The Right Metric for Infrastructure
Chuck Marohn's article on Monday, "Failure to Act (Like Professionals)," about the new American Society of Civil Engineers infrastructure report card sparked an intelligent conversation in our comment section. That's not unusual for an article on our site (not to brag, but Strong Towns' comment section often feels like one of the smarter, more respectful corners of the internet), but for this piece in particular, we felt the comment exchange was worth sharing. One commenter began with a simple question about why tax revenue is the selected metric for measuring the value of infrastructure. Another commenter responded with a thoughtful answer.
First, Aerys B. writes: "Why do you assert that the right metric for whether infrastructure is worthwhile is whether it is self-sustaining with additional tax revenue? It may be a very good outcome if an additional $1.44 trillion in infrastructure investment increases GDP by $3.955 trillion. What if we suddenly double tax rates? Assuming this has a second order impact on GDP, well, all of a sudden instead of a $716 billion increase in revenue, the new infrastructure spending brings in $1.43 trillion. Wow, it paid for itself! That is a little bit silly.
“Why should the tax rate be the single most important factor in whether or not a piece of infrastructure is a good idea?”
"Why should the tax rate be the single most important factor in whether or not a piece of infrastructure is a good idea? The tax rate doesn't determine whether it's a bad idea to pump water up to the top of the mountains in Los Angeles. We should build infrastructure if it is helpful and useful to people. That rests on careful cost-benefit analysis, not some rudimentary tax estimate.
"I agree with you that the United States has likely overinvested in infrastructure. We build stuff that fails the cost-benefit test. But your single-minded focus on the metric, "does it pay for itself through additional tax revenue?" has no theoretical justification."
At this point, Chuck Marohn interjected with a comment which you can read if you're interested, but another commenter's response answered the initial question even better.
Walker responds: "I want to try to reply in a more definitional way that I think is fundamental to the Strong Towns ideal, and helps explain why Strong Towns is such an important idea that is (quietly) radical, in the sense of going to the root of the problem.
"Aerys's query: "Why do you assert that the right metric for whether infrastructure is worthwhile is whether it is self-sustaining with additional tax revenue?"
"The answer: Because it's infrastructure! Infrastructure is a relatively recently coined word, and it means "the stuff beneath the ground."
“Infrastructure is the network of veins and lymphatic ducts — totally critical to success, but not anything that will ever attract any interest or attention except when malfunctioning, and completely incapable of generating any wealth directly.”
"It's the stuff that, when all is well, is completely invisible, totally out of sight and out of mind. Contrary to Strong Towns' definition of a street as "a platform for building wealth," and a good array of successful, strong streets being the heart of all real places, infrastructure is the network of veins and lymphatic ducts -- totally critical to success, but not anything that will ever attract any interest or attention except when malfunctioning, and completely incapable of generating any wealth directly. (Bad infrastructure can cost you wealth and diminish a place, but the world's greatest infrastructure will not raise the quality of an unloveable place one iota.)
"Wealth is something of a dirty word in America but on a civic scale, wealth is the only thing that enables places to have the amenities that are NOT invisible and are very much in our minds and that make people love a place -- universities, libraries, parks, museums and performance spaces, good public health and recreation, etc.
"When you waste money on nonproductive infrastructure -- the overbuilt highways, the stroads, the giga-acreage of car storage -- you pay three or four times over:
“Nonproductive infrastructure is the tangible expression—the outward symptom—of a system of graft and cronyism.”
- First, you over pay for the built stuff.
- Second, you incur a maintenance obligation that doesn't have to be there but now is.
- Third, you lower the quality of the place and the extent to which people want to dig into their own pockets to maintain it.
- And fourth, you devalue the whole urban area a little more, increasing the momentum for more and more of the kinds of projects that have caused the decline.
"To conclude, infrastructure is by definition done outside the market (it's all done by us, through taxes). That means that nonproductive infrastructure is the tangible expression — the outward symptom, of a system of graft and cronyism; the contractor lobby and the engineers and the developers get rich by plundering the rest of us (and our future), by lying to us and claiming that the project makes financial sense. Since infrastructure decisions lack the discipline of a competitive marketplace, they must NOT escape from at least aspiring to be net generators of wealth rather than sinks of it."
Comments have been edited for clarity.
(Top photo by Robert Lawton)