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Infrastructure All the Way Down

Summary:
I have argued on this blog that the best practical definition of infrastructure is “whatever the government wants to pay for because it benefits from the expenditure.” The adoption by the House of a -trillion bipartisan infrastructure bill reinforces this argument. (See Gabriel T. Rubin and Eliza Collins, “What’s in the Bipartisan Infrastructure Bill? From Amtrak to Roads to Water Systems,” Wall Street Journal, November 6, 2021.) The standard argument for public infrastructure is that it is an investment that will yield a high rate of return in terms of future economic growth. But there are many caveats. The returns may be lower than those of the private investments displaced by government financing of infrastructure. (See Josh Mitchell, “Infrastructure Law Seen

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I have argued on this blog that the best practical definition of infrastructure is “whatever the government wants to pay for because it benefits from the expenditure.” The adoption by the House of a $1-trillion bipartisan infrastructure bill reinforces this argument. (See Gabriel T. Rubin and Eliza Collins, “What’s in the Bipartisan Infrastructure Bill? From Amtrak to Roads to Water Systems,” Wall Street Journal, November 6, 2021.)

The standard argument for public infrastructure is that it is an investment that will yield a high rate of return in terms of future economic growth. But there are many caveats. The returns may be lower than those of the private investments displaced by government financing of infrastructure. (See Josh Mitchell, “Infrastructure Law Seen Having Small, Positive Impact on Growth,” Wall Street Journal, November 6, 2021.) More generally, if the government produces something, something else cannot be produced. And we have no credible theory showing that political and bureaucratic processes will choose the most productive investments.

The standard concept of public infrastructure may also run into a logical paradox. As the term suggests, infrastructure is conceived as underlying the whole structure of the economy, that is, of exchange and trade. This seems to imply that nearly everything is infrastructure by association. Roads need to be paved, at least in an advanced and efficient economy. So asphalt must also be infrastructure (or infra-infrastructure?). What about asphalt rollers and the steel that goes into them? The steel, aluminum, and concrete in road safety barriers? The iron used in steel manufacturing? The steelworkers themselves?

The infrastructure bill gives an idea of such infinite regress. It devotes $66 billion to rail maintenance, modernization, and expansion—mainly for Amtrak. Another $39 billion is scheduled for the modernization of public transit and its accessibility to the disabled and elderly. Energy is also part of infrastructure, at least when it is the sort favored by the government. The bill also promotes “environmental justice” and “good-paying union jobs”: is that infrastructure too? The $1.75-trillion “social” and environmental bill the Democratic Party is pushing is said to target “human infrastructure.”

Certainly, it cannot be infrastructure “all the way down.” This intriguing and humorous expression has many reported origins revolving around some old mythological belief that the earth stands on the back of a humongous turtle. But what does the turtle rest on? On another turtle, of course. And what about that turtle? “Ah, Sahib, after that it is turtles all the way down.” (In some versions, elephants stood in the chain.)

Note that, as is usually the case, much of government infrastructure propaganda is politicians’ smoke and mirrors. About half of the infrastructure bill is made of expenditures already planned, and the whole package is to be spread over the next five years. (See “Joe Biden Passes the Less Contentious Half of his Legislative Agenda,” The Economist, November 7, 2021.)

Perhaps there are some activities that only the state or the government, in the general sense of political authority, can do to support any system of social cooperation including a free society. (That’s the one-million-dollar question in political philosophy and economics.) Perhaps then we could meaningfully limit the meaning of “infrastructure” to the production of “public goods.” But it is doubtful that such things include Amtrak, electric car chargers, or broadband service which is already produced by private businesses. Or perhaps we should say that “infrastructure” is limited to fundamental conditions of social cooperation such as abstract institutions (like the rule of law) that favor exchange and individual liberty? This sort of definition is normative as opposed to the descriptive one I suggested before and would provide a guide to what the state should do.

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