All Infrastructure Spending Is Not Created Equally

Randomly pouring billions of dollars into roads won't fix America's gridlocked transportation system

The economy is officially a year into a recession, marking one of the longest periods of economic stagnation since World War II, and bolstering calls for yet another, even bigger federal stimulus package. On Tuesday, the nation's governors met with President-elect Barack Obama and funding for infrastructure projects topped their wish-list.

"There is not a governor in this country that would turn down money for roads and bridges and infrastructure projects," Gov. Michael F. Easley of North Carolina declared.

"Infrastructure investment is not only necessary for long-term economic growth and global competitiveness - but it will also create jobs when Americans, and Californians, need them the most," said California Gov. Arnold Schwarzenegger. "With an immediate commitment to national infrastructure investment, it's possible to put shovels in the dirt and start immediately on projects across the nation."

But, this begs an important question: Would all transportation infrastructure spending have an equal impact?

No.

Federal policymakers need to consider much more than dumping money into the transportation sector if they want to have a meaningful, positive impact on the economy. It takes more than digging ditches and laying asphalt to ensure that investments create improvements in mobility that spur job creation and increase productivity. To maximize the impact of any infrastructure spending, the transportation investments must be the right kind, in the right place, and at the right time. Those are no small obstacles.

On the surface, transportation seems like a "no brainer" if there is going to be a massive federal stimulus package. Our bridges, roads, and transit systems are crumbling. Depending on which interest group is compiling the numbers, the nation is under investing in transportation infrastructure by $70 to $100 billion per year.

According to Reason Foundation's Annual Highway Report, 50.7 percent of America's urban interstate highways were congested in 2006. And of the nearly 600,000 highway bridges in the country, 24.1 percent were deficient or functionally obsolete.

The National Governors Association suggests $57 billion in infrastructure projects could be started within 120 days of being funded. The American Association of State Highway and Transportation Officials claims that 3,109 transit and highway projects, accounting for $18 billion in new spending, are "ready to go" once state and local transportation agencies get a funding green light from the federal government. This spending would create 630,000 jobs according to their studies.

But not all of those projects will offer a return on taxpayers' investment. A bridge to nowhere or a lightly-traveled light rail route that will long require heavy annul subsidies isn't a good use of money just because it is infrastructure.

This isn't the 1950s. It's not just a matter of building the obvious routes needed for an Interstate highway system that will connect major metropolitan areas and create freight corridors. The country has reaped the economic rewards of the Interstate system. But, our rate of return has been falling on these investments since the 1970s. Now it is time to rethink transportation investments in the context of the modern economy.

The highway and road system must meet the needs of a globally competitive, dynamic, services-based economy. Today approximately 80 percent of all goods, by value, are shipped by truck in this country. Only 15 percent of travel on our nation's roads is traditional commuting, and 97 percent of our total travel is by automobile. Americans don't just get up and go to work. We combine and "chain" our trips to include errands, non-office business, personal appointments, and to meet friends for coffee or happy hour. Our demand for flexible and adaptable modes of transportation, primarily the car, has skyrocketed, placing unprecedented demands on the transportation system. At the same time our investment in the network has languished. Travel demand on our roads has outstripped additions to capacity by 3-to-1 over the last three decades.

The 21st century economy needs a transportation network that is fast, efficient, and flexible. Achieving this will require directing transportation investments to meet the following fundamental concepts:

  1. Think 3-D. We can eliminate chronic traffic congestion and increase travel speeds by adopting cutting edge engineering solutions and embracing innovative road design to provide multi-layered access to key destinations through tunnels, flyovers, queue jumpers (or duckers), and elevated expressways.
  2. Recognize the hidden costs of congestion. Congestion is a job killer because it limits our access to our most valuable resource: people. For the most part, people will live within a 30 minute commute of their workplace. Congestion shrinks this "opportunity circle" for workers and employers alike, preventing businesses from tapping into the most talented and productive workers available. Transportation projects should place a premium on reducing congestion.
  3. Adopt a "mobility first" transportation strategy. Transportation networks in a services-based economy need to emphasize connectivity with shorter travel times, lower overall travel costs for individuals and businesses, and expeditiously connecting people and businesses within metropolitan areas.
  4. Embrace market forces and the private sector. There's a reason almost one-third of our new road infrastructure has been built as toll roads. Modern tolling marries the powerful economic force of "willingness to pay" with new public and private capital capable of delivering the infrastructure users want. In short, toll roads put the right roads in the right place at the right time.
  5. Embrace innovative highway design and materials. The private sector has repeatedly shown its ability to provide new designs, using new materials, to speed up the delivery of transportation infrastructure when they've been allowed. It's time to give state and local governments more freedom to test the waters with private capital and incentivize innovations that meet real needs identified on the local and regional levels.

