President Joe Biden
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Why don’t we hear about “crumbling” private infrastructure?

In making the case against Joe Biden’s $2.3 trillion infrastructure plan, George Mason University economist Veronique de Rugy makes an interesting point:

While it’s impossible to hear about public infrastructure without the word “crumbling” being attached, de Rugy reminds us that “the private sector doesn’t seem to have any problem maintaining its infrastructure assets, as we see in the difference with railroads. Passenger rail is in mostly bad shape when owned publicly, whereas privately owned freight rail is mostly strong in quality.”

From this observation, she concludes, “The best way to improve infrastructure isn’t to throw taxpayers’ money at it, but to privatize things such as passenger rail, airports, and air traffic controllers, as many other countries have done already.”

But what about the jobs the infrastructure spending will create?

Not so fast. As de Rugy writes, “looking at spending on highway construction in the Great Recession stimulus bill, economist Valerie A. Ramey concluded that ‘there is scant empirical evidence that infrastructure investment, or public investment in general, has a short-run stimulus effect. There are more papers that find negative effects on employment than positive effects on employment.'”

If anything, the government infrastructure spending will “displace private investments,” de Rugy notes; private investment that proves far more productive and rewarding that government projects.

Brian Balfour / Senior Vice President of Research

Brian is Senior Vice President of Research at the John Locke Foundation