Infrastructure: Why Does America Pay So Much for Stuff That’s So Lousy?

Politicians love to talk about infrastructure spending. Trump wants a trillion dollars for it! Now that’s macroeconomic!!

Yet, most people don’t know exactly what it is. Here’s the big 6 components: the electricity grid, pipelines, railroads, airports, port facilities, and bridges. Roads and particularly highways kinda’ sorta’ belong on that list too, but most of them are done locally, and if you think about it … mostly go between places connected to the grid, pipelines, railroads, airports, and ports.

Our international students can confirm that a lot of America’s infrastructure is … hmmm … not what they expected from a country they viewed as big and rich. Why is that?

In short, what we build stinks because it costs more than it should.

Here’s one opinion why:

Americans have to understand that they are behind … They have to let go of the mythology of the American entrepreneur who does not listen to the experts. They can solve the problem of high construction costs if they want, but they need to first recognize that it exists, and that internal politics and business culture are part of the problem rather than the solution.

Oops. Didn’t we just elect an exemplar of “the mythology of the American entrepreneur who does not listen to the experts”?

I drew that from the conclusions of a long post at the blog Pedestrian Observations. There, 9 problems with building infrastructure in the U.S. were outlined (with an emphasis on examples from subway projects, and light rail like the Trax system in Salt Lake City).

• Almost all countries bore tunnels for subways (more expensive), but they dig out a big hole to make the station (cheaper). In the U.S., we bore out the station too, so as not to disturb the surface as much.
• Mezzanines: you know those shopping malls around public transport that … no one goes to for the shopping (think about it, you buy stuff there because you need to, not because the prices are good). Most countries don’t have those. Where exactly did our governments get the idea that they need to build malls, but only in subways, airports, and train and bus stations? A few shops are fine … but private malls on the surface have been going extinct for a couple of decades.
• Low bid contracts: in the U.S. we mostly require governments to go with the lowest bidder, but we don’t check how much extra it costs when we that bid needs to be upgraded. In many cases, the strategy is to offer the lowest bid, and jack up the prices when things need to be spruced up. (You may be sitting in one of those projects right now).
• Incomplete contracts and lawyers: in the U.S., those upgrades get negotiated on a case by case basis, instead of having stipulated prices in advance which bureaucrats could choose from.
• Poor management: transportation agencies are put in charge of managing their own construction projects, rather than having a government “department of construction” that might develop expertise.†
• Turf battles: this is a disadvantage of America’s decentralized and Federalized system of government.
• Irrelevant additions: everyone likes their public transportation to look nice, but the U.S. is known for overdoing it, especially on refurbishments of older facilities.
• Politicians are not hurt by high costs: who exactly is hurt by California shutting down construction of its high speed rail line? Note that California spent zero of its own money on that project so far … it was all federal money, coming from Cedar City amongst other places.
• Global Incuriousity: I love this one so much, I’m quoting below.

Functional illiteracy is a great concept. About 20 years ago I started incorporating innumeracy — the inability to process or make decisions about large numbers — into my explanations mix. And now I get to add incuriousity: the unwillingness to be curious about how other people do things because they might be doing it better.

That is America in a nutshell: we are conditioned to be incurious.

Incuriosity is not merely ignorance. Ignorance is a universal trait, people just differ in what they are ignorant about. But Americans are unique in not caring to learn from other countries even when those countries do things better. American liberals spent the second Bush administration talking about how health care worked better in most other developed countries, but displayed no interest in how they could implement universal health care so that the US could have what everyone else had, even when some of these countries, namely France and Israel, had only enacted reforms recently and had a population of mostly privately-insured workers. In contrast, they reinvented the wheel domestically, coming up with the basic details of Obamacare relying on the work on domestic thinktanks alone.

…

Americans venerate founders and innovators, an approach that works in industries where the US is in the global frontier, like tech or retail, but not in ones where it lags, like cars and the entire public sector. To avoid learning from others, Americans end up believing in myths about what is and isn’t possible: they insist they are so much richer than Europe that they have nothing to learn from across the Pond, and hang all their hopes on any flim-flam artist who comes from within American business culture …

Oops. Does that sound like you know who? For that matter, does it sound like flim-flam artists from other cultures, like Obama, who was elected to the presidency with an essentially empty resume? Or Bush II whose claim to fame was being partial owner of a baseball team?

Americans … have to let go of the mythology of the American entrepreneur who does not listen to the experts.

The latter is, of course, a huge problem with understanding macroeconomics. How often are you personally forwarded some meme or video relating to macroeconomics broadly? The thing is … I bet you’re never forwarded memes or videos like that about biochemistry, cinematography, or diachronic linguistics? Think about that for a minute.

Ready for some examples or transportation policymakers not listening?

… Tells me of an official at either Caltrain or the California High-Speed Rail Authority, I forget which, who did not know Germany had commuter trains. Another Caltrain official, confronted with the fact that in Japan trains turn faster than Caltrain thought possible, responded “Asians don’t value life the way we do” – never mind that Japan’s passenger rail safety per passenger-km is about 1.5 orders of magnitude better than the US’s. In stonewalling about its safety regulations, since positively reformed, an FRA official insisted American trucks are heavier than European ones, where in fact the opposite is the case. Boston’s sandbagged North-South Rail Link process included a best practices section but insisted on only including North American examples, since European ones would make America look bad. [BTW: I had no idea we even had an agency known as the FRA, short for Federal Railroad Administration].

Canada is not much better than the US. Americans’ world is flat, with its corners in Boston, Seattle, San Diego, and Miami. Canadians’ world includes the United States and Canada, making it flat with the northern ends of the quadrilateral stretched a few hundred kilometers to the north. A study of a long-overdue extension of Vancouver’s Millennium Line to UBC has four case studies for best practices, all from within North America. This is despite the fact that in the developed world the system most similar to Vancouver’s SkyTrain in technology and age is the Copenhagen Metro …

† The article notes a story I love. In Madrid, they evaluated the costs of their proposed big subway project by comparing it against subway projects around the world. Their list of subways included a surface light rail project in Boston because the Spaniards all assumed that any project so expensive must have involved a lot of digging. It didn’t.