Why Does Infrastructure Cost So Much?
strongtowns.org
strongtowns.org
Example city--Charlotte, NC. Down south in Charlotte there is an area called Ballantyne. Ballantyne has good schools, new everything, etc.
Ballantyne also has high taxes.
So what do people do?
Move 5-10 minutes down the road into South Carolina where there is abundant land. They start developing. More people move in. Schools are built. They fill up. They build new ones. People complain about the old two lane country roads so they are expanded.
Taxes go up to support this.
Then either people keep playing the move game to a new undeveloped area or the ROI calculation that nobody does on infrastructure catches up with the town. Some can support it, others can't and it's a downward spiral.
I'm not sure I've explained this well. I mostly think about this from the human POV, which I didn't even mention above. The rational thing for someone living in the high tax area is to go to the new area as it is developing and everything is new and then to decamp before things go so far downhill that property values drop.
Game theory? Tragedy of the Commons? What all is at play here and then as importantly, how do we do better?
It reminds me of Indianapolis, Cleveland, and their metropolitan areas. In 1969 Indianapolis created a "Unigov" merging with its surrounding county, and all of the suburbs within it.[0]
The Unigov concept has been studied a lot. General view is it was a net positive, with one of those benefits being a shared vision, shared tax base, etc.
Contrast that with the city of Cleveland and its metropolitan area. The city and its suburbs are distinct places. Suburbs on the east side and west side compete with downtown to give economic incentives to draw businesses away from each other.
For example, American Greetings (the card maker) moved its long-time HQ from Brooklyn, Ohio (a Cleveland suburb) to Westlake, Ohio (another Cleveland suburb). Westlake lured American Greetings with incentives that Brooklyn could not match.
The net benefit to the region is likely nil, but the benefit to Westlake, and the loss to the other suburb is demonstrable.
[0] https://www.cgr.org/consensuscny/docs/CaseStudies_ec-unigov5...
One of the general problems with growth is that it always and necessarily plateaus, and the growth stage has different dynamics compared to the plateau stage. When your town/business/country is growing it is easy to leverage the future because there is more wealth to spare.
In the growth period, investing in a new park/office space/spending program is totally rational if it helps improve growth and quality of life now, given that repaying that debt will be easy later. But once growth slows down, our expectations of progress must also wane. This is hard for many people to accept because they think that past growth was paid for with past success, when the reality is that it was paid for with current success.
Wow, great contribution. I appreciate so much when anyone can pull a nugget out of my ramblings and explain it back to me in a clearer way.
To add on to what you said and to bring this back to infrastructure, I think another challenge in the plateau phase is that you either need to spend a lot to keep old infrastructure working or massively reinvest to upgrade the infrastructure. If you've plateaued without expectations of future success, where do you get the funds to do either?
It would be interesting to have a "simcity" or "simearth" that a democratic society could run before making decisions about taxation or climate laws or policy.
It might also be good to implement policies with an expiration date, and update the model as things play out. Then cancel policies that haven't met the promises.
(Of course this is all probably nerd fantasy)
2019 taxes paid on a $1M home in Rollingwood: $2,053 [0]
2019 taxes paid on a $1M home in Austin: $20-30k
0: https://www.statesman.com/news/local/rollingwood-taxes-set-i...
Many municipal projects that are accessible to non-residents of a city (e.g. roads but not typically schools) are partially funded by counties, states, and the federal government.
If there are infrastructure investments that go beyond a state's borders, you rely upon National-level government to debate and allocate infrastructure investment.
> Game theory? Tragedy of the Commons? What all is at play here and then as importantly, how do we do better?
Market failure. Independent actors working for their own self-interest will create a failure in long-term thinking. You address this the same as any other market failure: you create a larger, 3rd party entity which is trusted. This trusted entity allocates funds and makes bigger decisions that the smaller groups of people cannot do efficiently.
* schools * police/fire/ambulance * pretty much any locally allocated service
Which would pretty much be political suicide in any state.
Ex: Few people bats an eye at FAFSA, which encompasses a nation-wide accreditation system for colleges and nation-wide student loan assistance.
There are national-level Police forces: ICE, FBI, and ATF to name a few. Obviously, political groups have taken issue with how these agencies operate, but their efficacy cannot be denied: they can do things more efficiently than local police forces.
Schools are funded by local property tax and the districts are drawn pretty locally, as are police and fire. They are also subject to the same vicious cycle of people move in -> demand better services -> local taxes go up -> the rich childless leave -> tax base suffers -> local taxes go up, etc.
If you want to work together, the cities need to form up a larger scale contract and work together. If you are willing to compete against your local cities, you are allowed to do that as well.
The same can't be said for involuntary trades, like those that filter through the government. This is the situation we're discussing right now. The government took your money and spent it on some pet project, probably tied to a donor. They then opened that project to "the public," some of whom use it without paying in. That is definitely a problem. But it is not solved by moving up to the next tier of government. That only makes the situation worse, because the pet project/donor is more likely to be even further from you geographically. At least with the local government there is some chance you will benefit from the project, and you have more ability to oversee and change local political priorities.
For the most part, I'm a free-market capitalist. But every philosophy has an error if you take it to the extreme. In the case of pure capitalism, you cannot deal with "market failures" (in particular: externalities, monopolies, cartels, tragedy of the commons...) with purely market-driven economics.
Its a known fact. The only solution to market failures is to stop using the market as a tool.
--------
Government policy should be to default to capitalism, but if an externality (or other market failure) is identified, you should use the Government as a tool to correct the market failure.
Ideally, you should minimize the Government's enforcement. Regulation is poorly accepted by the lay population who fail to understand its importance. But since 3rd party intervention are provably the ONLY solution to a market failure (indeed: its the DEFINITION of a market failure: when a 3rd party has to intervine)... your choices are as follows:
1. Accept the market failure as reality. (Ex: allow monopolies to exist. Allow externalities to warp the costs. Etc. etc.)
2. Create a 3rd party (usually Government) to regulate or force people to leave the market driven approach.
------
> The same can't be said for involuntary trades, like those that filter through the government. This is the situation we're discussing right now. The government took your money and spent it on some pet project, probably tied to a donor.
Case in point for market externality: City A uses up too much water from a river, such that City B no longer has enough water to survive. Gathering water from a river is extremely cheap, and maybe City A and B lived in peace before... but today cities can grow exponentially. And the increased usage by City A has led to City B's downfall.
