Price of Infrastructure

Ben Jacobs asks a basic question in the Washington Monthly: why is infrastructure so much more expensive to build in the US then elsewhere in the world? A great question, but then Jacob fails to follow up with any answers – a clear case of journalistic malpractice, especially when he doesn’t even use original sources, but just relies on second-hand reporting, and ends up comparing apples with oranges. Pity, as this really is an excellent question worth digging into.

So off the top of my head, here are some of the differences that start to pile up costs of infrastructure projects in the US – and no, cheaper labor elsewhere isn’t the primary cause.

The comparisons used up by Jacobs are the California High Speed Rail (US$89b) versus Chinese High Speed Rail  (US$276 billion & counting), and New York CIty’s 2nd Avenue Subway versus London’s Crossrail.

2nd Ave Subway is being dug through  the middle of a vibrant urban core with active business and residents straddling the route, unlike Crossrail which over half are through the still mostly vacant east london docks

As to California High Speed Rail costs, one of the largest expense of the project is that  real estate prices are several orders of magnitudes greater in the Golden State than China (even with corruption and a billion+ more people). There are also significant differences in seismic risks that are present for the entirety of the California route compared to China’s ring of fire – requiring more robust construction. That the China can built infrastructure cheaper is also a myth that has been debunked (WashPo & FastCo). Turns out that most large infrastructure projects in China have significant layers of hidden costs attributed to corruption at all levels of their government, bad accounting practices, and the possibility of  causing the catastrophic collapse of Chinese Banks if there is a default on the infrastructure bubble debts. Then there are the safety shortcuts that are proving to have a high human cost (California has much better oversite, so what was engineered is actually what gets built). Turns out that if we compare apples with apples, the true costs for HSR – no matter where the track are laid – are similar around the world.

Via The Expense of Infrastructure in the US


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