These concepts will be central to achieving a policy goal of improving the long-term viability and efficiency of our transportation network. And before the federal government gives governors billions for new infrastructure spending, someone should talk to Secretary of Transportation Mary Peters, who has said there is over $400 billion in private capital ready to be spent on infrastructure projects.

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  • ||

    Why is anyone at Reason writing articles about how the government should best build roads? Are you unclear on the concept of libertarianism?

  • ||

    So my dream of being a hobo will finally come to fruition? and i thought that BS in Engineering wouldn't pay off.

  • ||

    What makes you think that Obama means "roads" when he says "infrastructure"? I have no doubt he means "buses and rail".

  • Egosumabbas||

    "Why is anyone at Reason writing articles about how the government should best build roads? Are you unclear on the concept of libertarianism?"

    LMAO. Seth, you're new here, aren't you?

  • ||

    The Feds have a tax on gas as do all the states.Somehow all this money is collected and never directed to where it was meant.I doubt they can tell you where the money goes.

  • The Wine Commonsewer||

    Why is anyone at Reason writing articles about how the government should best build roads?

    Point taken, and Reason's Poole was heavily involved in private transportation projects, one of which was in my backyard. Public outcry and local politicians combined to convert the private toll road to a government owned toll road. And the costs went up. And the maintennance went down.

    Like public education, public roadways are not ever going away. At least not in the US. In that sense it makes sense to figure out how best to get the roads built.

    I don't recomend the Californicate model where you begin with the finest road system in the known world and end up fifty years later with every highway as bad or was than the Pa Turnpike

    BTW, if you want serious libertarian work on roads and airports you should check out beloved founder Bob Pooles extensive writing on the subject.

  • ||

    So my dream of being a hobo will finally come to fruition? and i thought that BS in Engineering wouldn't pay off.

    "Oh, my God! How do hobos fit all their stuff into a bandanna? It doesn't make sense, man! We're gonna need, like, a towel or a tablecloth or something! But...it's not gonna look cool! We're gonna look like assholes!"

  • ||

    Why is anyone at Reason writing articles about how the government should best build roads? Are you unclear on the concept of libertarianism?

    Drink!

  • Gilbert Martin||

    "The Feds have a tax on gas as do all the states.Somehow all this money is collected and never directed to where it was meant.I doubt they can tell you where the money goes."

    It goes into (a) - mass transit boodogles, and (b) overpriced union labor courtesy of the Davis-Bacon Act.

  • ||

    While roads are probably the least stupid option for government funding it still distorts the market greatly. Not everyone is in a business that makes extensive use of roads and bridges (or buses and light rail for that matter). My company is currently trying to shove as many people into telecommuting it can so they can then save on the cost of not having to house them during the day. Not surprisingly most workers are pretty happy to do this. But that means more roads and infrastructure will not benefit them (although them working from home benefits everyone else who still uses the road by reducing congestion).

    I point this out as perhaps more companies would take this coarse of action, as well as other kinds, were there not government incentives to do otherwise. Instead of just mindlessly trying to create more of something, we should be letting people innovate so they won't even need it in the first place.

  • FMC\\GM||

    "It takes more than digging ditches and laying asphalt to ensure that infrastructure investments spur job creation..."

    This isn't going to help laid off\unemployed autoworkers. The typical UAW worker doesn't have the skill necessary to use a shovel, much less the desire to actually sweat.

  • Egosumabbas||

    @Pain

    Stop making sense and using logic. Your opinions are not welcome! You're only allowed to quote from expensive statistical studies and cost-benefit analyses. Think tanks need to make money too you know.

