Infrastructure

No, We Don't Need Biden's $2.3 Trillion Infrastructure Plan

Just because a politician says something doesn't make it so.

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While President Joe Biden's administration doesn't seem to need an excuse to spend money, two recurring arguments for his gigantic $2.3 trillion infrastructure proposal are that our roads and bridges are "crumbling," and that modernization would generate economic growth and jobs—hence its name, the American Jobs Plan. But none of this clever marketing makes any of these claims true.

Let me start by pointing out that, to the extent that people think about roads and bridges when they hear the word "infrastructure," they should know that only $621 billion of the $2.3 trillion is for transportation—and of that sum, only $115 billion is for repairing roads and bridges. The rest of the bill is mostly a handout to private companies that already invest heavily in infrastructure. These subsidies will come with federal red tape and regulation, and hinder job creation, not bolster it.

Also, while our infrastructure could certainly be modernized and could use some maintenance, it's not crumbling. According to the World Economic Forum, U.S. infrastructure is ranked No. 13 in the world—which, out of 141 countries, isn't too shabby, especially when considering the enormous size of our country and the challenges that presents.

Yet as Washington Post columnist Charles Lane notes, it would be more accurate to bundle European nations together, since they share a significant amount of infrastructure, which would move the United States into fifth place.

Moreover, while the American Society of Civil Engineers' 2021 report card gave the United States a C-, this is its best grade in two decades—meaning that the quality of roads, bridges, inland waterways, or ports has been improving each year, without a congressional rescue plan. This fact doesn't quite fit the crumbling infrastructure narrative that politicians and the media like to tout.

Academics also refute the idea that infrastructure is crumbling. Reviewing a large body of research in a National Bureau of Economic Research paper, Wharton University economist Gilles Duranton and his co-authors state: "Perhaps our main conclusion is that, on average, U.S. transportation infrastructure does not seem to be in the dire state that politicians and pundits describe. We find that the quality of interstate highways has improved, the quality of bridges is stable, and the age of buses and subway cars is also about constant."

This is an important reminder that the private sector doesn't seem to have any problem maintaining its infrastructure assets, as we see in the difference with railroads. Passenger rail is in mostly bad shape when owned publicly, whereas privately owned freight rail is mostly strong in quality. The best way to improve infrastructure isn't to throw taxpayers' money at it, but to privatize things such as passenger rail, airports, and air traffic controllers, as many other countries have done already.

Also, while the idea that building infrastructure will bring about more economic growth makes for a good talking point, it doesn't work in practice. It's proven that when there's already economic growth occurring in a specific area, infrastructure spending targeted to support the boom will promote even more growth. But simply building infrastructure in the hope that it will create growth isn't supported by evidence. For instance, in their review of the literature, Duranton and his colleagues find "little compelling evidence about transportation infrastructure creating economic growth." One reason is that a supply of more infrastructure is likely to be a total waste of money if there's no actual demand for it.

What's more, looking at spending on highway construction in the Great Recession stimulus bill, economist Valerie A. Ramey concluded that "there is scant empirical evidence that infrastructure investment, or public investment in general, has a short-run stimulus effect. There are more papers that find negative effects on employment than positive effects on employment." What that spending does do, however, is displace private investments. This is unfortunate, since the Congressional Budget Office found that private spending produces twice the return as does public spending.

Finally, in theory, government spending could lead to higher growth in the longer term. Unfortunately, legislators' well-documented tendency to make decisions based on politics often leads them to favor projects that are outdated, expensive, and never profitable at the expense of private and profitable alternatives. Rail and transit projects come to mind.

The bottom line is this: Politicians make a lot of promises, but we shouldn't always believe them.

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  1. Maybe the staff at Reason shouldn’t have backed Biden. Their protests ring oh so hollow now.

    1. When Drumpf was in office Reason.com’s benefactor Charles Koch lost $5 billion over 12 months (January to December 2020).

      With Biden in office Mr. Koch has earned $5 billion in about 3 months.

      We #LibertariansForBiden clearly made the right call.

      1. One would hope that Mr. Koch’s profits/net worth (I’m not sure to what you refer) would have no influence Mr. Koch’s support of libertarian policies. Your post suggests that people in government have too much control over the profits and income of Koch Industries, and like the mob that exists in the Democrat party, they’re using their positions in government and government power to enrich themselves, at the expense of their political enemies.

        Thanks for letting us know.

        1. Koch Industries is a private company, so I don’t know where OpenBordersLiberal-tarian came with the $5 billion number. Drumpf didn’t cause the pandemic – and odds are high Koch Industries was doing fine, like much of the economy, during Trump’s first three years in office. Vaccines were being administered at a rate of 1 million+ a day during Trump’s last week in office, and that momentum has continued, which is something Biden deserves little or now credit for, so the if Charles Koch has seen his net worth increase, it’s just because the economy is recovering as the virus panic subsides.

      2. With Biden in office Mr. Koch has earned $5 billion in about 3 months.
        Just in time for Lizzy warren’s wealth tax.

    2. Every one of these sorts of articles are an admission by the author that they ignored addressing Biden and what he represented prior to the election.

      IOW they are dishonest fucks.

  2. “The bottom line is this: Politicians make a lot of promises, but we shouldn’t always believe them.”

    What an insightful observation! Maybe next, Veronique can do an article on H2O (or H2SO4, according to WK they’re interchangeable) where the big reveal at the end is that water is wet.

    1. These are promises kept to the supporters of the elected Democrats – unions, colleges, journalists, and government workers. Just use the plastic nature of words in public discourse to rename ‘payback’ as ‘infrastructure’ and off we go.

      1. That…… is very correct.

  3. Joe can build back America better again. Obama and his doormat Joe paid their pals to build the world’s largest airstrip in Afghanistan then abandoned the project before they finished it. It was a brilliant use of billions in taxpayer dollars to build an airstrip to nowhere. “Shovel ready jobs, Baby”.
    They also spent a few million to create one, yes, just one, female Afghan military pilot. She is here in the US now, apparently, her fellow Afghans were going to kill her because they do not agree with women flying planes, driving cars, or even leaving the house alone. Allowing Hillary Clinton to spend US tax dollars on “women’s rights” has been a huge success!
    We should stay there forever because forever is what it would take to bring equity to those Afghan gals. Thanks Joe. No, I really mean it, thanks Joe. I feel that Afghanistan is a noble cause. Who doesn’t?

    1. “We should stay there forever because forever is what it would take to bring equity to those Afghan gals. ”

      Don’t be so eager to swallow the propaganda. It’s just a pretext to salve American consciences. From Afghanistan, America can threaten Iran, Russia and China. If you want America to have an empire, you have to accept the occupation of Afghanistan.

      1. The USA can threaten Iran from Kansas.

        1. The USA can also close its bases on foreign soil.

          1. Or they could lower taxes, too.

    2. “Obama and his doormat Joe paid their pals to build the world’s largest airstrip in Afghanistan…” Now where in the hell did you get that bogus information from?

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  5. I’ve said it a thousand times – A simple way to look at government spending is that since most people are smart enough to do what it pays them to do, any time the government has to pay you to do something, it’s paying you to do something stupid, something nobody would do if the government weren’t paying them to do it.

    A second thing I’ve said a thousand times – government and private industry have different incentives and different goals and what’s effective and efficient depends on what your goals are. To the average consumer, efficiency is getting the best value for your money. To a politician, efficiency is getting the most votes and to a government bureaucrat efficiency is getting as big a budget and as much power as possible. You’re going to have to figure out a way to get those goals and incentives aligned. One way is to make everybody dependent on government and then everybody has an incentive to make government as big and powerful as possible. Another way involves a liberal application of ropes.

    1. Well Jerry, you seem to miss the purpose for government our founders sought: to protect our lives, liberty, and pursuit of happiness, from others who initiate force against individuals or groups and harm them. So when we collectively pay for police and military to protect us from people who’d initiate force against us, that isn’t “stupid, something nobody would do if government weren’t paying them”. In fact, many people would do this and take justice (revenge?) into their own hands lacking a government to do it, and they’d do it for free.

