Reducing Government Expenditures

Mr. Tabbarok makes the case for government directed innovation and infrastructure investment:

Our ancestors were bold and industrious–they built a significant portion of our energy and road infrastructure more than half a century ago. It would be almost impossible to build that system today. Could we build the Hoover Dam today? We have the technology but do we have the will? Unfortunately, we cannot rely on the infrastructure of our past to travel to our future. Airports, an electricity smart grid that doesn’t throw millions into the dark every few years, ubiquitous Wi-Fi — these are among the important infrastructures of the 21st century, and they are caught in the regulatory thicket.

It seems to me that the low hanging fruit of government-provided infrastructure is largely gone, which is why there are fewer high-profile “shovel ready” public works projects. Everyone could see the benefit of the Hoover Dam and the interstate highway system. We built them and got significant return on investment. The remaining infrastructure projects, like those mentioned in the article, provide far less value. That’s why there is no political will to do them.

Airports – not sure what the problem is, other than TSA adding huge cost and invasion of personal privacy into the boarding process. The airports I fly through have functional concourses, jetways, luggage carousels, and runways. What else is needed, and why should the federal government be involved? If a local government wants to build a new airport for the convenience of its citizens or to attract new businesses they can do that with their own taxes. If Mr. Tabarrok meant to say “air traffic” then I would agree there is a place for federal government to regulate air traffic and that it needs to modernize the current system.

Smart grid – yeah we had a well-documented failure in 2003, but most people still experience excellent availability. When I think about raising my taxes to pay for improvements I say “I think the system now works well enough”. There may be some efficiency gains and information security benefits but I would leave it to the free market to work out those problems.

Ubiquitous Wi-Fi – no reason for bureaucrats to pick a technology for billions in government investment. If Wi-Fi is the right technology then Verizon and AT&T will figure that out and build the network. I think the private sector is doing just fine providing wireless data services.

My principle objection to government investment and infrastructure spending is that it puts government in the role of picking winners and losers. I prefer to see the free market perform that function.

I’m not opposed to all government spending but would limit it to only places where there is a clear, compelling advantage to the government’s involvement. In my view there are many areas the federal government is “investing” in that are far better solved by local governments or private enterprise. Federal government should be shrinking investment and returning the money to the states.

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