American Infrastructure Report Card (2013)
infrastructurereportcard.org
infrastructurereportcard.org
At the same time, markets are offering to lend gobs of money to the US federal government for 30 years at 2.2%/year.[1]
Why not take advantage of these low rates to borrow and invest in public infrastructure like sustainable energy generation, modern high-speed transportation, and ultra-fast (100GB) internet connectivity? Put a team of top technology entrepreneurs in charge of awarding all contracts to sidestep corruption and idiocy.
Why not?
[1] https://www.treasury.gov/resource-center/data-chart-center/i...
I understand the idea is, if we build massive pipes, life changing uses of the internet will be invented that cannot even be conceived in today's bandwidth-strangled world.
If we had better infrastructure, we would take advantage of it, I guarantee you.
This study quantifies the gains from a fairly macro perspective: https://www.ericsson.com/news/1550083. 0.3% GDP growth for doubling internet speeds seems reasonable and is not unsubstantial. My guess is doubling internet speeds is cheaper than e.g. adding public transportation to even a small number of cities.
There are also huge network effects which may cloud the benefits, until suddenly some mass market consumer application makes it blatantly obvious. Youtube and Skype are so successful because a significant portion of the world has access to fast Internet and microphones/cameras to the point where I can talk to my grandparents in rural Russia despite not being able to visit them in person for almost a decade. What if our Internet was fast enough and our displays cheap enough that working remotely or across international offices becomes as simple as installing several wall sized monitors in geographically spread out rooms? The display tech will get there eventually (just look at the stuff Corning is working on), but if there isn't any infrastructure to utilize the tech it will take much longer for mass adoption. It's a chicken and egg loop but while the technology improves, we have to make the positive decision to invest in infrastructure even if the benefits aren't immediately clear.
I think the lack of content today isn't due to a lack of purpose, it's a lack of demand because the technology isn't quite there. In the next few years way more people will have 4k TVs and internet connections that can handle streaming 4k video. I already see a lot of people upgrading to bigger TVs as prices fall, where 4K will really matter.
It makes sense. The better and more extensive the networks that make up the economy, the easier it is to meet, transact, collaborate, move physical and digital goods back and forth, teach and learn from others, expand markets, compete, etc.
As people and things become more connected physically and digitally, the networks that make up the economy get larger -- by definition.
In my mind, this is a question of productivity as well not just about downloading movies or watching 4K. If everything is cloud based, we need the cloud to be faster as well as any interaction between the cloud and us to be as fast as possible.
All the while, lenders have few other borrowers to have as customers on this scale. China is a black box and Europe is a disaster.
Of course taxes are near historic lows in the post-war period so we can easily pay for it by raising taxes.
I'll also point out that the infrastructure spending stimulates the economy, generating tax revenue so the long-term cost isn't perfectly correlated with the immediate price tag. As long as the private sector isn't at capacity (or the spending is limited to actual infrastructure needs) it won't distort the market.
Even debt on a 30 year timeline has to be repaid eventually. Pushing the limits of how much credit is available leaves a country with no margin left to weather an economic slowdown. See: Argentina at the turn of the millennium.
In the USA's case it already took on a huge amount of debt during the last financial crisis. Another round of deficit spending that big would put the US at its highest debt/GDP level ever and firmly into unknown territory as far as just how much credit the world is willing to extend it.
Edit: For the US this is an especially dangerous game to play because unlike most other nations, it is too large to be rescued by the IMF.
The current international financial system is the white collar version of mutually assured destruction. The dollar is what gold was -- every nation on earth has pallets of $100 bills to conduct trade, buy oil, etc.
The US gets to effectively tax the world, and the alternatives are grim. Gold is too scarce. Alternate currencies like the Euro have their own problems, etc.
So the smart money is to keep buying those bonds. The end game will be refinancing or inflating it away, but it's in everyone's interest to keep things going.
Oddly enough, it seems that the more regulated a state is, the more profitable that waste becomes.
This isn't to say that some regulation isn't beneficial; for example, the work done by organizations like the FDA and OSHA mostly very good things.
But at the same time, we can see plenty of examples of how well-meaning regulation has backfired horribly for the nation: CBOs driving up the cost of healthcare, lowest-bidder laws resulting in dogfood-reject-grade food for kids and the elderly, and the utter nightmare that is trying to build anything in California.