This is a realistic situation on the Colorado River, where cities upstream have taken so much water that the Colorado River no longer flows to the ocean. To ensure that cities downstream even get enough water, there is a multi-city and multi-state agreement to ensure that Nevada, California and Arizona split the water appropriately.
Unfortunately, the agreement is flawed. But some agreement is better than no agreement at all.
------
The free market "solution" is that City A gets all the water, because its upstream. There's no reason for City A to cooperate with City B, any cooperation at all means that City A (from a free-market perspective) "loses" water that it feels like it deserves.
If you're really worried about that issue, then just use toll roads owned by the local municipality. Sometimes there's a simple market solution to some problems. So I'm not really concerned about problems where the market has a solution.
The issue with your way of thinking: is that in general... you will eventually come across an externality which cannot be addressed by market-driven thinking. Realize that capitalism is a tool that works in specific circumstances (basically any circumstance without a market failure / externality).
Public infrastructure needs to be built, but if a local government builds it, other people come and the local government fails to get paid. Local government needs to tax those other people somehow, but they're outside the jurisdiction.
So the solution is to use the state-government taxes (or national government taxes, if it crosses state lines) to pay for the infrastructure.
-----
I mean, do you not agree that its a market failure situation? If you agree its a market failure, the only solution is a 3rd party enforcing its will to override the market.
Its proven. The free market cannot solve any externality. Its a true market-failure situation.
This is municipalities using cash accounting instead of accrual accounting. Infrastructure has a known lifespan, and instead of amortizing the cost of replacement over it, the cost is realized all at the end when it must get replaced.
This stuff works exactly like a Ponzi Scheme, that's actually something Strong Towns explores in a lot of detail. There's a topic page about it here: https://www.strongtowns.org/the-growth-ponzi-scheme/
You aren't kidding. It's a 5-parter! Thanks for linking this. It's in my Pocket queue to dig into.
Really it's just the inherent assumptions of the "science" of economics. Nature and wildlife are worthless, except maybe as backdrops for the bay window of a McMansion. Maybe a park provides tourism?
Oh you mean destroying all the wildlife and natural preserves of the world might destroy us all in a couple centuries (but a blink of the eye on geological timescales)? Nah, no concern. We only care about the quarterly revenues.
It's not just the tragedy of the commons. That old economic saw is just about inconveniencing your fellow humans by shitting on things they need. It still doesn't encompass any notions of conservation.
Game theory is misapplied reductionism and oversimplification of the real world (which is what economics is too, which is why that is the darling math discipline of economics).
Economics can only produce costs on what it can measure and accurately estimate.
Economics can't even produce accurate estimations on the restricted space of human economic activity.
How can it POSSIBLY produce accurate estimations for the multiple orders of magnitude more complicated biological and natural worlds?
In fact all that does is provide fear, uncertainty, and doubt to the regressive economists and the polluters, and allow them plenty of denial room as they externalize costs of pollution and dumping and destruction on society as a whole.
This is a "science" where the mere mention of any regulation is still considered fundamentally wrong to a powerful, well-funded, and very public sizable portion of the intellectuals. And since that aligns with the rich and privileged of the world, it will continue to be the most public and pronounced aspect of the "science".
I generally agree with many of Strong Towns' arguments, but this really seems to miss the mark. The reason why major infrastructure projects like regional/urban rail systems, tunnels, etc are so expensive vs other developed countries isn't due to the cost of commodities like concrete or steel.
It's due to the lack of sufficient domestic expertise in designing, managing, and building such large scale works.
Because we don't build that scale of project frequently in the US, when we do it, we don't do it as efficiently. A recent example would be the use of the incorrect grade of steel in San Francisco's new Chinatown subway line.
OTOH, we have huge amounts of experience building big box stores, parking lots, and freeways, which are the sort of infrastructure that the Strong Towns perspective says (correctly IMO) that we don't need so much of.
We need to build infrastructure with higher utilization, which therefore doesn't need to rely on what Strong Towns describes as the Growth Ponzi Scheme, but unfortunately that's exactly the sort of infrastructure that we are not very good at building.
1. The US has a large NIH attitude and is unwilling to adopt overseas experience or standards.
2. Somehow we have to move away from building infrastructure as stepwise huge mega projects. And start building infrastructure as an ongoing incremental and reliable program into perpetuity. E.g. instead of CAHSR designed largely as a dedicated rail system with huge up front capital costs the benefits of which can’t be felt until it is all spent, set up a state rail agency to consolidate and consistently fund incremental improvements to the rail system, with incremental ROW purchases and improvements that over time reach the really big HSR goals. Imagine for example CAHSRs capital budget of $80 billion but instead going to fund an agency for 30 years that can then hire engineers and project managers and allocate it to its projects that have the best ROI over 30 years.
That last one seems to primarily be a political challenge though. Nobody likes state run agencies and everyone loves defunding them.
This indeed seems to be a problem. The US always wants to lead and if something works better somewhere else there is always the excuse “we are too big/spread out/not socialists” or something else. Or it just gets ignored. See healthcare or internet availability.
Remind me again, which nation has produced companies with a realistic chance of delivering satellite internet to every one?
Canada has worse broadband but better mobile [0][1]. I'd attribute this to population density: most of their population is fairly close to our border because the rest is a frozen wasteland.
Russia has worse speeds by far, and the certain things simply are not accessible due to being blocked.
No, we're not South Korea, but S. Korea is small with most people living in a very concentrated area. Again, no other nation has companies with excellent chances of setting up satellite network infrastructure, which is a good solution for a nation as big and spread-out as America.
[0] https://www.forbes.com/sites/kevinmurnane/2016/09/15/compari...
[1] https://en.wikipedia.org/wiki/List_of_countries_by_Internet_...
One problem with traffic circles is they require a wider carve out in what would be the corners of a 4-way stop. This involves eminent domain or prior government ownership; either making retrofitting difficult.
The fundamental problem is that in order for infrastructure to be built, people need to first start cycling. If there are enough cyclists on those roads for it to become a traffic problem, eventually politicians and urban planners will build cycle paths, then hopefully more people will use them, etc.
However I think in the US you have more than anything a cultural affinity toward the car. In the UK and much of western Europe, the roads (besides motorways) predate cars. Cars have to share that space with cyclists, horses, pedestrians. And generally speaking, the more vulnerable and untrained road users have the legal priority and the drivers of the fast metal boxes owe them a duty of care.
