Sunday, December 13, 2009

Is Too Much Money Invested In Infrastructure In The US?

Is too much money invested in infrastructure in the US?

There are two categories of government infrastructure investment. There is new infrastructure investment and there is investment in the replacement and repair of existing infrastructure.

There is a lot of older infrastructure in the US at the end of its useful life, but since its original construction, there were population and economic shifts. More people are moving (have moved) from colder climates to warmer climates, from central US to be closer to the coasts, from rural and metropolitan areas to suburban and exosuburban areas. Government infrastructure investment should follow US population and economic shifts to maximize the return to the public from the investment.

The existing infrastructure in many parts of the US is greater than is needed for the local population and economic base. As much as we need a program to invest in new and existing infrastructure in parts of the US, we also need a program to disinvest from infrastructure in many parts of the US. Many areas of the US have an overbuilt infrastructure. These areas have lost significant parts of their population and economic base and there is little if any need to maintain the full extent of the existing infrastructure in those parts of the US.

Too often infrastructure investment, both at the federal and local government levels, is based on the existence of an old infrastructure and political pork barrel and not on the most beneficial and productive allocation of limited infrastructure funds to maximize the return to the public. Just because an infrastructure is deteriorating and needs major repair or replacement is by itself insufficient reason to invest in it.
The above is the comment I posted on Capital Gains and Games blog, "A Capital Budget: Taking the First Steps" by Andrew Samwick.

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