By Maryann O. Keating, Ph.D.
Infrastructure is complicated; there are no easy answers. Yet, crumbling bridges, unsafe water, inadequate airports, antiquated ports and weak cyber insecurity threaten our nation’s health, safety, and economic future.
Confusion reigns as the U.S. Congress debates a $3.5 trillion dollar spending package in addition to another trillion or so associated with a bipartisan infrastructure bill. Lack of expertise in infrastructure engineering inhibits most Americans from commenting. However, there is no genius is available to solve this dilemma, and it is foolish for every suggestions to carry equal weight. To address U.S. infrastructure successfully, residents need to share informed opinions.
The last duty of government according to Adam Smith, writing in 1776, is to erect and maintain public institutions and public works. Smith argued that public works create benefits to society as a whole, but a private individual or group cannot generally be expected to erect or maintain them Smith. Presently, however, large corporations can raise large amounts of capital exceeding some nations’ gross national product. The case for government provision is based on the degree to which infrastructure holds characteristics associated with public goods.
In comparison with national defense and the rule of law, infrastructure shares some but not all characteristics of a public good. Public goods are defined in terms of two characteristics, non-exclusivity and non-rivalry. It is relatively easy to exclude others from consuming your private goods, but not the street in front of your home. Public lighthouses were an example of non-rivalry; the per-unit amount of benefits provided did not decline with one more ship guided by the light.
Roads, airports and flood control projects share, to some degree, the nature of a public good, limited ability to exclude and over-use of existing infrastructures. The key is whether there exists a cost-effective way to exclude individuals once the public good is provided and how to deal with congestion.
Infrastructure offer individuals and firms access to transportation, communication, commercial and social activity, potable water, safety from environmental extremes and energy. There is no clear theoretical distinction between infrastructure falling within government provision and that of the private market economy. In practice, however, the government’s role is justified politically by historical precedent, macroeconomic and social concerns, plus geo-strategic positioning.
Avoiding transfers of benefits and costs is impossible, whenever infrastructure is publicly available. Those, who never visit a National Park, may receive intangible benefits in knowing that these parks merely exist.
For others, pride in maintaining natural resources is important. Residents of Fort Wayne, for example, recently celebrated “Mama Jo,” a tunnel-boring machine that dug through five miles of bedrock. The 14-year construction endeavor will handle 850 million gallons of combined sewage every day. This should result in public benefits such as cleaner rivers and private benefits to a subset of 45,000 residents experiencing basement backups and street flooding.
Infrastructure policy requires a framework for defining public as compared to private goods, a critical distinction lacking in the proposed bills. Also lacking is a discussion of net benefits spread over time, a fundamental characteristic of infrastructure.