  6. The Dotard failed to build the wall he put as his primary objective yet he still quadrupled the deficit.

    1. Weird you didn’t respond to the link yesterday about the binge on spending this year.

    2. Living in the past.

    3. So Trump didn’t complete the wall, and the spending continued. Congress ensured it was that way.

      Trump worked to build the wall, and though it was < 0.5% of the budget, and half the country voted for him and his wall, the political class prevented him from doing it, in a slap to the face of his supporters. Further, what leads you to believe Trump can stop the spending? Neither the Democrats or RINOs that dominate the GOP want the spending to stop, so Trump's only option is to veto spending bills and shut down the government, until his veto is overridden resulting in the same spending if not more.

      At least Trump had the idea to send money directly to the people, so politicians don't direct the spending to get the biggest kickbacks in campaign cash or other favors. The political class hated that, because after all, if we're going to supposedly "stimulate" the economy, why not direct it to the people instead of politically directed spending?

      "… in theory, government spending could lead to higher growth in the longer term."

      I disagree: any government spending beyond "protecting our lives, liberty and pursuit of happiness" will lead to less growth because it takes some of the fruits of people's labor; thus, creates incentives to not produce, while also creating incentives for those taking and consuming that value to do more of it. This argument is bogus IMHO, and shows the extent to which we've collectively been gaslighted into believing it, as evidenced by DeRugy's statement (assuming no lack of space for a disclaimer).

    4. I hear Joe wants to finish it for him.

  7. The bottom line is this: Politicians make a lot of promises, but we shouldn’t always believe them.

    Politicians make a lot of promises, but we should never, ever, ever believe them. Where the absolute fuck have you been?

    1. reason has been saying as much for 50 years. More people have decided politicians’ promises are worth taking a chance on. Some have obviously benefitted and continue to support the con; the rest believe that “we just need the right people in office.”

  8. Filling that article quota with pointless drivel I see. Politicians lie and waste money? What a trenchant insight! No one has ever revealed the truth to me in such a way before!

  9. “Just because a politician says something doesn’t make it so.”

    THEN WHAT GOOD ARE THEY?

    1. They’re not. We should dispose of them. Progs first.

  10. Just because a politician says something doesn’t make it so.

    Insurrectionist!

  11. C’mon. Everybody likes trains and bridges. They also like beaches, fried chicken and cute furry puppies. Can we have more of those too Uncle Joe?

    1. Tribbles are infrastructure.

      1. I saw somewhere that there is a real grain triticale. They just added the prefix.

        1. So, they changed the way it was spelt?

  12. Just because a politician says something doesn’t make it so.
    Every Lefty, “But the Gov-Gods will save for us…” by stealing from those of us that create something besides poop.

  13. “Politicians make a lot of promises”

    Bullshit is infrastructure!

  14. “Academics also refute the idea that infrastructure is crumbling.”

    Yeah, but they ignore the fact that the next “bridge to nowhere” ain’t gonna build itself!!

  15. How come the fed stopped reporting some numbers lately – hyperinflation coming? However will the cancerous tumors on the left and in Biden’s cabinet and media spin that?

    1. It doesn’t matter how they spin it. The US voter, with Reasons help, decided to vote for authoritarian socialism because mean tweets were too horrific to endure.

  16. we. didn’t. need. Biden.

  17. When democrats win, they feed their troops. Every time.
    When republicans win, they remind us how much they actually hate us and resent needing our votes.

  18. I think by now the mask is off, and we understand that four decades of (utterly hypocritical) fiscal penny-pinching was never about balancing budgets or being responsible. Instead of spending this country’s wealth on modern infrastructure and other obviously necessary investments, we spent it on ludicrously enormous cash giveaways to the already wealthy. That’s what we prioritized, without any effort put to actual fiscal prudence (except under Clinton, where a budget surplus served as anti-stimulus and planted the seeds for later economic calamities).

    Even a libertarian is hard pressed to argue that modernizing infrastructure wouldn’t pay dividends for the private sector which uses it every day to generate economic activity.

    The sad thing is you’d rather risk death on a crumbling bridge than admit that your fiscal philosophy is a scam. Nobody makes any money without public investment in infrastructure. The same goes for education, healthcare, and all the other things that buttress a modern economy.

