Infrastructure Gap? Look at the Facts. We Spend More Than Europe
http://www.forbes.com/sites/paulroderickgregory/2013/04/01/infrastructure-gap-look-at-the-facts-we-spend-more-than-europe/
By Paul Roderick Gregory, April 1, 2013

Big government advocates seek to substitute “infrastructure” for the
“s” (stimulus) word. President Obama’s State of the Union address called
for $40 billion to fix the nation’s roads and bridges and also called
for a federal infrastructure bank. On April 29, he called for an
additional $4 billion of infrastructure spending. $40 billion here and
$4 billion there, and soon you have some real money.
To convince a wary public to spend more with trillion dollar
deficits, big government advocates must gin up a national infrastructure
emergency that threatens safety, jobs, and well being. Public spending
lobbyists are ready to oblige with D+ report cards for “aging and
unreliable” roads, bridges, and ports. Big government advocates
substitute scare tactics for the facts that our infrastructure is as
good as Europe’s and that we spend more than the European Union on
public investment. If we spend as much or more and have inferior
infrastructure that is a political failure of untold proportions for
which someone should pay.
President Obama used
Miami’s
port as a backdrop for his pitch for more $4 billion more in
infrastructure spending. Gone are grandiose plans for massive stimulus
to boost output and employment on Keynesian steroids. Instead the
President is repackaging stimulus as infrastructure spending. Obama’s
speech was timed to the newly-released American Society of Civil
Engineers’ 2013 infrastructure report card. Its D+ rating rang the
alarms that our roads, bridges, water and waste treatment, rail, dams,
and airports are crumbling and unsafe.
At least the President reminded us in Miami that we have had the good
fortune of four years of enlightened stimulus spending under him:
“Now, over the last four
years, we’ve done some good work. Construction crews have built or
improved enough roads….to circle the globe 14 times and upgraded enough
(rail) to go coast to coast and back. We’ve repaired or replaced more
than 20,000 bridges. We’ve helped get tens of thousands of construction
workers back on the job.”
If our roads circled the globe 50 times would we get a B+? Teachers
reserve D+ for students who make no effort other than to show up. D+
brings to mind backwater countries of Latin America and Asia. D+ is a
national disgrace for a once great country! How could we have let it get
so bad?
The Society of Civil Engineers (
Failure to Act Studies)
gives its price tag for restoring a first-world infrastructure. It
would take $1.7T to correct our current infrastructure deficit and an
extra $160 billion a year – or $1.1T — to meet our infrastructure needs
through 2020. Our civil engineers do not tell us the effect of almost
$3T in additional spending on the deficit. We should focus on the
positive side. After all, what is it worth being able to drive across
bridges without fear of plunging to certain death? (By my calculations
our bridge failure rate is one in three hundred and fifty thousand).
Even though we do not have the $1.7T for current needs and the $1.1T
for later, we would be penny wise and pound foolish not to borrow and
spend, say our civil engineers. The $160 billion extra over each of the
next seven years would alone raise GDP by $3.1T (a three to one return)
and add 3.5 million jobs! What a bonanza!
We have not seen such optimistic numbers since the young Obama
administration promised huge returns for the first stimulus. Should we
put again put caution aside? A word of warning: The web site of the
Society of Civil Engineers shows it to be a lobbyist for infrastructure
spending. Asking the civil engineers how much infrastructure spending we
need is akin to asking defense contractors how much we should spend to
keep America safe. I doubt if the big government people would like that.
The U.S.’s fourteenth place ranking in the World Economic Forum’s
infrastructure index scarcely bespeaks a national scandal.
Luxembourg and
Canada rank just above the U.S., and
Austria and
Denmark
rank just below. None of these countries are exactly slouches in the
infrastructure category. Among the twenty largest countries, the U.S.
ranks second only to Canada. The World Economic Forum index also shows
that U.S. infrastructure beats the European Union average by a wide
margin! How can that be with the high speed rail and the gleaming
Autobahns of the European Union – the envy of our transportation
bureaucrats?
Consider another hitch.
OECD infrastructure experts
find that Europe has too much supply of roads and rail relative to the
demand. Yes, they have trains departing every few minutes, but half
empty, and do Germans really need five different Autobahns to drive from
Munich to Frankfurt? The same OECD experts find that the U.S., Canada,
and Australia have built about the amount of infrastructure that fits
the demand.
Well, if all else fails, our big government spenders at least can
show that we spend little on infrastructure relative to countries that
have good infrastructure. We can really catch the U.S. with its pants
down by looking at its miserly infrastructure spending.
Get ready for a surprise. According to
OECD statistics,
the United States spends 3.3 percent of its GDP (2006-2011) on
infrastructure investment versus the European Union’s 3.1 percent. With
roughly equal GDPs, the United States actually outspends the Europe
Union – our model of infrastructure perfection.
If we spend as much or more than the European Union on
infrastructure, we should have better or equal results. In both the
United States and Europe, public investment and procurement are
political processes characterized by waste, politics and corruption. If
we get less bang per buck from our infrastructure dollar than do our
European colleagues, our problem would be not too few dollars but too
much waste and corruption.
In his Miami pitch for more infrastructure spending, the President
stated: “We’ve got to do it in a way that makes sure taxpayer dollars
are spent wisely.” Does he know something the people do not?
Could it be
that tax payer dollars were not wisely spent in the past? Could the
unions, crony capitalists, and lobbyists have collected at taxpayer
expense?
That would be as hard to believe as Claude Rains’ surprise that there was gambling in Casablanca.