Let the Market Build Bridges
By Staff News & Analysis - May 27, 2013

Why are our Bridges Falling? The Economics of the Infrastructure Deficit …Tonight I turned on the news to learn that a major bridge over the Skagit River on Washingon State's I-5 had fallen down. The bridge is not far from where I live. I have driven over it more times than I like to think. Why did it fall? The proximate cause is clear: A large truck, carrying an oversize load, hit a crucial girder and the whole thing collapsed. The economic cause is also clear: Our political leaders are so obsessed with one isolated part of the national balance sheet—the balance of the federal government's financial assets and liabilities—that they have not noticed other, even larger threats to our national balance sheet. Economonitor

Dominant Social Theme: Government better get serious about the infrastructure – and fast.

Free-Market Analysis: This is a great article because it points out how wretchedly US government at every level has performed when it comes to the infrastructure.

Of course, one could say the same thing about Britain and Europe, but that is not the focal point of this story. The US is, because unlike the EU, US industrial and transportation facilities have never gotten a facelift.

They only did in the EU because the Eurocrats needed to do something to impress the locals when they were trying to build the EU, so they handed out money. The infrastructure of Europe greatly benefited as a result, but it was because of politics, not any sense of bureaucratic stewardship.

And please rest assured that given Europe's precipitous economic decline, the great infrastructure projects that were not completed will decay while the completed ones will suffer from a lack of upkeep and gradually rot. It is always this way. The state is a horrible custodian of infrastructure.

In fact, this is where the article declines to tread. It points out the many ways the state has failed but then explains earnestly why we must suffer from more of the same. Here's more:

If you have any doubt that the infrastructure deficit is real, try taking a look at the Report Card for America's Infrastructure published every four years by the American Society of Civil Engineers (ASCE). The Report Card assigns grades of "A" through "F" to various infrastructure categories. The 2013 report begins on an optimistic note: the cumulative GPA for our infrastructure is up. Good news! It is up! Up to D-! That is Capital-D-Minus, as in totally pathetic. We are UP to totally pathetic!

Unbelievably, bridges are one of the bright spots in the report. They rate a C+. Wow! C+! In the language of the report card, "only" one in nine of the nation's bridges is rated as structurally deficient. (Structurally deficient means not only functionally obsolete, but inadequately maintained. It is an even worse rating than the bridge that fell down today.)

The average age of the nation's 607,380 bridges is currently "only" 42 years, 16 years younger than the fallen Skagit span. The Federal Highway Administration (FHWA) estimates that to eliminate the nation's bridge deficiency backlog by 2028, we would need to invest $20.5 billion annually. Unfortunately, though, we are currently spending only $12.8 billion.

Is there any way to separate the wheat from the chaff? A few years ago another useful infrastructure report, this one from the Bipartisan Policy Center, tried to address that question. Although it focused specifically on transportation infrastructure, it made some common sense recommendations that are more widely applicable.

-Beware of putting new, borrowed money into existing distribution channels. Those channels tend to share out funds on political grounds rather than zeroing in on the most productive projects. It would be better not to spend at all than to spend without rational prioritization.

-Focus not just on projects that are "shovel-ready" but on those that are both ready and consistent with longterm productivity standards. We will never catch up with the infrastructure deficit if we fund too many shortterm make-work projects.

-Be skeptical of the "jobs multiplier" rationale for infrastructure projects. Focus on the outputs from infrastructure spending, not the inputs.

Sounds good, doesn't it? And the author earnestly implores those in charge to focus not on the short term but on what needs to be done for the good of the republic.

But the US is not so much of a republic anymore and too many infrastructure decisions are taken at the top where perspectives are most apt to be skewed by short-term thinking and political calculations.

In fact, and here is where we think the author and his article could have gone a lot farther, government is a lousy custodian of infrastructure and the cult of government "public works" ought to be disbanded or at least exposed.

There is no way that people in government will ever make rational decisions about infrastructure. History is replete with various horrors of modernity when it comes to transportation and infrastructure.

The biggest problem is that government can never guarantee the upkeep of what it builds because it is not necessarily market based. When the market itself does not generate the necessary infrastructure, the maintenance must be rationalized within the political process. Over time this is impossible, which is why the US's infrastructure is falling down.

Only the Invisible Hand of the free market can comprehensively and logically create infrastructure and provide for its upkeep. It is about time that the market was allowed to operate again and that people got over the idea that only government can provide the exoskeleton that keeps society moving smoothly.

After Thoughts

It cannot and never will.

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