Interstate Infrastructure
I think Greg Mankiw might want to think harder about this: “First, since most infrastructure is used locally, the proper level of spending is best determined by state and local governments rather than by the federal government.”
The country has always had a lot of infrastructure spending take place at purely the state and local level. After all, a lot of infrastructure is a purely state and local issue. Here in DC, a lot of our small city parks are actually under the control of the National Parks Service and it’s a big problem. There’s a small park between my neighborhood and Chinatown that the community wants to redo on a kind of “Chinatown” theme and there are all kinds of hold-ups because it seems doing this will actually require an act of congress. Consider yourself lucky that if you don’t live in DC your local park infrastructure decisions are made on a local level. That’s how it’s always been, and I don’t see anyone proposing that we do otherwise.
But at the same time, we’ve always done some infrastructure spending and planning on a national level. The authority to build roads is one of the congress’ enumerated powers, and if you think back to your US History days you’ll dimly recall something about Henry Clay’s “American System” which involved building canals and such. The issue back then and carrying forward to the present day is that a lot of infrastructure crosses state lines. People who live in New York use Newark Airport in New Jersey and they need ways to get there. And people in New Jersey use Philadelphia Airport in Pennsylvania. People live in Maryland and take MARC trains to work in DC. And of course people in every state consume goods made abroad, but few states contain a major container port. It would be crazy for the federal government to take sole responsibility for infrastructure in such a giant and diverse country, but at the same time there’s no way you can just leave this up to the state and local governments and hope they remember that the highways need to meet at the border.
46 Responses to “Interstate Infrastructure”
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December 1st, 2008 at 5:20 pm
Well, that’s kinda true, the Feds have spent some money on infrastructure, but the reality is that prior to the New Deal most of the infrastructure in this country was built with money at the state and local levels. The Erie Canal was built by New York without any outside funding. The roads and bridges in the Northeast were actually built by private entrepreneurs, but they couldn’t make any money out of the roads (too easy to ride around the toll booths) and the States took over. The part of the reason why the North had better production capabilities during the Civil War was because the Northern States invested in infrastructure.
December 1st, 2008 at 5:23 pm
I learned everything I need to know about federal spending on infrastructure from “Johnny Canal.” (Tragically, I can’t find the video anywhere online.)
December 1st, 2008 at 5:25 pm
He needs to think harder?
Yeah, I’d say so.
How many cities, for one instance, are smack dab in the middle of their State? Not many. And even those that are more central participate in regional trade networks and human capital exchange. One of the reasons cities were built where they are is approximation to other cities in other States.
That aside, many places in the country with the greatest infrastructure needs are broke and will stay that way if Uncle Sam doesn’t help out with repairs and new projects. Once oil starts skyrocketing again, do you honestly think Detroit is going to be able to cover the cost of asphalt needed to pave their road systems? Nope. Many of the imploding Sun Belt cities are likely going to be in the crapper pretty soon too as far as their local budgets are concerned.
December 1st, 2008 at 5:26 pm
Not to mention that the feds could make money available for local use if good proposals were put forward. It’s not as if the choice is either the feds determine every aspect of how the money is used or else they have no hand in it at all. Sometimes I suspect that Mankiw might not be an honest dealer on these issues but might be driven by ideological grounds…
December 1st, 2008 at 5:27 pm
And the railroads were built with private capital with heavy state legislative help. The constitution enumerates the power of Congress to build post roads. Obviously modern interstate commerce theory permits Congress to spend as it likes on infrastructure. This post is correct though, the feds spend money on local infrastructure projects all the time. But a stimulus package is likely to have money for block grants to states. Many states have infrastructure projects ready to go including the environmental assessment but do not have the cash to start building.
December 1st, 2008 at 5:30 pm
FYI, Matt: the point of that little 19th-Century cartoon would probably be a lot more apparent if it were big enough to actually read (or if a link was attached to a full-size version.)
December 1st, 2008 at 5:39 pm
Note that Clay’s American System never saw programmatic enactment. Clay’s Whigs were high on federally-sponsored “internal improvements,” but Democrats decried them as unconstitutional and as pork-barrel sops to special interests. The few major exceptions were roads deemed militarily important, like the Natchez Trace and the National Road, and later federal aid to construction of the transcontinental railroads. The same military justification, BTW, was used for the biggest [by far] such project ever undertaken by the federal government, the Interstate Highway System. Odd that Matt doesn’t cite it as a precedent.
