What is Infrastructure Anyway?  And When Should the Government Be Spending on It?

The fiercest debate in Washington right now centers on some surprisingly basic questions.  What is infrastructure? And when should the federal government invest in it?

Tori Gorman, a public policy expert at the Concord Coalition, has some provocative answers: “Stop using the old-fashioned definition. It’s obsolete. Start thinking about investments that will make our economy and our workers more productive in the future.”

That doesn’t mean she thinks all of President Biden’s $1.9 trillion infrastructure bill qualifies.  Or that it is even a good idea.

Listen to the full conversation here:

 

This conversation has been condensed and edited for clarity.

Matt Robison: What is infrastructure?

Tori Gorman: There really is no agreed-upon definition. In the past, people usually meant long-lived capital investment projects.  Things like roads and bridges, or mass transit.  Sometimes drinking water systems, energy generation and transmission, and telecommunications. But even on those the debate goes back a long way. During the New Deal, lawmakers sparred over whether or not universal access to electricity qualified.

But nowadays we think broader. We talk about critical infrastructure systems that are vulnerable to terrorist attack or natural disasters: chemical facilities, critical manufacturing, the defense industrial base and financial services.  People also usually agree that green infrastructure investments needed to combat climate change should count.

So I think it’s time to stop using the old definition. It’s obsolete.

Matt Robison: How much does the federal government invest?

Tori Gorman: For example, in 2017 the federal government spent about $84 billion on transportation infrastructure. On highways specifically, federal investment was about 25% of all spending that year. State and local governments and private entities paid for the other 75%. Federal investment is even smaller on other types of infrastructure.

Matt Robison: What is the economic case for the government to be involved at all?

Tori Gorman:  A growing economy creates wealth.  So we should want to make our economy grow faster and bigger. There are two constraints on our growth: the size of our labor force and the productivity of those workers.  Economic studies prove that infrastructure helps enhance worker productivity.

Matt Robison: So the theory behind government investments should be that we’re going to help our people to create the most economic output?

Tori Gorman: Exactly.

Matt Robison: But we have to make intelligent choices about where we’re putting federal resources?

Tori Gorman: Absolutely! Our gross national debt right now is $28 trillion. We don’t have the resources to just throw taxpayer money around.  We want to focus on projects that help the basic functioning of society and give broader benefits beyond just the people who directly pay for them.  That’s one of the principles of economics.  For example, If we build roads in one state, drivers who live in a neighboring state benefit.  But they may not be asked to pay.  That kind of mismatch is where there’s a role for the federal government to make the investment.

Matt Robison:  In general, when should government get involved instead of the private sector?

Tori Gorman: Infrastructure is highly correlated with economic growth. But  some infrastructure projects can be really risky investments for the private sector.  They take a long time to pay off, the benefits are spread out, and they are uncertain. So when those factors mean that the market fails to provide the optimal level of investment, that’s a good time for government to get involved.

Matt Robison:  Is that how we should be thinking about infrastructure investment in general, and the Biden bill in particular?

Tori Gorman: Yes. We need to think of ways to sustain higher levels of economic growth in the future.  We can’t make our labor force bigger. So the only other tool in the growth toolbox is labor productivity. It’s time to think about infrastructure through the lens of what will boost productivity the most down the line.  Not as a way to create jobs in the next couple of years. If we wanted to do that, we could just hand millions of people a shovel and pay them to start digging.

Matt Robison: So how does the Biden infrastructure bill stack up to your definition?

Tori Gorman:  Things like transportation infrastructure makes sense. Things like safe drinking water make sense. Broadband and telecommunications make sense. But then they do start to stretch a bit.  An educated labor force benefits society, so I can justify some of the education spending.  Childcare is harder.  Does society benefit if an individual has childcare, or mostly just that individual?  And is it appropriate for the federal government to invest in the caring economy for elder Americans? Probably not.  When you talk about these more narrowly targeted investments, I’m not saying that they don’t qualify as infrastructure. What I would question is whether or not the federal government should be the one that’s making those investments.  There’s definitely a good debate to be had.

We share edited excerpts from the Great Ideas podcast every week that explain how policies work and present innovative solutions for problems. Please subscribe, and to hear Tori Gorman’s full breakdown of infrastructure investment and the Biden plan, check out the full episode on Apple, Spotify, Google, Anchor, Breaker, Pocket, RadioPublic, or Stitcher