Mr Reed is thinking along such lines, or he will take an education.  "It’s time to strengthen those aspects of the public -- whether it’s electricity grid management, higher education or whatever else -- that make private prosperity possible in the first place."  I submit strengthening the core functions of government, meaning limited, enumerated, and separated powers, might be the way to go.

Note:  the lights went out in Texas for a variety of reasons, most of which are tangential to today's political economy clinic.  Once upon a time, your local power company was a diversified firm with a name like The Milwaukee Electric Railway and Light Company, and the transmission lines (elements of the grid, if you will) often had electric railway tracks (duh!) alongside.  These days, there are advantages and disadvantages to vertical disintegration, meaning multiple power producers sell electricity into a common grid, but there's no serious evidence that a larger grid or a government funded grid or a government managed grid can do a better job.  That's a different sort of clinic for another day.