Just in the past two days I’ve seen:
A driver turn make an unprotected left through traffic going straight in the other direction and through pedestrians in the crosswalk.
A bicyclist skip a stop sign and turn left in front my car. (It’s rare I see a bicyclist stop for stop signs at all.)
A pedestrian standing on the corner pointed at an angle towards the intersection giving no indication to any of the traffic if he was intending to cross and in what direction.
A driver run a red light full seconds after it was red.
A driver stop in the middle of the road for no apparent reason. (Uber/Lyft drivers frequently do this even when they could pull out and in easily.)
A driver pass someone in the turning lane while skipping a stop sign and then doing about 2x the speed limit.
A bicyclist give a driver the finger when the driver was making a legal right on green and the bicyclist was trying to pass on the right.
Most of your examples are of drivers making mistakes and, when drivers make mistakes, the odds are higher that a large mass of steel will hit people at high momentum. This is not the case when pedestrians or cyclists make mistakes. We should focus on why we have so many cars on the road and why they are driven by people who are not responsible.
The heavy focus on “cars suck” isn’t realistic here. The reasons why are well known. The cities and especially the suburbs were built around cars. You won’t catch me arguing against much more difficult to acquire licenses or more bike lanes or better crosswalks. You won’t even catch me arguing against fewer cars. But it’s going to be a long time before there’s significantly fewer cars.
The idea that drivers are the only ones out there responsible for safety is reflected in the dangerous and inconsiderate behavior of bicyclists and pedestrians. The reality is all three groups need education. But culturally the bicyclists don’t care and the pedestrians are lead to believe drivers are always at fault, causing them to do things like step into a crosswalk unexpectedly after a car is already halfway through the intersection.
Every place I’ve lived in the US, the pedestrian’s right of way is maintained as long as they enter the crosswalk before the car does, and the status of the adjoining intersection is immaterial. In California law, there’s legally a crosswalk at every intersection with sidewalks, even if there aren’t any markings on the road. A green signal doesn’t absolve a driver of these responsibilities; just like with a blind corner, drivers must slow down to a speed where they can react appropriately to pedestrians.
Pedestrians are so rare, however, that cars don’t know how to deal with them. I’ve never seen a driver in the US stop for someone who is waiting to enter a crosswalk, only ones that have actually started to cross.
The part most pedestrians seem to miss is that they also have a duty of care. That means, even if the driver should yield right-of-way, you can't just step out in front of them. If you do, you'll probably be found partially responsible, which will reduce the amount you can win in court.
> I’ve never seen a driver in the US stop for someone who is waiting to enter a crosswalk, only ones that have actually started to cross.
I do this all the time and see it fairly regularly. About 5% of the time, the person isn't even trying to cross. (Waiting for an Uber maybe?)
Pedestrians need to make their intentions known. It's actually really easy. I do it all the time. Stick your hand out in the direction you're trying to cross and try to make eye contact.
Near me now there are several “roundabouts”. One is a curb in the middle of what is otherwise a normal intersection. One direction has no signs. The other has stop signs.
Another is three sawhorses with an arrow sign and a circle painted on the road around them. The arrow signs might as well just say “good luck”!
No one uses them the way they are supposed to be used because no one trusts other people to use them the way they are supposed to be used. And with the ones near me they can’t possibly even function that way.
All of these roundabouts only exist because people hear how great roundabouts are and demand them. And I’m sure they are great, but you need educated drivers, proper signage, enough space, and consistency. And they need to be used in spaces they’ll be effective. We get none of that anywhere in the states I’ve ever seen.
Counteranecdata - Our new roundabout in suburban Houston is great.
But it meets your criteria so you have a good assessment of what's needed.
I think you've hit the nail on the head. Ever since Saint Reagan said, "Government isn't the solution to our problem; government is the problem," people believe that any sort of dedicated government oversight is "bad." But the reality is, unless you carve out an agency/committee/trust to manage long-term projects, the oversight for it falls to the whims of whoever happens to be in office at the time.
Analogously imagine you have a relative who gets sloppy drunk and wreaks havoc every time he's around alcohol. Then he makes the argument that it's because he doesn't have enough alcohol. That maybe if he had a constant secure supply he wouldn't feel the need to binge every time he gets his hand on a bottle of vodka.
I'm not saying that your argument is wrong. But poorly run government projects prima facie justify less government spending not more. If you want to make the case that it's the opposite, there's a pretty high burden of proof.
Moreover, by your logic, infrastructure would be better in liberal cities and states. But it’s not. Baltimore hasn’t had a republican mayor since 1967. The city council hasn’t had a republican since 1942. Where can I find a republican to blame for the fact that it’s infrastructure is a disaster? San Francisco hasn’t had a republican mayor since 1964, has just a single republican in city-wide elected office, and the entire Bay Area currently has no republican representatives in either the state legislature or the Congress. DC has never had a republican mayor. These places should have great public services, right? If not transit (where Democrats sometimes have to share power with republicans at the state level) but schools, local public services, etc., should be fantastic and well funded, right?
What metric are you using to make this claim? I don’t even know of any non liberal cities. And whatever their faults may be, liberal cities and states are more desirable to live in or near, based on price data.
> I don’t even know of any non liberal cities.
Phoenix, Arizona, the fastest growing large city in the U.S. As to states, the 10 most popular governors currently are all republicans, while 7 of the 10 least popular are democrats: https://freebeacon.com/politics/10-most-popular-governors-in....
This is not really a broad political point, but a very narrow response to the idea that infrastructure and public services suck in the U.S. "because republicans." When you live in a city like New York, DC, or SF, where 80% of people vote for the democratic candidate year-after-year, you can't really blame Reagan for the fact that the schools suck, the transit is falling apart, etc.
Also, it’s not clear to me that transit projects in other countries receive dramatically more national funding. The French National government is paying for only 20% of Paris’s new regional transit extension: https://www.thetransportpolitic.com/2011/05/27/paris-region-.... That’s consistent with what similar projects in the US receive. (For example, the next phase of the Second Avenue subway is eligible for up to $2 billion from federal sources of a $6 billion total cost. And the federal government is paying $900 million of the $6 billion purple line in Maryland.) More important, it’s a small enough percentage of the overall budget that federal republicans withholding federal support shouldn’t make or break projects.
