President Joe Biden is planning a multi-trillion-dollar infrastructure and jobs package to spur transformative change to the economy. Unfortunately, the infrastructure component of his plan will fail to significantly improve the nation’s roads, bridges, and the like because it ignores the vast inefficiencies in current transportation policy that greatly reduce benefits from infrastructure spending.
Let me take you on the journey of a dollar of government spending intended to improve, for example, travel conditions on a highway. This dollar will have a long, perilous trip and encounter many dangers enroute that will divert it from its correct destination and take large, wasteful chunks out of it. By the time it reaches the wrong destination, it will fund much less than a dollar’s worth of highway improvements. The dangers it encounters include inefficient road pricing and investment policy, inflated input and project costs, misallocation of highway revenues, and the slow adoption of technological innovations.
This is from Clifford Winston, “How Federal Infrastructure Dollars Get Nickeled and Dimed,” Barron’s, March 24, 2021.
I highly recommend the whole piece. Actually, everything I’ve ever read by Cliff has been at least good and usually great.
READER COMMENTS
KevinDC
Mar 24 2021 at 2:43pm
Small world – I just linked to his work on another topic in a discussion in the comments on another post! I share your assessment of his work too – he’s a solid thinker and writer.
David Henderson
Mar 24 2021 at 5:52pm
That IS interesting. He is one of my 2 favorite economists at Brookings.
Alan Goldhammer
Mar 24 2021 at 2:58pm
It doesn’t help much when you post links to articles behind paywalls.
Mark Z
Mar 24 2021 at 4:07pm
Well, you could get around the paywall using incognito mode, then it’s just a question of ethics.
Maniel
Mar 24 2021 at 7:11pm
This brings to mind one of the scariest words in the English language, “bi-partisan.” This is when the safety of disagreement is set aside and we taxpayers are fleeced by politicians of all persuasions under the pretense of “the common good.” Yes, I do understand that there is a magical printing press in Washington, so that money can be created virtually at will, but I can hardly wait to see the ROIC statement nonetheless.
By the way, for the odd politico that actually believes this is a good idea, I have a high-speed train for sale at well below cost. Disclaimer: I live in California.
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