Why Are Infrastructure Costs So High In The US?
Why Are Infrastructure Costs So High In The US?
Sorry, but anybody wanting some simple answer on this one, especially an ideologically neat one, sorry, there is not one, Indeed, on this important issue, there is a large problem, but not remotely a clear answer regarding why there is this large and important problem.
For numbers on this problem, I draw on a Washington Post column yesterday by Catherine Rampell. Here are some of the crucial data. In the early 1930s, just to pick one major infrastructure project, the Oakland-Bay bridge was approved and built within four months. Yeah, the Great Depression. But now compared to Europe, where supposedly they have higher labor costs and more regulations, well: a tunnel in Seattle cost three times as much as one in Paris and seven times as one in Madrid. This is not an oddball, this is how it is. Infrastructure investments in the US now cost multiple times what it does abroad, and these are in nations where labor and environmental concerns are being taken seriously.
So, what is going on here? The very bright and knowledgeable Rampell confesses that not only does she not know, but she cannot find anybody who can explain it. In a way this looks like the high costs of medical care in the US. This is a much more politicized matter, but when one digs seriously into the research there seems to be no single reason, a whole series of matters, not easily resolved.
The issue of infrastructure lacks some of the matters healthcare has, such as how the US is the only nation in the world not having universal healthcare, which many of us think would lead to lower healthcare costs for various reasons. But what is responsible for the now high costs of infrastructure investment in the US, some of the obvious culprits there for healthcare are not there.
Of course there are many things involved here, which Rampell lays out, but again there is not remotely a “smoking gun,” But her list contains the following: “poor planning, complicated procurement processes, our multilayered federalist system, NIMBY-ism, and risks of litigation.” Why all this is worse than so many other high-income nations I do not know.
She also adds some other matters, such as a tendency of our political system to fund wasteful projects, although this is something that has always gone on, and that I find hard to believe also do not go on in other democratically run nations. Local economic interests have a way of getting their way in democratic political systems and also do so in non-democratic ones, although even in those places, local economic interests get their way to the degree they get in with the Supreme Leader.
Barkley Rosser
Much has been written about Boston’s Big Dig project, which started out with a budget of roughly $3B, ballooned to about $12N, and when finally paid off in another 15 years will have cost $25B supposedly. Much has been written.
What seems to have happened was that the original plans were (shall we say) ‘inadequate’. Many, many, many changes occurred during construction. A whole lot of re-work. A considerable amount of corruption presumably. Shoddy materials. Bad welds. Much profit for various and sundry construction companies. No doubt huge labor costs. You know that billions were spent on ‘paperwork’. In the end around $10B went towards interest.
To be expected, inevitably, on an enormous project that disrupted the lives of inhabitants of Boston and surrounding towns for a decade.
Probably one should go have a look at what happened to replace the Tappan Zee Bridge across the Hudson in NY.
A Colossal Bridge Will Rise Across the Hudson
https://www.nytimes.com/2014/01/20/nyregion/a-colossal-bridge-will-rise-across-the-hudson.html?smid=tw-share
suspect its the lack of projects. since the US hasnt done much in the way of recent projects, the cost of materials goes up, the labor force has changed, as fewer are available to do the work.
now we have to admit there is more work to be done (than say in 1930s…or before). since there are concerns about pollution (and unless you want to go back to the 1960s, when there wee cities that you saw pollution just above your head…) thats not likely to change
NY Times examined subway extension costs in New York and other major cities, such as Paris. NY Transit projects cost several multiples of project costs in Paris. Some factors were lack of competition among major construction firms, labor rules, featherbedding of various sorts, among other factors. Disfunctional procurement systems, lack of training and expertise at all levels, confused or haphazard inspection policies might also play roles. Purple Line project in Maryland suburbs of DC blew up after supposedly self-regulating consortium fell apart. Subway extension to Dulles airport hobbled by failure to inspect concrete panels before they were installed, leading to long and costly delays.
AA and others,
Yes, there is this long list of things, all of which seem to be playing a part in one place or another in the US. What is still not clear is how all these are adding up to have costs so much higher in the US than in lots of other nations. Many of those nations have some of these problems, with things like concentration of firms and high labor costs arguably worse in some of them than in the US. How it is that the combination we have in the US, with no clear smoking gun major cause, all add up to our costs and times involved being so much worse. But it is definitely a serious problem, if not one widely recognized, much less understood.
Bridge Comes to San Francisco With a Made-in-China Label https://www.nytimes.com/2011/06/26/business/global/26bridge.html?smid=tw-share
SHANGHAI — Talk about outsourcing.
At a sprawling manufacturing complex here, hundreds of Chinese laborers are now completing work on the San Francisco-Oakland Bay Bridge.
Next month, the last four of more than two dozen giant steel modules — each with a roadbed segment about half the size of a football field — will be loaded onto a huge ship and transported 6,500 miles to Oakland. There, they will be assembled to fit into the eastern span of the new Bay Bridge.
The project is part of China’s continual move up the global economic value chain — from cheap toys to Apple iPads to commercial jetliners — as it aims to become the world’s civil engineer.
The assembly work in California, and the pouring of the concrete road surface, will be done by Americans. But construction of the bridge decks and the materials that went into them are a Made in China affair. California officials say the state saved hundreds of millions of dollars by turning to China. …
Dang: The Chinese-Made Bay Bridge Continues to Fall Apart
April 7, 2015
The San Francisco Chronicle reports the bridge’s anchor rods may be snapping.
Good news for people who like bad news: There are serious problems with the San Francisco-Oakland Bay Bridge. Again. From the San Francisco Chronicle comes the news that one of the anchor rods in the bridge’s eastern span may have snapped: