New York Times Op-ed on Infrastructure

March 17, 2014

My op-ed in today’s New York Times has prompted numerous critical comments on theNYT website. Let me address some of them.

Some readers questioned the linked source for my statement that infrastructure spending in the United States is about the same level as in other high-income countries. This fact does need some explanation, but I didn’t have room to include it in the op-ed. The data I cited were emailed to me by the author of the linked OECD report. It is national accounts data on gross fixed investment. I charted the data here in Figure 2.

Some readers wondered about my definition of “infrastructure.” That word is often used loosely. The definition that makes sense to me is the broad one of gross fixed investment, which includes such items as government highways and private pipelines and factories. The data are available from BEA Table 1.5.5, where you can see that private investment—even aside from residential—dwarfs government investment.

One reader expressed a common view that in traveling abroad you often find nicer airports than in this country. I think that’s correct, and often those foreign airports are private or partly private, while ours are government-owned.

Numerous readers pointed to shortcomings of particular private companies, and some of those complaints are surely correct. Private companies often screw up, but my experience is that governments screw up more because of deep, structural incentive problems. Furthermore, private markets have the powerful built-in mechanism of competition to fix problems over time, whereas government shortcomings often go unaddressed. Where there is a lack of competition in private markets, policymakers should focus on opening entry to increase it.

A number of readers thought my mention of the Iron Bridge spurious. I thought of that very old cast iron structure after reading this WNYC story about Wednesday’s gas explosion in Harlem. A Con Ed senior VP says that the company checked the Harlem pipes less than two weeks ago and found no leaks. The story notes,

The bulk of the main on that block, however—about 150-feet—is cast iron from 1887. Con Edison has been working to replace such aging pipe citywide. [Con Ed VP] Foppiano said cast iron mains can be in the ground for a couple hundred years and age is not necessarily a factor.

Finally, one reader pointed to rising congestion as a reason to invest more in highways, even aside from the highway quality issue that I touched on. I agree that congestion is a big problem, and in this essay I discuss how we can improve the efficiency of our investment to better solve it.



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