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Why Are Infrastructure Costs So High In The US?

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Why Are Infrastructure Costs So High In The US? Sorry, but anybody wanting some simple answer on this one, especially an ideologically neat one, sorry, there is not one, Indeed, on this important issue, there is a large problem, but not remotely a clear answer regarding why there is this large and important problem. For numbers on this problem, I draw on a Washington Post column yesterday by Catherine Rampell. Here are some of the crucial data. In the early 1930s, just to pick one major infrastructure project, the Oakland-Bay bridge was approved and built within four months.  Yeah, the Great Depression.  But now compared to Europe, where supposedly they have higher labor costs and more regulations, well: a tunnel in Seattle cost three times as

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Why Are Infrastructure Costs So High In The US?

Sorry, but anybody wanting some simple answer on this one, especially an ideologically neat one, sorry, there is not one, Indeed, on this important issue, there is a large problem, but not remotely a clear answer regarding why there is this large and important problem.

For numbers on this problem, I draw on a Washington Post column yesterday by Catherine Rampell. Here are some of the crucial data. In the early 1930s, just to pick one major infrastructure project, the Oakland-Bay bridge was approved and built within four months.  Yeah, the Great Depression.  But now compared to Europe, where supposedly they have higher labor costs and more regulations, well: a tunnel in Seattle cost three times as much as one in Paris and seven times as one in Madrid. This is not an oddball, this is how it is.  Infrastructure investments in the US now cost multiple times what it does abroad, and these are in nations where labor and environmental concerns are being taken seriously.

So, what is going on here? The very bright and knowledgeable Rampell confesses that not only does she not know, but she cannot find anybody who can explain it. In a way this looks like the high costs of medical care in the US.  This is  a much more politicized matter, but when one digs seriously into the research there seems to be no single reason, a whole series of matters, not easily resolved.

The issue of infrastructure lacks some of the matters healthcare has, such as how the US is the only nation in the world not having universal healthcare, which many of us think would lead to lower healthcare costs for various reasons. But what is responsible for the now high costs of infrastructure investment in the US, some of the obvious culprits there for healthcare are not there.

Of course there are many things involved here, which Rampell lays out, but again there is not remotely a “smoking gun,” But her list contains the following: “poor planning, complicated procurement processes,  our multilayered federalist system, NIMBY-ism, and risks of litigation.” Why all this is worse than so many other high-income nations  I do not know. 

She also adds some other matters, such as a tendency of our political system to fund wasteful projects, although this is something that has always gone on, and that I find hard to believe also do not go on in other democratically run nations. Local economic interests have a way of getting their way in democratic political systems and also do so in non-democratic ones, although even in those places, local economic interests get their way to the degree they get in with the Supreme Leader.

Barkley Rosser 

Barkley Rosser
I remember how loud it was. I was a young Economics undergraduate, and most professors didn’t really slam points home the way Dr. Rosser did. He would bang on the table and throw things around the classroom. Not for the faint of heart, but he definitely kept my attention and made me smile. It is hard to not smile around J. Barkley Rosser, especially when he gets going on economic theory. The passion comes through and encourages you to come along with it in a truly contagious way. After meeting him, it is as if you can just tell that anybody who knows that much and has that much to say deserves your attention.

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