Saturday, April 16, 2016

PROBLEMS WITH U.S. INFRASTRUCTURE


Opinion: Our crumbling infrastructure is hurting U.S. competitiveness


Published: Apr 13, 2016 4:39 p.m. ET
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Efficiency requires ‘just in time distribution’ but we are moving to ‘maybe in time’

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A bridge on Interstate 5 collapsed in 2013.
By

JohnRennie Short

Every day, we see how the U.S. is falling behind in the quality, reliability and even the very safety of its transportation infrastructure. The impact goes beyond traffic jams or collapsed bridges — it adds to the cost of doing business and it suppresses job growth.
Efficiency requires “just in time distribution”; we are moving to “maybe in time.” Businesses in the U.S. pay an extra $27 billion a year in freight transportation costs and carry extra inventory and add extra distribution centers because they can’t rely on goods getting where they need to be on time, according to a report by National Economic Council and the President’s Council of Economic Advisers.
One reason: The U.S. is investing half of what it spent on transportation infrastructure more than 50 years ago as a percentage of the economy – close to 1.5% of GDP now compared with nearly 3% of GDP in 1962.

The American Society of Civil Engineers gives the nation’s infrastructure a D+. It estimates the U.S. needs to spend $1.7 trillion by 2020 just to upgrade our surface transportation of roads, bridges and rail. Currently we are on track to spend just $877 billion.
That’s a gap of around $850 billion.
Warnings of big spending shortfalls normally require some skepticism; civil engineers making a claim for the need to build more things aren't exactly an example of arm's-length objectivity. But the conclusions are confirmed by our everyday experience — the potholes that lie in wait for months, the crowded interstate, the poor quality of our mass transit systems in both large cities and suburbs and the appalling quality and rising costs of domestic air travel.
We need to almost double the gas tax simply to pay for existing projects.

Consider our roads. The current 18.4-cent tax on every gallon of gasoline sold hasn't been raised since 1993. It now brings in close to $30 billion a year, but Congress spends almost $50 billion on road projects. We need to almost double the gas tax simply to pay for existing projects. And we need to link the tax to construction costs so that is raised automatically without the need for annual approval, similar to the link between the consumer-price index and Social Security.
The decline in our infrastructure means we spend more time and money moving people and goods than competitors elsewhere, making our goods and services that much more costly than they could or should be. According to the World Economic Forum, the U.S. ranks behind 11 counties in terms of infrastructure quality. While it is easy to be outranked by small, dense, rich counties like Singapore, Switzerland and the Netherlands, we are also outranked by leading economic competitors such as Japan, Germany, France, Spain and the U.K.
The solution isn’t as easy as just spending more. Critics rightly point to the waste in some of our infrastructure investments. Who can forget the planned bridge to nowhere in Alaska, a brazen example of pork-barrel politics? It is not so much more investment that we need, but smarter, more targeted investment. Sustained, targeted smart investment on public transport of $1 billion each year over a 20-year period could yield on average $3.7 billion a year of added growth, including 50,000 new jobs, according to the American Public Transportation Association, an advocacy group for everything from bus and subway service to high-speed rail and commuter trains.
A very real danger with large-scale public infrastructure investments is that the money will be allocated in the usual pork-barrel fashion. To short-circuit the possibilities of future bridges to nowhere, we need a bipartisan commission that objectively evaluates the cost and benefit of major infrastructure investments.
An impossible pipe dream? We already have a model that works. The recommendations of the Defense Base Closure and Realignment Commission (BRAC) cannot be cherry-picked by members of Congress. The recommendations are voted up or down as a group.
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Students at Brooklyn Technical High School nabbed a Grand Prize in Samsung's Solve for Tomorrow contest, by creating an app aimed at preventing traffic deaths. Brooklyn Tech. students Alison Collard and Benjamin Spiegel join Tanya Rivero to discuss their winning project. Photo: Samsung USA
And we need to avoid the false dichotomy of public versus private transportation. An efficient economy needs both. In fact, studies show a symbiosis between public transport and business efficiencies.
More spending doesn’t necessarily mean more public spending. The recently approved $5.6 billion light rail system in Maryland, known as the Purple Line, is a joint venture, with the private sector responsible for building the system and in return licensed to operate it for 30 years with a preset annual fee. We need more public-private investment partnerships to improve the efficiency of our infrastructure.
At the same time, we must avoid building new infrastructure geared toward the needs of the last economic growth wave. The Interstate system was perfect for the car age coming into its own in the 1950s. Today’s spending should be directed toward more creative use of mass transit systems, refurbishing our aged inner cites and declining inner suburbs as well as improving public lives and laying the basis for a greener economy. Our metropolitan economies are where we can make huge productivity gains through infrastructure investments that reduce delays and costs, leaving more room for productive investment and job growth.
We face a stark choice. If we choose not to invest in moving people and goods more efficiently, we risk making goods unnecessarily more expensive, costing American jobs in an increasingly competitive global economy. If we invest smartly, we can lay the basis for a more competitive, more productive and more sustainable U.S. economy.
John Rennie Short is a professor of public policy at the University of Maryland, Baltimore County.