Stop Bleating About Crumbling Infrastructure

The self-evident point is that there have been no blackouts, brownouts or power shortages of any kind that could plausibly have interfered with economic production and growth during that period. What the infrastructure hobbyists are really complaining about is economic outcomes they don’t like. That is, only a tiny fraction of the ample power available to US businesses and households is generated by green fuel such as wind and solar.

But that’s because it is not economically competitive, not because capital investment is being starved. After all, the overwhelming share of utility investment is accounted for by the private sector and is debt financed. Are we therefore not talking about bringing coals to Newcastle? Thanks to the Fed misguided financial repression, long-term utility financing has never, ever been cheaper.

Indeed, the typical double-shuffle or hidden agenda of the infrastructure cheerleaders is revealed by Phillips curious claim that $30 billion is “wasted” each year due to inefficient power transmission. Now, how in the world does he know that?

Of course, there is inherent power loss in the process by which  central station bulk power is distributed through high voltage power lines and then across the local distribution grid. But its a matter of economic trade-offs. If you invest a lot more in high performance transmission system, you will absolutely get less power loss, but the investment may never pay for itself, either.

Indeed, that the crumbling infrastructure claim is really about a completely ulterior agenda is actually admitted to—even if inadvertently—by Phillips:

The wasted electricity from the obsolete power grid is the same as the output of 200 average coal-burning power plants — causing an extra 280 million tons of carbon to spew into the air each year.

Right. Replace perfectly good transmission capacity with ultra high cost advanced transmission technology. That way you can force the shutdown of perfectly serviceable coal-fired power plants!

Another category of alleged infrastructure starvation is waste water and sewerage treatment, and here the story is even worse. Ever since the EPA started making multi-billion grants for sewer plants during the early 1970s, municipalities have been been wasting massive of amounts of resources building over-sized plants, and then under-charging their business and residential customers for their use. So the truth in this category is not starvation, but economic obesity!

Accordingly, under a regime of full economic pricing for waste treatment services the infrastructure budget could be sharply reduced in this sector; unsubsidized prices at the municipal intake pipe would cause an outpouring of user technology innovation and practice changes would dramatically reduce the capacity requirements and cost of end-system treatment plants.

Moreover, even under the current system of waste treatment socialism, there are no facts whatsoever that support the starvation argument.  Current annual spending for waste treatment of about $25 billion is 25% higher than a decade ago—-even after adjustment by the 20% gain in the GDP deflator during the interim.

Now it is absolutely true that in selective localities in the US there are obsolete sewer treatment plants, just as in the case of roads and streets. But you can’t blame that on inadequate spending. The real problem is local government corruption, inefficiency, pork barrel politics and the excessive power of the municipal unions and the construction trades.

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