NYC and London, both liberal cities, the latter arguably more liberal as regards public transit funding, yet NYC costs twice as much per passenger mile of subway. Seems like being a liberal city doesn't really explain the difference.
Are you using the political meaning of "liberal" or the financial meaning, "not very worried about overspending"?
I mean liberal in the political sense of government being ultimately responsible for the execution and success of infrastructure projects. Such a scenario could be financially conservative in the sense of providing transit service on budget, which London appears to do. Or it could be inefficient (or financially "liberal") like the examples we've discussed.
I think the real difference is that in places like London, well off people take transit more than is typical in the United States (due to a history of class and race coding around transit in the US), so there is more political incentive in London to ensure that the government agencies that build efficient, comprehensive, and effective transit.
Similar cultural priorities and even better transit systems can be found in Germany and other parts of Europe.
Or to put it simply, in London, bankers take the Tube. The same kind of people in the US usually drive cars, because the mass transit option is underinvested and hence slower, less maintained, and used mostly by poorer people. This is the case for many municipal bus agencies in the US.
Indeed, the EU had a directive encouraging deregulation of rail: https://en.m.wikipedia.org/wiki/Single_European_Railway_Dire.... It encourages separating the infrastructure from the operating companies, and opening the operations to international competition. If we had that in the US, a private company in Omaha could bid to operate commuter rail service in New York or Chicago. That’s a very politically conservative (neoliberal) approach.
Agreed, but raising ticket prices to ensure that a transit system runs a profit requires that the alternatives (driving, taxi, uber) are sufficiently expensive by pricing in their externalities.
It also requires that your average transit rider have enough income, and that the transit system be clean and comprehensive, which requires investment.
You can't build a great transit system by starving it of revenue.
London incomes are substantially lower than New York incomes, while transit fares in London are substantially higher.
> and that the transit system be clean and comprehensive, which requires investment.
London’s and New York’s subways have almost identical track mileage in cities that are similar in population and density. London’s system is expanding more now, but again that’s due to more liberal policies in New York. The US has some of the strongest public sector unions in the world, which drives up capital costs. It also has stringent environmental review and public participation laws for transit projects, which again drives up capital costs. These are all “liberal” policies.
As to cleanliness, cleaning is an operating cost, and that’s an example of something that the US does in a “liberal” way (cleaning staff typically are government employees), while Europe often does in a “conservative” way. In the case of London, cleaning is an operating cost Transport for London is required to pay for through ticket revenue, while in New York the government covers half the cost. And in Stockholm, cleaning, along with most other operations, is done by private companies.
> You can't build a great transit system by starving it of revenue.
New York spends twice as much per passenger mile as London in operating costs, and several times as much for equivalent new infrastructure. In no way is New York’s system starved of revenue. Same for DC, Chicago, Boston, etc. None of these systems are “starved for revenue.”
Right, which is why I agree NYC subway fares should be higher, and shouldn't be a flat-rate no matter where you are going, which is what they are today IIUC.
But lower incomes than NYC that also means the London underground's labor costs are lower. Londoners make do with the higher fares despite their lower incomes because driving is even more expensive.
> London’s and New York’s subways have almost identical track mileage in cities that are similar in population and density. London’s system is expanding more now, but again that’s due to more liberal policies in New York. The US has some of the strongest public sector unions in the world, which drives up capital costs. It also has stringent environmental review and public participation laws for transit projects, which again drives up capital costs.
Without a citation (I'm genuinely interested) for a comparative strength of transit unions for NYC and London and the resulting effect on capital costs, there is nothing backing this statement besides what appears to be your general anti-union ideology.
London Underground workers are part of a national union [1], and have organized a number of strikes, as recently as 2017 [2]. Regarding environmental reviews TfL has to do those also [3]. Please provide some references to support the assertion that their reviews are sufficiently less onerous than NYC's.
[1] https://en.wikipedia.org/wiki/National_Union_of_Rail,_Mariti... [2] https://en.wikipedia.org/wiki/London_Underground_strikes [3] https://tfl.gov.uk/corporate/publications-and-reports/enviro...
Ultimately, Londoners pay a higher price for a higher quality of public transit service. Setting up the system to work that way that way isn't the result of a religious adherence to "liberal" or "conservative" policies, it's a decision to make public transit a priority and establishing whatever structures and incentives are needed to achieve that.
Does it? Or are the competent administrators (and engineers, but particularly the administrators - managing big projects is hard!) all getting paid bank at the most lucrative private companies?
If you want transparency and cost effectiveness and speed you need some really fucking good management.
Anything they did would have made traffic suck less. With the influx of rich people back into the cities in the late 90s the waterfront was gonna get rich no matter what they did.
With the benefit of hindsight it seems clear that the original 1950s/60s plans (themselves adaptation of 1940s plans) for expanding the highway and subway systems should have been followed (in no particular order so long as it all got done) and they should have tossed in a beltway line (so that literally everyone who needs to get across the city doesn't need to go downtown to do it) of some sort. They had a plan and they didn't follow it. They basically assembled 80% of the puzzle and then left it. That's why none of the major road/rail arteries in Boston link up in a sensible manner. IMO had Boston and the state not shot itself in the foot by repeatedly neutering its transit plans throughout the 20th century (killing I695, not pursuing the North/South station connector, making the silver line a bus line instead of a proper subway, the list goes on) it could have been as economically developed as the DMV area or the NYC/NJ area.
Don't get me wrong, it's nice that the highway is below ground but it has its costs. Literally an entire generation of people grew up not knowing what regular infrastructure maintenance and upgrades looked like because the state was pouring all that money into a bunch of holes under Boston. It was not worth the cost. Given the choice of two ugly highways in downtown Boston bundled with any one of the planned subway developments (maybe the North/South station connector) or what we have today the choice is obvious.
Ultimately people have finite time, and the people responsible for oversight should be those who benefit the most from the project coming under budget and on time.
I'd actually agree with that - I think the government should do fewer things, but do them better. Infrastructure is one of those things where there's a good economic reason why the government needs to do it (privately-funded infrastructure tends to run into tragedy-of-the-commons and diffused responsibility problems), so if responsibility for infrastructure is going to rest with the government, they might as well get it right.
The central problem in traffic congestion is all those other drivers ;)
The observation was really about freeways being built on valuable land taken under eminent domain by the state while passenger rail is mostly relegated to being a second class citizen on freight routes laid out 150 years ago.
