Rebuilding America’s Infrastructure: Some market-based ideas could help get the job done
- September 1, 2017: Vol. 4, Number 9

Rebuilding America’s Infrastructure: Some market-based ideas could help get the job done


American infrastructure is in dire need of repair and replacement. Yet decades of experience have shown us that simply showering federal money on infrastructure is not the right solution. Indeed, this approach has been shown to encourage wasteful spending on projects that are politically expedient but economically dubious.

But despite these pitfalls, the federal government does have a role to play in revitalizing our country’s highways, airports, rail networks, pipelines, electrical grids and water infrastructure. Among the principles government authorities should take into account are the following:

Know the limits of privatization. Given all the hurdles associated with the public sector, many have argued that private enterprise should play a larger part in infrastructure provision. While there is space for an increased private role, handing control of infrastructure provision to the private sector is not always the answer. Harvard economist Ed Glaeser argues it is difficult to locate a role for the private sector in the maintenance of existing infrastructure, which tends not to generate profit yet is the country’s most pressing infrastructure need.

Decentralize infrastructure financing and management. On this topic, Glaeser says an all-too-common problem is that political leaders set bad infrastructure priorities. Too often, politicians prioritize new projects in declining areas where the expenditures can’t be justified on economic grounds. His solution: Give more decision-making authority to local communities.

Prioritize high-value investments. City Journal contributing editor Nicole Gelinas says policymakers should not worry about borrowing money to fund projects that will pay for themselves, and that the federal government should reward states and cities that have reasonable work rules and a demonstrated history of managing large projects well.

Fix existing highways before building new ones. With 20 percent of the nation’s roads in poor condition, and the total number of miles driven annually by Americans stagnant, now is not the time to build new highways, according to
Manhattan Institute senior fellow Aaron Renn, especially since self-driving cars promise to reduce highway volume in the years to come.

Privatize airports. Many of the world’s best airports are run privately or through public-private partnerships; meanwhile U.S. airports are lagging.

Break up the Port Authority of New York and New Jersey. This organization controls much of the critical infrastructure in the country’s largest urban center, and is corrupt, unwieldy, fiscally unsound and incompetent. Robert Poole, founder of the Reason Foundation, insists that a federal infrastructure plan should have incentives for the Port Authority to break apart each of its functions, which include management of a rail transit line, a bus terminal, several airports, and all of the bridges and tunnels across the Hudson River, into separate entities.

Make the electric grid more secure, not greener. One of the major trends in energy policy has been the move toward “green” grids. While the federal government spends massively on grid efficiency technology, it spends next to nothing on grid security. Manhattan Institute senior fellow Mark Mills contends the government should prioritize grid reliability and resiliency above all other goals.

Excerpted from Rebuilding America’s Infrastructure, an 86-page report from The Manhattan Institute. Read the complete report at:

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