    And what better time to pump money into public infrastructure than when private-sector activity is depressed? Shit, we should have started when everyone was sitting at home not using the roads anyway.

    You can sit around waiting for John Galts to come along to trickle their genius down and somehow magically make roads and bridges and broadband that functions efficiently, or you can recognize that participating in a modern market means necessarily availing yourself of public infrastructure. You can’t even get to work without it.

    You only believe it’s “your” money or “their” money because you’ve bought into the psychopathic notion that any resources not handed over to private interests are stolen from them before they even had them. The earth belongs to no one and everyone. That money doesn’t go into a black hole, it goes back to the private sector in the form of infrastructure investments. A country with a strong army and fiat currency is not on a household budget. It can do whatever it wants to do with the resources at its disposal. You no longer get to argue that the only possible use of those resources is to shove it into CEOs savings accounts. There’s nothing natural about that. It’s just poor planning.

    1. Did you even read the article? The bridges aren’t crumbling. Private investment on infrastructure yields better returns than public investment. Projects that need government money generate no returns because there’s no demand for them. You’re living in a fantasy land.

      Money (and more generally, value) doesn’t exist in a state of nature. Raw resources are pretty useless on their own. It is with ingenuity and effort that wealth is created. Wealth is private, because only individuals create wealth, and only by creating things that other people want, and are willing to trade the product of their labor and ingenuity for. Government never creates wealth – it only ever destroys it.

      And CEOs don’t keep all their wealth in massive savings accounts, or scrooge McDuck style cash vaults. That money is invested in productive ventures – that is, in people and ideas about how to create yet more value. Capital formation is really important for starting new ventures and creating new wealth. Maybe you should learn some actual economics.

      1. If the private sector were capable of building a modern efficient infrastructure, it would have done so by now with all the excess wealth funneled to its accounts over the past decades.

        Government not only does not “destroy wealth” whatever that means, it is the only reason you can account for your wealth on a spreadsheet at all. I’m definitely not saying the private sector doesn’t efficiently allocate resources when properly regulated or that it is a net drain. It’s an essential part of the program.

        But wealth is tabulated in dollars, and dollars are literally created by the government. It’s also not the case that government only spends after it has taken taxes from the private sector. Government spends first, then collects taxes if it is so inclined (it hasn’t been very inclined thanks to Republican fiscal policy). It has never been constrained by a budget because it creates money. Anyone saying that it is is running a scam.

        You acknowledge that government allocating money to the accounts of rich people produces economic activity. So why can’t it cut out the middle man and pay for the roads and bridges that every sane person understands is necessary for an economy to function?

        A modern economy doesn’t emerge from nature. Government sets the system up, builds the infrastructure, and makes the laws, and the economy follows. Having this understanding makes us free, because we are free to vote for allocating the country’s resources however we feel necessary and good. You’re saying it should only be allocated in one (inefficient) way. Trickle-down theory is Keynesianism, right? It’s just a retarded version of it.

        Government spending money puts wealth into the private sector. It pays contractors directly for one, and with their income they buy shit. No wealth is destroyed. Again, that’s the first law of thermodynamics. Government balancing its budget is exactly equivalent to government taking money out of the private sector.

        1. You are a mental midget.

        2. Everything you said is total bullshit. And you don’t deserve a better response than that.

          Kill yourself.

  19. “Our infrastructure is great. We got a C-”

    We were raised on stories of American greatness. Now it’s “C- is good enough.” Have some damn pride in your country and strive for something better.

    1. The point was its getting better, not that C- is good enough.

      1. It doesn’t magically get better all on its own though. We have to keep investing in it to make it continue to get better

  20. Passenger rail cannot exist with our taxpayer subsidies. There just aren’t enough people who want it, in comparison to how much it costs to provide it. Killing Amtrak would be a merciful act.

  21. “These subsidies will come with federal red tape and regulation, and hinder job creation, not bolster it.”

    What would be worse than throwing $2,300,000,000,000 into the streets with red tape? Throwing $2,300,000,000,000 into the streets without red tape!

    Don’t temp them.

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