There was a recent thread, about a paid talk at blackhat, by a scam company, and the audience's pushback. It included a thought, something like, that there are communities of professionalism, and communities of "bs", and they are intertwined interestingly in companies and society.
I fuzzily recall reading years ago, a comparison of subway construction management and cost in various countries. One city that worked well, had the professional expertise to manage the project within the government, able and willing to discipline contractors, and a city culture that this was an area for professionalism, not a playpen for political graft and grandstanding.
Cultures have norms of "this you just don't do". A recurring example is espionage during the cold war. You might kill someone. You can certainly seduce their wife. But you don't otherwise mess with their kids.
I've seen some pretty intense loathing of political subculture, from people in scientific subculture, based on conflicts in such norms (around climate change, and "this is useless research" stories).
Boeing's root failure is said to have been an engineering-centered culture being displaced by another.
So I'd like to see work on how subcultures negotiate and accept boundaries of influence. We frequently discuss examples: the sales team that sells software that doesn't exist, and looks to engineering to magically manifest it. And we name local phenomena, like moral hazard. But I've not seen a vocabulary and theory for discussing such at a larger scale, as instances of larger patterns. Which makes it harder to explore what boundaries might enable less dysfunctional execution of large projects.
Perhaps that's one way to explore "dysfunction [...] at a higher level"?
I think there is a general sense of american exceptionalism when it comes to bureaucratic incompetence. It is hard for citizens to point to any well managed government agency.
Sometimes this is a self fulfilling prophecy due to defunding, but more often I suspect it is due to lack of accountability and negligence.
Take the CA DMV for example. No one is accountable for the horror show that is our backlogged paper based system .
Do civil engineers not learn these things in schools in the US? Is efficiency not considered? So many questions.
https://www.bloomberg.com/opinion/articles/2018-10-03/rounda...
The Department of Transportation published a study about 20 years ago about roundabouts [1]; I'm sure most American Civil Engineers doing road design are familiar with it.
[1] https://www.fhwa.dot.gov/publications/research/safety/00068/
So how do the they deal with this aspect in the EU countries?
Some more recent signage uses the incredibly sterile and clunky "traffic circle," and I guess I would take roundabout over that if I had to.
All the same thing, just different names. I don't see them often outside the northeast though.
A. Most of them actually are rotaries.
B. The average person is not aware of the distinction.
[1] http://calmstreetsboston.blogspot.com/2012/04/rotaries-vs-ro...
As a country we basically venerate fraud. This has consequences which could easily have been predicted.
They've literally never had a project come in on-time or under budget. They're not even all that politically well connected anymore, but keep getting projects because they're one of the few US companies with the experience in massive infrastructure projects.
> Because we don't build that scale of project frequently in the US, when we do it, we don't do it as efficiently. A recent example would be the use of the incorrect grade of steel in San Francisco's new Chinatown subway line.
No, it's because the government doesn't do it often, because the government is slow and inefficient. Private companies can do it fine; let them do it rather than sending the work to corrupt union shops owned by some one's brother-in-law.
1. The parking lots, freeways, and such that the US builds so much of, at such large scale, is still very expensive.
2. From the article, Chuck's point is almost the same as yours. We have plenty of expertise -- but our experts have been conditioned by the enormous wealth for almost two generations after WW2 to develop systems that are good at all sorts of metrics, but affordability is not one of them.
Whereas your point is that other countries have more experience building things and having to worry about the budget.
I think the reason that these things get talked about mostly regarding transit etc. is that projects that are uncommon in the US naturally attract more attention / skepticism.
As an anecdote, years ago I remember driving in the Austin area listening to local radio and hearing two segments back to back, which went something like this...
Segment 1: "The local light rail plan is a boondoggle, you know they spent $80 million on that thing and hardly anyone rides it! Just imagine how many new schools we could have built for that money!"
Segment 2: "The DOT is considering a highway expansion to help deal with traffic in Bee Cave... this project is estimated to cost $400M, which sounds like a lot, but it's actually pretty reasonable as a percentage of the state's overall budget..."
For context the light rail line was built, it was the first rail project in the Austin area and spanned some 32 miles but has very few stops, is slow, and has very little capacity (because, surprise, they built it as cheaply as they could).[1]
The freeway expansion project is a plan for just a few miles, really to deal with one funky intersection where US290 stops being a freeway. It hasn't happened yet, and maybe won't.[2]
The point of this anecdote is that the entire conversation around infrastructure projects is pretty strange. We spend huge sums of money on "routine" mega freeway projects all the time, and we just think that's normal. Even "simple" residential streets cost a lot more than people realize, and in most cases a lot more than the taxable value of the homes would justify. But we've been so wealthy for so long that we got away with all that without anyone questioning it.
Now that our wealth is fading, we've got a lot of difficult questions facing us.
It might be compared to technical debt for the HN crowd: you build fast and break things for a couple of decades (post-WW2) and then suddenly you find yourself with an unimaginably complex, catatonic system that can't pay for itself. The interest payments overwhelm the rest of the system.
However! That doesn't actually answer the question about why _new_ infrastructure costs so much (surely a new subway line doesn't actually care if half the roads are ten years behind their maintenance schedule).
we already require this in the medical field and know full well that those 15 dollar bandaid and insurance premiums are the things that drives ip costs.
that's not to say one should not evaluate the potential of a dollar spent in a metro area of 25million vs. 2500. but it is to say that that metric of revenue neutrality isn't ideal.
one could easily imagine a situation where $1 in infra leads to $4 in economic growth, or $1.05 in additional tax revenue, or whatever.
but yeah i agree, those are the calculations that need to be done. and yeah it's a bit self reinforcing - rich get richer, economy wise - but this notion that everyone can not pay that much extra yet get their own big ass plot of land, roads and parking spaces - which is what suburbs are, as far as i can tell - isn't sustainable.
It has seemed apparent to me for some time that contractors/developers are pumping costs and milking change orders, with cities going along with it, possibly due to limited numbers of contenders. Similar to healthcare costs being a dance of growth between insurance and medical providers.
Strongtowns have a great article about costs and benefits https://www.strongtowns.org/journal/2010/12/21/best-of-blog-... which makes some fantastic points about bogus numbers, and about how spending $ without gaining $ is a failure mode.
However, sometimes I feel they sideline the point that our government taxes us to provide shared infrastructure (legal, social, transport, hospitals, education, etc) and to prevent the tragedy of the commons.
