It's the Infrastructure, stupid

No one writes songs about “infrastructure.” It’s not a term that sets the blood racing outside of academic and engineering circles.

But in our daily lives, it may well be the single most important aspect of national policy. The expansion and maintenance of infrastructure is about roads, rivers and rail systems – the subjects of nearly as many songs as love and death. It’s about the air we breathe and the water we drink, the electricity that lights and powers our homes, the airports where we begin and end vacations and business trips, the communications networks that link us to each other and to the world beyond.

Infrastructure is also an international battleground, where each advance (and every whimpering retreat) is a forecast of who the next generation’s global winners and losers will be.

As travelers to the 2008 Olympics will soon see, China looks certain to be among the winners. At this point, the United States is likely to be among the losers.

THE LITMUS TEST

The explanation couldn’t be clearer. China spends more than 9 percent of its annual GDP on infrastructure. That’s ten times as much, proportionately, as the meager 0.93 percent budgeted in the United States.

The results are depressingly obvious to anyone who boards a plane in the Delta Airlines terminal at JFK airport in New York – America’s richest and most important gateway city – en route to a final destination almost anywhere in the People’s Republic of China.

At the JFK departure point, passengers are crowded into dark, narrow hallways with scant seating and an abundance of litter. Long lines form at a fast-food restaurant on an elevated concrete mezzanine, where there is little option but to eat standing up. The scene resembles nothing so much as a seedy 1950s bus station.

By contrast, the terminals of Shanghai and Beijing, China’s counterparts to New York and Washington D.C., are regularly featured in architecture magazines as stunning models of contemporary design and hyper-efficient operation. Even second-tier destinations like Fuzhou, Kunming and Xiamen, provincial cities where I landed on assignment in the past few of years, have invested in showcase air facilities.

“Airports are a litmus test for where America stacks up in the world of infrastructure,” notes a 2007 study by the Urban Land Institute (ULI) and the consultancy firm Ernst & Young. “Airports are your calling card, the first impression when you enter a country. None of the U.S. international airports come close to matching the efficiency or cleanliness of Asia’s or Europe’s top airports.”

The lag reaches beyond the terminal doors. All of Europe and Asia’s major airports, the study adds, have direct high-speed rail connections to their city centers. The comparable trip to Manhattan from JFK is an exhausting three-leg slog by monorail and local subway or suburban railroad, with a transfer between lines often required in the Borough of Queens.

At most other key American airports – the ULI study cites the U.S. capital’s Dulles International, Los Angeles International, Dallas-Fort Worth, Miami International, and Denver International – access is exclusively via traffic-jammed roads.

ATTENTION: OBAMA AND McCAIN

Airports are emblematic of a much larger problem, extending across the entire gamut of facilities and services that comprise the U.S. infrastructure. The fault lies with several successive presidential administrations, dating back to Ronald Reagan’s, that have opted for the short-term political advantage of tax cuts at the expense of essential long-term public needs.

From the Atlantic to the Pacific, from collapsing bridges in Minnesota and California to breached flood levees in New Orleans and Iowa, vitally important projects have been left waiting for so long that their failure is simply a matter of time and chance.

The budget deficit for critical upgrades over the next five years, given the pitiful U.S. commitment to infrastructure, is expected to hit $1.6 trillion.

The decline of the American infrastructure matters for a broad constellation of reasons. They range from thousands of tragically unnecessary deaths and injuries – New Orleans in the wake of Hurricane Katrina is the most glaring example — to millions of individual work days wasted annually in snail’s-pace commutes, along with billions of gallons of high-priced gas, and the effects of that flunked “litmus test” on business visitors’ first impressions.

No economy can function at desirable levels of speed and productivity if its roads are clogged and potholed, its trains obsolete, or its power grid subject to brownouts or full-fledged blackouts – an event that has become dismally common in the United States since the monster August, 2003 crash that cut the electricity to 40 million people at a cost of $6 billion.

The risks entailed in neglecting the infrastructure cut two ways. Katrina and the 2003 blackout dramatize the immediate consequences in lives and property damage. Less evident and seldom discussed is a long-term effect, the loss of a golden investment opportunity. Infrastructural upgrades almost always pay for themselves, with dividends that put Wall Street to shame.

A 2005 report by the Business Council of Australia estimated that $90 billion spent on infrastructure yields a $16 billion permanent increase in GDP, a 17.8 per cent annual return on capital. “The current (Australian) Federal Government has not been prepared to accept its proper national responsibility for infrastructure. It has failed the future,” the report concluded.

The same might be said of government in the United States, Britain, Italy and other developed nations that have drifted into lethargy as their global competitors pour cash into modernization. As the celebrated warning on Bill Clinton’s Oval Office desk pointed out, there is one issue no leader can afford to ignore: “It’s the economy, stupid.”

Barack Obama and John McCain, please take note. A healthy infrastructure is the keystone of a successful economy.

FROM WINNERS TO LOSERS?

China is not the only place where heavy infrastructural investments are already paying spectacular GDP dividends. As any journalist who has covered the booming Asian Tigers will confirm, the soaring economic growth registered by South Korea, Singapore and Taiwan since 1980 has been closely paralleled by the development of integrated transit systems, state-of-the-art container ports, and the world’s fastest broadband communications networks.

In Europe, the model is Germany, which has installed nearly three times the mileage of high-speed rail lines now found in the United States and the United Kingdom combined – while serving less than one-fourth their combined population on less than one-twenty-eighth their combined territory.

From the crumbling of the Berlin Wall in 1989 into the first years of the new century, half the nation sprouted forests of cranes as political reunification led to the rapid reconstruction of the former East Germany. At the outset, the effort was widely regarded as an onerous burden, understood only in terms of its immense outlay of cash. But the long-term impact has been to solidify Germany’s role as the manufacturing and financial capital of an expanding European Union – and also as the world’s number one exporter of goods and services, with a trade surplus beyond Washington’s wildest dreams.

Ironically, two of the most egregious laggards today, the United Kingdom and the United States, were yesterday’s infrastructure models. The transport and communications systems constructed by Britain in the mid-19th century, and by America at its end, were the wonders of the world. They were the engines of history’s most extensive empire in the first case, and its most dynamic economy in the second.

Some observers, fixated on China, argue that vast infrastructure projects today are beyond the scope of democracies, where public debate stymies bold initiatives. Only a totalitarian regime, they contend, has the undisputed power to make really big things happen.

The achievements of Germany in the throes of reunification, or of South Korea and Taiwan – all solidly democratic states, answerable to citizens who expect much more of government than Americans – suggest otherwise.

So too does the most ambitious road-building project ever undertaken. It was born in a 1956 initiative that funded the construction of 40,000 miles of freeways over the next 20 years, with 90 percent of the cost covered by the central government.

The initiative’s name was the Federal-Aid Highway Act, passed in the U.S. Congress by 388 votes to 19 and signed into law by Dwight David Eisenhower, a man no one would mistake for a dictator. “The impact on the American economy – the jobs it would produce in manufacturing and construction, the rural areas it would open up – was beyond calculation,” he wrote in his memoirs.

Although the automobile has lost favor in an era of shrinking oil reserves and global warming, in its own time the Highway Act demonstrated that a federal public works program could “change the face of America,” as Ike put it.

But that was more than half a century ago.