The US economy is struggling to fully emerge from the Great Recession. Even as Wall Street barons and multinational corporations rake in record profits, job-creation is still slow, and credit is tight for most people and most businesses. It is time to start capital flowing by actually building something new, which just happens to be a necessary step toward building a better, more prosperous future.
The American Society of Civil Engineers warns that if we continue to fail to maintain and upgrade our decaying infrastructure, we will see economic output depressed by $3.1 trillion over ten years, and lose over 800,000 jobs. Opportunity costs could be still higher, and some economists believe we have literally millions fewer jobs today than we would were we to invest seriously in infrastructure.
Pennsylvania Gov. Ed Rendell said this week, in an interview for MSBNC, that his state has over 5,500 “structurally deficient bridges”, more than any other state in the country. He also said his administration has put more money into bridge repair and upgrade than the previous five administrations combined, and yet it only “made a dent” in the real scale of the problem.
He cited examples across the country where failing infrastructure has resulted in disasters, deaths and billions of dollars in direct losses. But there are opportunity costs associated with inaction that cannot be overlooked. Sustained economic recovery, cutting-edge innovation and reliable job creation, all require some substantive new economic activity that drives investment, recovery, innovation and hiring.
Rendell cited studies showing that 25,000 well-paying jobs are created by every $1 billion of infrastructure spending. Consequently, if there were $200 billion of investment, a combination of public and private funds, it would create as many as 5 million well-paying jobs. Infrastructure spending can do more to stimulate new investment from the private sector than direct subsidies and tax breaks to non-infrastructure-related projects.
The reason for this is simple: infrastructure makes things possible that were not possible before. A highway makes rapid travel possible. A high-speed rail line connects cities in ways that highways and airports do not. Urban infrastructure makes cities more habitable, more attractive to families, and better atmospheres for hiring, innovation and enterprise.
We need to keep in mind: this is not a question of new spending designed to artificially stimulate the economy: We have to spend over $3 trillion to upgrade our infrastructure, or we will see massive new costs to our economy over time. We have to find a way to make this funding possible, to build it into our economic future.
We have an urgent need for new, cutting-edge smart transport and energy infrastructure. The 21st century energy economy requires an eventual transition to zero-combustion energy resources, and those economies that do not make the transition will be at a steep competitive disadvantage over the long term. Massive hidden costs of continuing to rely on fossil fuels will hamper economic growth and impose real quality of life decline on the entire economy, if we do not commit to a serious transition to more innovative technologies.
A national infrastructure bank which would allow public financing to generate massive private investment in new infrastructure projects and in the resulting revitalization of local and regional economies. Such a plan would allow the nation’s government to move away from ideological fights over partisan preferences and toward a pragmatic approach to grappling with deep-rooted long-term national challenges.
The road to real, and lasting, economic recovery, runs through a series of basic economic factors:
- The re-establishment of a pervasive industrial project to revitalize American manufacturing;
- Construction and engineering projects on the scale of national infrastructure;
- The repair and upgrade of transport and energy infrastructure;
- The deployment of a cutting-edge smart electricity grid, to enable optimal high-efficiency distribution of clean energy;
- A virtuous cycle of public and private investment that sets in motion local and regional community-building;
- A new flow of capital to the middle class, to motivate consumption, investment and asset-building;
- A civic infrastructure for policy implementation that rivals the physical infrastructure required for sustained economic growth;
- Energy and transport infrastructure operating on a zero-combustion paradigm, to avoid massive externalized costs of combustion.
With a $3 trillion infrastructure-investment deficit hanging over the American economy, the fact that infrastructure investment would allow us to optimize spending in such a way as to stimulate potentially unprecedented levels of new private investment and job creation, only serves to illustrate how urgently we need to start committing to projects that build the physical environment for future success.
Let’s build something, because our nation’s aspirations demand it, our economic moment imposes the need, and our future prosperity depends on it.