Money spent to encourage social goals can be worthwhile or not, independent of the financial balance. Spending money that saves everyone time can be worthwhile, even if the tax base is not increased proportionally (the linked article disagrees with this). Edit: if the government taxes me $x for an hour's work, and spends $x to save me more than an hours drive, that is good economics for everyone even though the government hasn't increased tax returns.
Anyone who has been to some poor countries can viscerally understand the value of roading infrastructure, the value of social trust "infrastructure", or the value of safety and health improvements.
We can all see waste and bogus numbers in our governments, but yet most of us wouldn't move to a more anarchic country. We should fight against government waste and misincentives, but we should encourage improvements to our common good (the opposite of a tragedy).
Chuck would liken spending public money on things that don't have a measurable return on investment to "ice cream." There's room for ice cream in life. The problem is when its your entire diet.
What we're more worried about is that cities are losing so much money on bad investments that they're increasingly unable to afford "bread and butter," let alone ice cream.
And to be clear, as a response to this problem Strong Towns doesn't advocate stopping all spending/investment, but rather to take a careful approach that seeks to invest in things that produce a return, so the city will have more resources over time, so that there's money to pay for ice cream :)
I understand why you might get your impression though. Strong Towns content mostly is a blog stream and you can read a lot of it without getting the entire picture. Chuck's book is coming out pretty soon [2], and I think that'll help. The book boils down the entire Strong Towns "philosophy" (if you will) into something you can read in a day.
[1] Source: I'm on the board.
My very rough take is that physical (and virtual) infrastructure require more labor specialization as the complexity of the existing system increases. In order to get that subway built you need specialists come in to make sure the roads can withstand extra stress from tunneling etc etc. Those specialists are expensive and miss-communicate with other specialists etc etc.
NYC only has a big subway because it gobbled up all the failed private railroads, still unprofitable today but it's the only way to move the workforce into midtown Manhattan every day.
LA at one point had one of the most extensive rail transit systems in the world (1), but it was ran by a private company that couldn't make any money off infrastructure, cut service, and circled the drain until its doom. The city opted instead to switch to busses, build elevated highways, and tear out rails instead of purchasing and improving existing rail transit. Today, the city is spending millions per mile to build rail over some of those same former railbeds that were dismantled 60 years ago, because rail is the right tool for the job of moving people around a city.
You would if that stapler costs $10k, or if you need a new one every other day.
Large public works projects are really expensive and take a lot of know-how to get done properly. It's only been since the 70's that we've had the engineering chops to even understand how ground water works around a dam [0] let alone what to do with the older dams. The computer models of how the soil works around the transbay tube duing an earthquake is basically guessing, we just don't have good data. Heck, even with good models and good firms, you still have to just pray that the rain isn't too bad for a few years.
One of the main issues is that we just do not have a good idea what the ground/climate is doing over a 50 year timeline here in the US. Look at all the cliff-side houses in Santa Barbara, or the houses along the Mississippi, or the houses in Paradise. As such, it's very hard to insure, plan, and estimate what kinds of tolerances the public works should be built to.
To do things properly is basically a guess most of the time. As such, when that gamble fails, the clean-up is really something.
[0] https://www.youtube.com/watch?v=0EzoHXEzdwY esp. around minute 3.
This one is different from the rest.
People have lived along the Mississippi for hundreds of years and the river reliably floods beyond its banks every. single. year.
The problem with dwellings along the Mississippi is the "moral hazard" by allowing the US Federal Government to insure these houses without preconditions and never denying a claim, despite the fact that one property has flooded more than 53 times in the last 50 years (claiming on flood insurance every single time).
I would argue that it's just not politically sexy to say "I am going to maintain this X" as it is to say "We are going to build this Y". They are the "blocking and tackling", but the voters are in the stands waiting for the quarterback drops back to pass long.
Seems like the owner is likely just making cheap patches and then waiting for the next flood to collect another payment.
Otherwise, I can't imagine anyone wanting to go through that every year.
Everything is a new front end on top of a new front end.
Every once in a while, you’ll get directed toward some ancient looking page designed for 800x600 that’s running everything.
Particularly on the account payments side.
Not everything old needs to be remade anew.
But it wasn’t broken, so why spend the money on SharePoint, right?
Your account can only be in one currency. Want to do some listings in US$, and others in CAD$? No yuo. You can only change between your billing currency every 12 months.
Fundamentally, it's not worth it to build a new financial backend to meet the unusual needs of .001% of their customer base.
If you want to have listings in two currencies, you should create 2 accounts. That is exactly how it is done in most financial systems. eBay is just making that transparent to their sellers.
In NZ potential changes to the national road system are ranked by cost versus benefit. Only the most beneficial projects are commenced, and low or negative value projects are not funded. Projects must also exceed a minimum benefit vs cost ratio.
The political problem is that national infrastructure project spending and lending is seen as overwhelmingly occurring in Auckland.
Cost-benefit leads to perceived imbalance because costs are massive in Auckland but the benefits are huge too (a large population, multiplied by large congestion).
Regardless of how optimal for the nation that might be, or even if everyone is actually better off, you can easily end up with many unhappy people outside of Auckland (a political problem).
Edit: strongtowns on cost/benefit analysis (half good, half not): https://www.strongtowns.org/journal/2010/12/21/best-of-blog-...
If Alaska consumes a lot of tax units by having an early warning system for ICBMs, then Alaska benefits in the sense that there is a government jobs program, but the simple calculus of tax units consumed vs produced doesn't factor in the benefit San Francisco and Los Angeles get from the early warning system.
I haven't lived in NZ for a few years now, but I grew up there. I wouldn't be surprised if your analysis on urban vs. rural centers being producers vs. consumers might be slightly off as the economy is heavily dependent on agriculture etc.
New Zealand has two major problems: 1: Housing is completely out of touch with reality in Auckland (and to a lesser extent in all major centers). Auckland is one of the least affordable cities in the world to live in, and unlike San Francisco, lacks an industry that pays enough to keep up. 2: The regions are suffering from a death by 1000 cuts type scenario.