December 1st, 2008 at 5:48 pm
The same military justification, BTW, was used for the biggest [by far] such project ever undertaken by the federal government, the Interstate Highway System.
You make a good point. After 9/11 Fritz Hollings rolled out an initiative to develop a national high speed rail network called the National Defense Rail Act that had several conservative owls fluttering their feathers in approval. George Will was bullish on the idea, and there was initial broad spectrum support in Congress. Well, Fritz retired and the bill died a quiet death in wake of the Iraq War. I’d like to see somebody in Congress try this again.
December 1st, 2008 at 5:51 pm
And the railroads were built with private capital with heavy state legislative help.
Only partially true. Most of the big transcontinentals were built with extensive financial assistance from the Federal government in the form of land grants.
December 1st, 2008 at 6:04 pm
The American State (meaning the feds, the several states, even local towns) was very active in building roads in the early republic as a crucial means of building state power (i.e., nationbuilding). Roads also introduced market penetration to areas in the backcountry that were isolated from it, prompting insurrections in many places. Pennsylvania, for instance, saw a number of farmers blockading, digging trenches across, even piling up high with manure, the roads in that state in the 1790s. The revenue man, the sherriff come to evict, the attorney: all of these accessed isolated settlements by these new roads, thus leading Democrats (i.e. Jacksonians) in the antebellum period to view Clay’s Whiggish American System as an instrument of tyranny.
Whigs, on the other hand, viewed internal improvements — roads, canals, etc. — as essential to the qualitative development of the nation. Their vision was one of an intensive, rather than extensive, society.
But roads existed well before the early national period; the Boston Post Road b/t NYC and Boston was open as early as the 1680s.
Sorry to get all historical here, and apologies also for the scattershot nature of the comment, but I wrote a seminar paper in grad school on this recently, and the mention of Henry Clay does kind of beg for an historian’s view. Plus, it’s on my brain.
December 1st, 2008 at 6:36 pm
Utilizing local knowledge to get more value for the cost seems pretty sensible to me. Some of the stimulus should be left up to the federal gov’t, but there isn’t really a pressing need for a huge transportation project like the ’50s highways or the railroads.
The Economist put forward the persuasive argument that states already face a $70B budget gap, and as a result they’ve cancelled a lot of already-scheduled infrastructure projects. The planning has already been done for a lot of those projects, so reviving them can put the money to work very quickly.
December 1st, 2008 at 6:52 pm
With big bucks in the offing, state and local pols will dream up ways to huckster projects as “infrastructure” just as businesses have found ways to repackage themselves into “banks” so as to share the bailout gravy. Some things just never change.
December 1st, 2008 at 7:39 pm
One thing often missed in the dust ups over earmarks is that they replaced ‘revenue sharing’. A term first used in the Nixon era I think. where money was ‘earmarked’ for states and localities and it let them hash out where it went. The earmark thing federalized the decision making on this spending and those decisions were made behind closed doors.
If the Alaska DOT or whatever it’s called got those XX millions that were directed at the Bridge to Nowhere to spend how they wanted it’s possible that bridge would have gone forward anyway, but I wouldn’t bet on it.
December 1st, 2008 at 8:17 pm
Just to throw in:
The Erie Canal is a perfect example of how even infrastructure within a state has broader implications. The Erie Canal fundamentally shaped the economic development, not just of New York, which became the premier port and financial center of the East Coast, but also of the whole Midwest, by giving people an easier way to move out to Indiana, Illinois, etc., and giving them a direct access to global markets for their goods.
And yes, national railroad policy in the 19th century was crucial. Without the public lands, the calls for intercontinental railroads, and the Federal regulation of railroads, you don’t get the U.S rail system.
December 1st, 2008 at 8:41 pm
Mankiw? The guy who advised the Bush admin on economics? I think I will pass on his advice.
I hear he teaches econ 101 well though.
December 1st, 2008 at 8:57 pm
StevenAtwell: And here’s another example, quoting a Whig congressman’s argument which made reference to the Illinois and Michigan tunnel which connected the Mississippi river to the Great Lakes:
December 1st, 2008 at 9:35 pm
Good quote. And a good point.
December 1st, 2008 at 10:56 pm
Full size ver of the cartoon illustration:
http://upload.wikimedia.org/wikipedia/commons/b/b6/Henry_Clay_-_Project_Gutenberg_eText_16960.png
December 1st, 2008 at 11:21 pm
this up to the state and local governments and hope they remember that the highways need to meet at the border
This is by far the weakest sentence in an otherwise worthwhile post.