The question is not whether or not to regulate, but how to build and implement regulations that are loose enough to allow creative solutions to flourish, while at the same time limiting the impact of malicious or incompetent actors?
https://en.wikipedia.org/wiki/American_Society_of_Civil_Engi...
An interesting read!
My main, and likely cynical take away from this however is that this is funded by people likely to benefit from an increase in infrastructure spending. This isn't exactly an unbiased view.
But are achievements of the 20th century likely to be exclusively the same ones driving the 21st century? These categories are certainly still critical, but is it an exhaustive list?
I don't think anybody denies infrastructure is important. Hillary Clinton's plan is to spend $275bn on infrastructure[1]. Donald Trump wants double that[2]. But if we're going to spend billions or trillions of dollars we might want to make sure it's thoughtfully allocated.
1. https://www.hillaryclinton.com/issues/fixing-americas-infras... 2. http://www.nytimes.com/2016/08/03/us/politics/trump-clinton-...
The facts are mostly in their favor. How many interstate overpass bridges are there? Most have 35 year lifespans, and most are older.
In my area (Albany, NY) the State is just wrapping up a 6 year project to retrofit a major bridge that was a sister of the I-35 bridge in Minnesota that catastrophically failed a few years ago -- before that event, it was known to be in rough shape and nothing was done.
Also in my city, a century old storm sewer just collapsed last week, swallowing an entire street, taking out a primary water main and gas main in the process.
This sort of infrastructure is decaying all over the place, and even when not failing catastrophically, it causes other issues. For example, current standards are to separate storm sewers from sanitary (i.e. Poop) sewers. Most older areas end up overflowing storm drains into both systems, overwhelming treatment plants and dumping untreated waste. Increased sprawl and pavement mean more storm water -- so local rivers and harbors are fouled all over the country.
True, but one thing to consider is that engineers and construction workers can make a lot more money performing emergency repairs (replacing a bridge that has just collapsed or fixing a broken water main) compared with a run-of-the-mill rehab or new project.
Building up infrastructure leads to better economics on those improved platforms. How about upgradeable GB internet across the country? How about an electric car upgradable highway charging system? How about paying down some debt not making more of it after each war since WWII? We sure know how to invest...
[1] http://articles.latimes.com/2013/mar/18/business/la-fi-mo-ir...
[2] http://www.businessinsider.com/why-the-iraq-war-cost-2-trill...
Building a road is a time tested government program. It is mature, there is lots of competition and opportunity for publicity or kickbacks is limited. The profit margins of the road construction companies are pretty thin too. I dont think politicians benefit by building a road or bridge. Today they benefit by having outrageous programs like high speed train that will not see light of the day for decades to come (or probably never) or transmitting American programs into Cuba (which the cubans cant hear because the signal is blocked).
The only way is to put a hard constitutional limit on the government spending as a % of GDP. The government is then forced to take measure to increase GDP if they want to subsidize education of Chinese prostitutes or spend $$$ on study effects of LSD on monkeys.
I think the way forward for the US is to completely retool the military industrial complex to a civilian/academic industry that utilizes its resources for the public good instead of geopolitical posturing. Between the factories, scientists, engineers, and trained, disciplined soldiers I think that the complex could single handedly turn around our infrastructure decline. US defense spending in 2000 was almost 400 billion so a decade later we'd still have spent the majority of the money we did, war or no. If we just cut the defense industry and reinvested in infrastructure instead of retooling our existing system, there's no telling whether the net result would be any better than what we have now just due to the shock to a $400-600 billion dollar jobs program and any social instability or brinkmanship that results (aka a demagogue like trump winning an election in a backlash).
Money owed is money owed even if interest only becomes 2 trillion we are still at 4 trillion. It will probably end up as more than 6 trillion as these figures are usually off on the low side. That is money that is on the books that could have been used for infrastructure and is harder to get now.
It's angering that the extra wear on my suspension is costing me money, and it's really embarrassing when I think about all the folks who come in from say, Japan or Germany. They have to really wonder what we are thinking.
I suppose it's taken a long time for the state to refill its coffers after the financial crisis, but that was what, 8 years ago now? Can we get on with it?
To bad it was all a scam.
Or the billions in telecom tax breaks for higher speed Internet infrastructure.
Now we are Stronger Together.