I have a working theory that the move towards bigger and better and more powerful cities has been one of our gravest errors in modern urban planning.
but honestly, that seemingly had to happen. the true cost of 'burbs is just way higher than anyone wanted to admit (or tax). the huge overhead of services + spreading them out over massive areas (relative to dense cities) seems to be untenable long term.
government subsidization was manageable when out-migration didn't demand the resources it does now, in terms of standards/regulations (roads, drainage, electricity, water, sewage, internet, etc.), process (bureaucracy, legal challenges), graft/corruption, and the sizeable population now in (and moving to) the suburbs/exurbs, all in a robustly growing and more equitable economy.
we've since realized that costs go up superlinearly, which makes it a bad use of resources, so instead we advocate denser urban areas, which provide economies of scale on the infrastructure dollar.
I don't know what the end results look like. More ebb and flow I guess. I will say that this is a middle-middle class suburb; the upper middle class suburb it borders with the excellent school district and an equinox is doing great with homes selling for north of 500k.
*who are willing to deal with government red tape
I try to keep in mind that it might be for the purposes of creating BS jobs for economic purposes. But here in Wisconsin, and everywhere else too probably, there is definitely a very large element of skimming tax revenue by funneling it to your buddies.
I know your statement is hyperbole, but this is a completely wrong understanding of how public-financed construction projects work, and the market for them, and other people are taking it for face value.
For starters, demand for new infrastructure at the public level generally requires replacing existing/old infrastructure. This is frequently because decades-old infrastructure was built to older/weaker standards and would need to be upgraded to newer standards, and the upgrade would cost as much or more than simply demolishing and rebuilding brand new.
Also, there is no such thing as a shortage of construction contractors willing to deal with government red tape. The government is the best client: it always pays on time, and it usually pays more than the face value of the original contract.
* Higher intrinsic costs (i.e., labor costs, eminent domain costs, litigation costs)
* Outright corruption (this one in particular I'd disagree with for US costs, but I have heard people discuss it).
* Price gouging, either via corporate cost-plus contracts raking in money, or via union featherbedding, or some other way in which a lot of money within the contracts are for things that don't really serve any "legitimate" purpose.
* Political consideration forcing all projects to become "megaprojects" that are prone to sunk cost fallacies or scope creep and are not amenable to effective cost-control.
* Antigovernment trends shifting design and engineering work from public agencies, causing the agencies to be unable to effectively manage the construction of projects.
http://nymag.com/intelligencer/2019/07/why-we-cant-figure-ou...
This is a pretty good article, along with his response to comments:
https://slatestarcodex.com/2017/02/17/highlights-from-the-co...
It's less good at explaining the vast outlier (larger outlier on cost than gdp) that is US construction costs.
It seems to me that could mean a whole lot of different things, or maybe nothing at all. It's not really specific advice. IDK. Maybe the book has the details.
The first underlying driver of U.S. infrastructure costs is that the U.S. has felt so rich as a country that, for decades, we spent freely on infrastructure and never asked serious questions about the return on that investment
The second underlying driver of U.S. infrastructure costs is how deeply embedded infrastructure spending is within our model of economic growth.
It fails rather obviously because (a) the article is comparing costs across countries, and other countries haven't found some magic system to increase accountability of politicians and beaurocrats that goes beyond not re-electing them.
And, (b), there are plenty of incentives for decision-makers to keep costs down. Don't you think the governor or Mayor of New York would crow endlessly if they managed to build subway <x> or tunnel <y> for a fraction of the usual costs? Have you noticed how California's high-speed rail project and its cost overruns have been terrible for three governors in a row?
Sure, so why doesn't this happen more often? The simplest explanation is that elected politician's influence is small compared to the collective bureaucracy's power to do what it was going to do anyway.
And yes, everyone who is handed a pile of third-party cash to spend on other people does not usually have very good incentives to make the most efficient choices, and doubly so when their personal agency is further restricted by a mass of regulation.
The citizens are the only ones who would have such incentives. They're paying for it & they're using it. They aren't supposed to be piggy banks to jiggle to pay for things, they should also be involved in what gets paid for and how. Expecting a bureaucracy to be efficient is like expecting a monopoly to be fair, so the citizenry needs to be more engaged.
The second reason seems flat out wrong especially when you compare e.g. the large scale infrastructure investments China is making to fuel its economic growth and compare that to the US where economic growth seems to be largely based on quantitative easing.
This sort of thinking gets in the way of a lot of projects. I read at the time that Acela was proposed as a 180mph train, but the difficulty acquiring and building more right of way to smooth out turns, and the requirements for heavier parts to meet some safety regulations, meant that it could not approximate the speed of TGV. Instead, it goes 150 on some relatively straight sections and usually goes somewhat less. The special trainsets also cost more than European HSR trainsets.
Why do government software systems cost so much? Many of the same reasons, and as the article points out for infrastructure, the players have a desire to fund big projects and act like they're "done" instead of funding little improvements all the time.
In other words, taxpayer money is being taken for a ride. For a good example of the latter situation, look up the rampant overtime abuse that's been discovered at the LIRR. There's little incentive to keep costs down and use funds efficiently, because it's tax payer money.
The purple line in Maryland, a 16 mile long above ground light rail line through the DC suburbs, is so plagued by litigation, it will cost almost twice as much as Copenhagen’s massive new subway expansion (27 miles of tunnel under downtown Copenhagen).
Though to your point, interstates tend to be pretty good, but but a lot of random cities’ surface streets can be pretty bad, there have been public health scares like the lead contamination in Flint, Michigan, and there was a often cited report by the American Society of Civil Engineers that rated the USA poorly on its infrastructure [1].
Most of the shitty roads I've seen in the states are in the cities where there are loads of traffic. I'm not really bothered by it.
Meanwhile all those construction vehicles and tools are just sitting around. Somehow these guys ended up being the lowest bidders.
(I'm not putting a general value judgment on overseas outsourcing here, only saying that it lowered prices.)
* You can't make land in a factory, barring a collision with Mars.
A few executives and directors (who are already the richest humans that have ever lived) are adding orders of magnitude to their hoards with these massive buybacks. Google just broke records by announcing an unprecedented $25B in buybacks for this quarter. Over the same time period they are spending $6.2B for all of research & development.
Expect these buyback numbers to grow wildly in the coming years.
How much does a bridge cost again?
First of all, it isn't "we". This is not public money. It belongs to the shareholders, and buybacks are one way to return the money (tax efficiently). Why should it be horded by the company? If there is nowhere to invest, give it back to the owners to spend or invest as they see fit. Second, buybacks don't magically raise the share price. The number of shares outstanding decreases, but so does the cash on the balance sheet.
There is plenty of literature on stock buybacks and how they work, you simply need to look beyond the populist headlines.
