An Infrastructure Crisis?
“We are going to have an investment in infrastructure—our roads, our bridges, our tunnels, our ports, our airports. But it’s not only what you can see. It’s also under the ground—the water systems, the sewer systems and, yes, we need a new modern electric grid.”
“I would say at least double her numbers, and you’re really going to need more than that. We have bridges that are falling down. We’ll get a fund, we’ll make a phenomenal deal with the low interest rates and rebuild our infrastructure.”
I started this site in November 2008, a presidential election year. I liked John McCain personally and thought he would make a decent, level-headed president. I also liked Barack Obama as a person and -- like the Nobel Peace Prize committee would express in short order -- was optimistic about what his election might mean. Still, despite being disposed to actually like the two candidates, I found the entire election season bewildering.
Earlier that year, we experienced seismic shocks in our financial system leading to the collapse, and Fed/Treasury-orchestrated sweetheart buyout, of Bear Stearns. Then we had gas prices over the $4 mark and the collapse of the subprime housing market. This all seemingly climaxed in the failure of Lehman Brothers, which shortly cascaded into bailouts and golden parachutes for everyone including AIG, Fannie/Freddie and all the big Wall Street banks.
I'll never forget hearing from our key national leaders -- President G.W. Bush, Henry Paulson, Ben Bernanke, Nancy Pelosi -- that, if Congress did not appropriate, in 24 hours, $700 billion dollars in bank bailouts, there would be no food on the grocery store shelves by week's end. And then they gave the banks $700 billion dollars. Holy $h!t.
I was bewildered because our conversation -- while predictably superficial and hysterical all around -- did not seem in any way up to the task at hand. The gauntlet had been thrown down -- nearly a trillion dollars or Americans starve -- and what was our national call to action?
Send us your shovel ready projects. Oh, and don't stop buying stuff on credit.
Question: What is a shovel ready project? Answer: It is a project that made its way through the entire bureaucratic process but then, when it came time to fund it, had so little real return that even the politicians balked at borrowing the money for it. Thus, the plans went on a shelf where they could someday be pulled out and dusted off the next time the rising tide of federal money raised all bloats.
At the time I started writing here, I felt like a voice in the wilderness. I had worked on these infrastructure projects, had seen the housing crisis develop from the permits written out of my office, had a front row seat at the Panem-level, over-consumption fest that is the American economy. I saw all of this as the core problem. The rest of the country was apparently seeing it as the solution. Either they were crazy or I was crazy. At that point, I was open to either option.
Fast forward eight years. Here's what we've learned: The American economy is a Growth Ponzi Scheme, one where we try to optimize the macro statistics of GDP and unemployment (short term transactions) and generate a short-term Illusion of Wealth by having our cities, neighborhoods and families take on enormous long term liabilities.
In this undertaking, we're cheered on by the Infrastructure Cult, a collection of self-serving individuals and organizations that directly benefit from the current approach. They exploit -- on a multi-trillion dollar scale -- the natural human inclination for cognitive discounting, the over-valuing of immediate benefits and the deep discounting of future liabilities. As our infrastructure liabilities grow to absurd levels, we never ask how we got here, why do these investments not generate enough productivity -- enough real return -- to be sustained? We just ask the ridiculously simple question: How do we get more money to continue building? Infrastructure spending for congestion-free commutes, ample parking and new development are the bread and circuses of our time.
Like the Roman bread and circuses, we have a cross-cultural consensus that this is a great idea. One candidate releases a bold proposal with eye-popping numbers (that, amazingly, are still a small fraction of the amount actually needed to make good on every promise we've made to fix and maintain stuff). The rival candidate then proposes to double the amount. As a Christian, I suppose I should be somewhat relieved that our populace is so easily bribed; I won't be forced to duel any ravenous lions to placate the masses. Still, this is what is considered serious public policy in 2016? Pension smoothing, raiding the Federal Reserve's cash flow and selling part of the Strategic Petroleum Reserve just to build a few more bridges and some additional lane miles?
There's something else important that we've learned, something that can help us deal with these complex problems right now. At Strong Towns, we see that our cities, towns and neighborhoods are dripping with opportunity. These opportunities are not of the mega-project variety. They don't come with ribbon cuttings, press releases and legislative approvals. They are small -- seemingly beneath us, perhaps -- but they can positively transform everything about how we live our lives. A row of trees here. A bike lane there. A crosswalk. A street light. A sidewalk. Some benches. In the nation we've built, the high returning infrastructure investments are now of the details, details, details variety.
“There are trillions of dollars of unproductive infrastructure already in the ground today waiting for us to make better use of.”
In a nation that has spent more than seven decades frantically spreading out, there are trillions of dollars of unproductive infrastructure already in the ground today waiting for us to make better use of. Every city has long stretches of road and street, curb and sidewalk, pipes, pumps and valves that have nothing on them. Even more have something of low value, something that needs to be improved to a higher order of community wealth. There are an endless number of parks that have parking lots but aren't designed to radiate value to surrounding properties. There are tens of thousands of downtowns that are cut off from their surrounding neighborhoods by nasty stroads. Neighborhoods in decline where there is an unnecessary bank run on confidence. Libraries, schools and community centers in fields on the edge of town. The list is endless....
This is the true challenge we face. How do we take these massive public investments and, with the limited resources we have, make productive use of them? If we're committed to maintaining all this infrastructure, how do we make that a financially beneficial undertaking? How do we get beyond the simple propaganda equation of **Spending Money on Infrastructure = Jobs and Growth** and make investments that actually make us wealthier?
These are the questions we are going to explore between now, the election in November and the initial days of the new presidency and congressional session, when national decisions on infrastructure spending seemingly will be made. We're going to highlight the assumptions behind our current approach and show how they are flawed. We're going to look at alternatives and explore what is needed to make a different approach happen. We're going to talk to local leaders and advocates and learn from them the type of infrastructure investments that can actually improve people's lives.
And we're going to involve you, to make this a national dialog, so that this election season is not wasted on the same old rhetoric. We must use this time of intense interest on public policy to actually shift the national consensus Americans have on infrastructure spending to something that will make our country stronger.
Join us in pushing for a stronger America full of strong cities, towns and neighborhoods.
#InfrastructureCrisis
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Charles Marohn—known as “Chuck” to friends and colleagues—is the founder and president of Strong Towns. He is a land use planner and civil engineer with decades of experience. He holds a bachelor’s degree in civil engineering and a Master of Urban and Regional Planning, both from the University of Minnesota.
Marohn is the author of Strong Towns: A Bottom-Up Revolution to Rebuild American Prosperity (Wiley, 2019) and Confessions of a Recovering Engineer: Transportation for a Strong Town (Wiley 2021). He hosts the Strong Towns Podcast and is a primary writer for Strong Towns’ web content. He has presented Strong Towns concepts in hundreds of cities and towns across North America.