  • Egosumabbas||

    If you look up the actually history of roads, it's only recently that they are huge government projects. If you look at roman roads for instance, they were initially constructed by the army, then the maintenance was paid for by private individuals, the local censor out of his own funds, and lastly by taxes--which were usually tolls.

    So from a philosophical/moral perspective, and even using history as a guide, public roads are an aberration.

    As for existing public roads, I don't run around protesting them because at least I have a choice to pay for them: gas taxes are user fees.

    These new obamariffic roads though... probably will be paid for with more debt.

  • Sarg||

    So the army is going to plow a road through your yard, and when were done -- you're going to pay to keep it in good shape. You got that maggot?

  • ||

    Why isn't anyone talking about other forms of transport. Roads aren't the answer...more roads means more drivers, an endless cycle. Transit systems with cities designed (private and public) to make that trip to the store, work, pub all on the same transit network.

    This idea of one person/4-6 person car is silly. Transit with more options, and people willing to sit next to someone they don't know (God forbid) is the way to go, IMHO.

  • Sarg||

    Nothing stopping you from building this transport system Fusion.

  • tarran||

    Actually, sarg, there are serious impediments to providing public transportation without government approval.

    If I tried to build a bus system without getting permission from Mumbles Menino and
    Deval Patrick they'd throw my ass in the clink. Furthermore, they aren't going to give me permission if it looks like I will be competing effectively with the MBTA.

    Back when bus systems were overwhelmingly designed for the convenience of white riders (and few buses ran in black neighborhoods), some black entrepeneurs attempted to set up bus companies that catered to this market. Ususally they had to come up with creative ideas for evading city governments that wanted to shut them down (selling 25 cent shares in the company to people who desired to ride the bus for example).

    That is one of the most pernicious aspects of state involvement in transport infrastructure - it makes innovation hard.

  • ||

    So why does this all happen? I'm always struck by all the governors clamoring for cash for projects that are almost always completely contained within the bounds of their states and with no interstate issues.

    This is a classic case of how federal funding hurts state decision making. There is so much federal highway funding, that states will simply not fix a road without federal funding.

    Would it be better to eliminate federal funding of transportation projects (with the exception of those with true national implications)? Critics would point to the current state of things and say that things would get dramatically worse. I wonder if finally states would be able to make decisions based on real priorities instead of just those projects that can get federal funding.

  • Web weenie||

    Would it kill ya to fill out the alt-text to let us now something about the image every now and then?

  • economist||

    Look guys, you're either preaching to the choir, or trying to reason with people who think that spending lots of money on planes, boats, tanks and bombs in World War II ended the Great Depression.

  • economist||

    "That is one of the most pernicious aspects of state involvement in transport infrastructure - it makes innovation hard."

    But without absolute state control of infrastructure, TEH CORPORASHUNZ would gain a monopoly on transportation and kill your children.

    (Note: I actually favor public provision of major infrastructure such as roads. But whenever private alternatives come up, I'm strongly in favor)

  • economist||

    "These new obamariffic roads though... probably will be paid for with more debt."

    Phase 1: Debt
    Phase 2: ?
    Phase 3: Profit

  • Jeremy||

    Roads subsidize CO2 emissions. Build rail.

  • ||

    For the love of all that is holy, where's Joe?

  • ||

    "...heavy annul subsidies..."

    *snork*

  • Kolohe||

    Look guys, you're either preaching to the choir, or trying to reason with people who think that spending lots of money on planes, boats, tanks and bombs in World War II ended the Great Depression.

    Well, that, and employing 12 million men aged 18-45 to use the planes, boats, tanks and bombs.

    Here's the thing: broken windows 'works' if you're the one not only throwing the rocks, but also selling rocks to others, throwing rocks into other's glass factories (and at there glass workers), and then selling everyone windows afterwards, while not getting as many of your windows broken(and none of your own glass factories nor your own glass workers). You also need to carefully draw the boundary conditions.

  • Teh Very Concernd OBserver||

    YOu people are just denying economic facts! Keynes showed conclusivly that window breaking and fixing stimulates the economie and spreads the wealth sothat the evil capitalists don't get to hord all of it!!!!!!!!!!!!!!!!!!!!!!!!!!!!!


    I HATE MY LIFE!

  • jhn||

    Nice passing dig at rail in the article.

    We don't need more roads. Net money paid to support automobiles per driver exceed net money paid to support rail per passenger, and when you factor in the externalities are probably more costly still.

    The government shouldn't be spending on either, but if you have to pick one I'd pick rail.

    A better analysis would be "what would happen if government stepped the fuck out?" Then since the government won't step out, try to have it do what would have happened had it.

  • Sam Grove||

    Why can't we have flying cars instead?

  • cunnivore||

    The Depression ended because all of our international competitors had their industrial base destroyed in the war. I don't think they realized the Depression was over in Western Europe during the late 40s, for instance. FDR also helped end the depression, by dying. The Taft-Hartley revisions to the Labor Relations Act helped as well (and surprise, the Dems are licking their chops on rolling those particular revisions back now that America is under their heels again).

  • ||

    The Depression ended because all of our international competitors had their industrial base destroyed in the war.

    Are you saying, then, that the present economic troubles can be immediately reversed if all industrial capacity of Europe and Asia were destroyed tomorrow? Because, you know, the US can at least simulate that by ending all imports from those continents tomorrow.

    Is that the recipe for ending a Depression? Not quite, or Smoot-Hawley would have been a rousing success.

    Just as California is richer because the rest of the US is not an impoverished wasteland, the US is richer because of the opportunities for trade and comparative advantage with the rest of the world.

    A richer and more productive rest of the world is better for the US than a poorer and less productive rest of the world. That is as true today as it was in 1945.

  • ||

    Anyone interested in roads should read the entertaining works of James Howard Kunstler, kunstler.com.

    An enormous amount of gov. money goes to support our roads infrastructure. Building the interstate highway system was the greatest public works program in the world. The cheap oil we've had through our history has meant we built a wildly spaced out America where you need to drive everywhere. As oil/natural gas rises in price (worldwide production is declining despite the high prices we've had), this need to drive everywhere is going to present HUGE problems for us Americans.

  • Jed Rothwell||

    The more roads we build, the more the demand for them will increase, especially if they are made available for free. The best solution by far is to stop building roads and stop going places! That sounds crazy, but most travel is unpleasant, unnecessary, and can easily be avoided.

    What we need are satellite offices in the suburbs, linked together with high-speed Internet video connections. People should travel a short distance from their houses and spend the day connected to their colleagues via a full-size Internet connections. Many jobs do not require physical presence.

    This is already being done. In Washington DC, legal office secretaries do paperwork, greet customers, make telephone calls, and order sandwiches. These secretaries live in Pakistan and they appear in Washington DC on full-screen high-definition televisions. If we can afford to make high definition links to Pakistan we can certainly afford to make them halfway across town from one satellite office to another. There is a glut of fiber-optic cable in any case. The daily energy cost of a video connection 8000 miles away is far smaller than an automobile trip of a few miles. Internet connections use milliwatts of power and the video monitor produces light efficiently so fewer overhead lights are needed.

    Roads and automobiles are a 19th century solution to a 21st-century problem. They are far too slow, inconvenient, polluting and obsolete for commuting or most other business purposes. We should have instantaneous full-scale visual access everywhere.

    This technology is long overdue. Arthur Clarke described it 45 years ago. We could have implemented it 10 years ago. Granted, it has started already on a small scale as I mentioned (and also with Internet meetings), but we should scale it up now, quickly, instead of building more roads.

  • Funny Shit||

    Recently before elections I divulged my voting preference for 3rd party as a Libertarian. My counterpart immediately went into funding of federal highways. I replied that that was the worst of my worries given the War in Iraq, the War in Afghanistan, the War on Terror, the War on Drugs, ad nauseum ad infinitum.

  • My Way or the Highway||

    I am recently back from India. Roads are good. They're great. I don't argue the simplistic Libertarian arguments. If driving means not dodging the cart drawn by camel, brahma, or horse, I would say India's economy would improve but... sacred cows are sacred cows.

    Great experience, but i'll let India work it out. They are starting to eat beef. I'll just wait. Beef is delicious.

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