Via Arnaud deBorchgrave writing at The New Atlanticist, I’ve been reading the latest infrastructure report from the American Society of Civil Engineers. Entitled “Failure to Act: The Economic Impact of Current Investment Trends in Airports, Inland Waterways and Marine Ports“, it is not a happy read.
America’s airports, inland waterways, and marine ports link the nation directly to the global economy, and link regions of the United States together. These three infrastructure systems support the nation’s ability to export, to efficiently move goods internally and to expand our high-end service sector through widespread business travel. These functions are critical to the U.S. economy, and depend on the efficient and cost effective operation of these networks. Each of these systems require that the investments needed to sustain competitive transportation costs are well coordinated among the many interdependent modes of transportation needed to keep the entire U.S. supply chain operating efficiently, and to ensure that our strong service sectors can efficiently and cost-effectively make use of international and long distance business travel. However, as has been demonstrated in this report, inadequate and unbalanced investments in essential commercial transportation infrastructure have become an enormous drag on the productivity and competitiveness of the U.S. economy.
The US is already losing over $50 billion a year due to defficiencies in air and water infrastructure, and deBorchgrave writes: “ASCE’s overall bottom line: at current investment levels, losses will accumulate every year to a total loss of nearly $4 trillion to the national GDP and $7.9 trillion in lost business through 2040. ” Over the same period, over 1.7 million fewer jobs will be created. Yet it would only cost around $40 billion between now and 2020 to stem these financial and job losses entirely.
Remember that this is in addition to the lost business from America’s other crumbling infrastructure – it’s highways, bridges, pipelines, sewer sytems and so on. Years of deficit spending on wars and tax cuts have left the fabric of the nation threadbare at best. The costs are relatively minimal: $50 billion to fix the nation’s 4,000 hazardous dams, $100 billion to fix 200,000 aging bridges. Meanwhile the US military budget is as close to $700 billion as makes no difference.
Yet infrastructure spending, which had already largely been pushed off the federal budget onto state and local ones where it was promptly ignored, is investment for growth in a way that defense spending or tax cuts for the wealthy can never be. Nobel-winning economist Joseph Stiglitz recently explained to Charlie Rose the lunacy of cutting investment right now.
Stiglitz’ prescription is simple: don’t worry so much about the deficit right now, when it’s the worst possible time to begin repaying it. Instead, invest for economic growth and then begin to pay back the deficit when the economy is stronger and interest rates and currency exchange rates are more favorable – effectively reducing the amount that needs paid. Infrastructure investment would be an essential part of that solution.