There are plenty of highways that meet up at the US/Canadian border that both sides have managed to build without the United Nations getting involved. Do you think the state DOT’s are staffed by complete morons that have an inability to confer with their counterparts in bordering states?
Now there’s a case to be made for federal involvement to keep a ‘big picture’ routing that makes sense over several states. Also to resolve conflicts between states and/or look out for when local interests might diverge from national ones.
But I’m pretty sure most states won’t build ‘roads to nowhere’ (with their own money)
December 2nd, 2008 at 2:46 am
Alaska is even worse, many of our most basic land use decisions are made by acts of Congress, which compels people to vote for people like Ted Stevens who are unabashedly corrupt but willing to fight for the odd issue no one but their home constituency has any interest in.
December 2nd, 2008 at 7:09 am
The situation is made worse by our convuluted state boundaries. For example, public rail and bus transportation in New York City is a federal issue; the MTA operates in three states, and the Port Authority operates trains and busses in two states. The transit systems in Philadelphia, Washington, and St. Louis all operate across state lines.
Because of the fragmentation in the Northeast in particular, for many of our largest cities any government encompassing the entire metropolitan area has to be either handled at the federal level, or through a jerry-rigged network of unelected organizations.
Now in California and Texas, local issues can actually be handled at the local level, because those states are as big as mid-sized countries. But for thie same reason, Sacramento is probably just as distant and unaccountable to the average California resident as is Washington.
December 2nd, 2008 at 8:32 am
Mankiw is a disgusting hack. Why waste even one neuron on any of his drivel?
December 2nd, 2008 at 8:41 am
I think it really has to depend on what the goals of any stimulus package would be. Simply giving governors a big bale of cash like the Bushies sent to Iraq, would be unwise in the extreme–I’m thinking of my own crackpot governor, Rod Blagojevich here. God only knows what he’d do with a few billion dollars to reward his buddies and punish his enemies (which are legion, even, or especially, in his own party).
All states, I assume, have multi-year transportation plans. In Illinois, there is a process in place with projects added to the five year plan every year that includes everything from acquisition of property to engineering. And that includes maintenance projects as well as new roads. Illinois has a huge backlog of projects they have completed property acquisition and engineering for that are simply awaiting funding. So if the feds would stipulate the funds have to be used for ready-to-go transportation projects, with preference given to critical maintenance areas like bridges, the injection of cash would be almost immediate, although the bidding process would, of course, take a while.
The same process is, more or less, mirrored at every level of government, from counties to townships to municipalities. Now a lot of these local governments have a better grip on planning than others do, but there are enough local projects in the Chicago metro region hanging fire due to lack of funds (virtually all of which are maintenance projects on locally-owned roads and bridges) that a specifically earmarked infusion of cash would be recycled back into the economy very quickly.
After covering local news for many, many years I’ve come to the conclusion that the best federal aid comes in two flavors: The old Federal Revenue Sharing kind of annual payments that worked very well indeed on a business as usual basis; and targeted aid in times of economic and other distress. If ever there was a time for targeted aid to pump some cash into the economy while making sure it was used to finance capital projects (instead of ending up in some pol’s back pocket) this is it.
December 2nd, 2008 at 1:31 pm
The money would not just go to roads and bridges. There will also be money for rail, aviation and envrionmental infrastructure (i.e. sewers). There are projects in every state ready to go. The problem is because of the economy there is not enough cash to fund all the projects and states and municipalities are having a tough time borrowing the money to pay for these projects. Each state has a formal process for deciding what roads, sewer systems and bridges receive funding. My understanding is the stimulus uses each state’s existing plans and isn’t pork barrel spending to areas that have no immediate need for the projects. The construction industry has an unemployment rate of 9.9% because of the housing bubble and there are trained workers who can do these projects. And if that does not persuade you consider that the U.S. has not adquately invested in infrastructure in the last 25 years. So there are several compelling reasons to do this.
December 8th, 2008 at 3:56 pm
GEORGE PACCIELLO/STAF PHOTOGRAPHER Franklin Township School fourth grader Alexis Tiger makes a paper peace crane as part of a character education program focusing on the many aspects of peace. FRANKLIN TWP. — Students at
December 8th, 2008 at 3:57 pm
GEORGE PACCIELLO/STAF PHOTOGRAPHER Franklin Township School fourth grader Alexis Tiger makes a paper peace crane as part of a character education program focusing on the many aspects of peace. FRANKLIN TWP. — Students at
December 16th, 2008 at 4:08 pm
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