You could argue it should have been.
https://www.bloomberg.com/news/articles/2019-01-16/here-s-ho...
> On Jan. 1, 2018, the biggest, most sweeping U.S. corporate tax cut ever enacted went into effect. A year later, we’re able to see how businesses used all that extra cash.
> The short answer: to buy back shares.
I don't understand the issue. Why should "you" have any say in how others decide to spend their money? The tax cuts are a separate argument.
>year later, we’re able to see how businesses used all that extra cash.
Post hoc, ergo propter hoc. Corporate cash balances have been inflated for a decade. The previous high was in 2007.
Nah.
> Why should "you" have any say in how others decide to spend their money?
Because they're getting it by lobbying to saddle me with the exploding deficit their cushy tax cuts have grown dramatically.
stuff like this becomes a part of rational short term behavior for corps with low taxes, cheap debt, etc. why get 2% ROI on R&D when you can get 3% elsewhere?
we know some solutions: higher taxes, nonfree debt. there just isn't political will to do it atm, for numerous reasons.
Now, the question is, how long do the benefits last? And are buybacks always beneficial? I think that's debatable. There's data on both sides of that argument, but I do think that most companies don't use buybacks judiciously. Berkshire Hathaway does-- buying back only when they have cash that can't be put to a better use, and only when their share price is below intrinsic value. But most companies are using leverage to fund buybacks, which is a short-term way to benefit shareholders at the cost of long-term deterioration of the balance sheet.
I certainly hope we don't outlaw buybacks, but I think there's a case to be made that they shouldn't be done via leverage. Good luck trying to legislate that behavior, though. Money has a way of finding loopholes, and such legislation will almost certainly have negative, unintended consequences.
From an investor's perspective, they're taxed the same.
With a buyback, you might get X income. But in order to get you X gains the company needs to pay Z (current share price), which is always more expensive than paying a dividend (generally for dividend paying companies, a share trades for 10x-100x the amount the dividend would be for). So the company either pays 100x or it buys back less stock, rewarded fewer investors. Additionally, any shareholder that participates in the buyback is now closed off from getting income Y for any stock sold back. Alternatively, if you don't participate in the buyback, you must hope the company maintains or grows its share price, or else your gains fall below X and you're no longer deferring tax, you're just losing money.
(IOW, for the same amount of cash, a buyback is several times less efficient at returning gains to investors as a dividends. And this means that rather than increasing the price per share, buybacks frequently have the opposite effect, or no effect, because the company also has significantly less cash on hand after the buyback.
Then why do companies love buybacks? Executives love buybacks because it lets them exchange their equity compensation out-of-schedule. This is the primary driving force behind the rise of buybacks. The reason they open buybacks to the public is to avoid running afoul of SEC insider trader regulations.)
The idea that companies that can’t invest well should be forced to spend like drunken sailors is a bit silly.
Of course a problem with this is that I don't think all forms of infrastructure spending of gone up in price - look at housing; per square foot I don't think the cost has gone up that much.
Australia pays even higher prices than in America.
eg Sydney purchased surplus trams from Spain. The Spanish tram system cost USD 115 million for about 40 km (25 miles) and Sydney has already spent nearly $3 billion (USD 2.1 billion) for about 40 km and it will cost another $500 million before a single tram starts. The project is already years behind schedule.
Infrastructure is expensive.
Education is expensive.
What all these things have in common is that they are labor intensive and must be performed with American labor—and well-trained American labor at that. American labor is expensive because we’re a rich country. So it’s absolutely no surprise these things would be expensive, and not much we can do about it.
At least that’s become my theory and it’s so obvious to me that I don’t know why it hasn’t been analyzed that way.
Cynical market manipulation has soaked into real world work at every level both public and private. Sociopaths with the balls to ask 10x or 100x the traditional, cost based price have succeeded totally, and have lured workers with 2x or 5x wages, essentially starving any potentially honest competition. It stuffs all the good workers into a profit-maximizing corporation that now has a lot of other priorities that often conflict with "an honest days work for honest pay".
The city politicians and admins responsible for actually spending the peoples money are often unable and/or unwilling to actually take responsibility for the projects. Partly this is the moral hazard of spending other people's money; but partly it's passing the buck, not wanting to take on any risk associated with real project execution. The public's awareness is dim and short-lived, so the upside of project success isn't worth the risk. So you hire a firm to hire the firm to do the project, and you have plenty of scapegoats if things go sideways.
I don't think successful projects can just happen. You need individuals, visibly, identifiably, running projects, and building reputations. I think it's wrong for a small town's admins to throw money at a big corp to do an infrastructure project, and pay themselves 6-figure salaries to "oversee" it for 10 years, "darn those overruns!" In fact, I think it would be great if infra project competence was second only to running a self-restrained police force as a topic of city elections (the distant third being capability in running other city services well).
But from what I've seen American voters only show up if they have strong emotions, and don't know anything about government or the people running to rule them. So, this is what you get.
https://arstechnica.com/tech-policy/2018/03/dig-once-rule-re...
The second part is a bunch of Malthusian nonsense.
[1] Brooks, Leah, and Zachary D. Liscow. “Infrastructure Costs.” SSRN Scholarly Paper. Rochester, NY: Social Science Research Network, July 31, 2019. https://papers.ssrn.com/abstract=3428675.
What a waste of time reading this article.
Also, in the movie, one of the mission controllers looked to be about 70. To think that when we he was born, flight, radio, and computers did not exist. Here he was putting men in the moon.
Here I’m, born a couple of years after that, and seems not a damn thing has happened since. Everyone has a piece of shit in their pocket with which they can sext. Call that progress; Truly depressing.
The program did cost much less than the Vietnam War, and did pay off in future dividends. The war not so much.
Obviously it's a counter-factual. Maybe Vietnam was inherently unwinnable. Maybe victory would have left Southeast Asia just as messed up as defeat.
A couple million people's deaths were caused by the US war in Vietnam and Cambodia. I don't see how I could argue in favor of that.
Had it won, it's not clear that the US would have somehow turned the Vietnamese economy into the South Korean economy. That would have been mostly up to the people of Vietnam. I mean, in another light, consider the fact that the US cannot even turn its own economy into the South Korean economy.
https://christopherrcooper.com/blog/apollo-program-cost-retu...
Every generation should have such a bold audacious goal.
It's great that we did something amazing in the process, but that kind of political will came from a very specific arms race.