Infrastructure and the transition to environmentally sustainable development
While the Civil War and Abraham Lincoln’s middle-class American dreams spurred the federal government to start building infrastructure, our governments have been investing in infrastructure and stimulating the economy since the 19th century.the th century. The idea of a free market unsubsidized by the government has long been a myth. States such as New York began building the Erie Canal earlier than the federal government. The canal opened in 1825 and was so successful that its tolls paid off its construction debt in about a year. Made New York City the commercial capital of the United States by connecting New York Harbor to the Great Lakes. In 1862, Lincoln signed a law establishing a land-grant university: it sold land to the federal government in exchange for establishing universities that focused on agriculture and engineering and worked to promote, or “extend,” to farmers. Penn State and Cornell were the original two “land-grant universities.” U.S. agriculture is increasingly productive as new farming techniques are developed and taught to farmers. The government builds ports and roads, subsidizes railways, airports, water and sewage systems, and promotes the development of urban power grids. During the Roosevelt era, the federal government paid for rural electrification, a development that would not have happened without government intervention.
For more than a century, as the private economy in the United States has grown, government has played a role in investing in collective goods that would not attract private investment on terms consistent with the public interest. Imagine how long it would take to develop a transportation system if all roads were toll roads. The United States, as well as all developed countries, has a deep tradition of public investment in infrastructure. In the 1950s, U.S. infrastructure investment soared with the construction of the Interstate Highway System. However, from the 1980s. The anti-tax era ushered in by Ronald Reagan led to a sharp decline in infrastructure investment. Before the Biden administration, we spent less than 2.5% of GDP on infrastructure, compared to about 5% in Europe and 8% in China. As China is a rapidly developing country with huge infrastructure needs, it cannot be effectively compared with mature economies in Europe and the United States. Europe is a better comparison. In the United States, much of our infrastructure is deteriorating and in need of repair and rebuilding. Potholes, collapsed bridges, and burst water mains are commonplace in anti-tax, anti-public investment America.
One of America’s greatest needs for infrastructure investment today is our energy infrastructure. Our energy system is extremely inefficient, vulnerable to weather and terror, and deteriorating every day. As our energy system decarbonises, grids are becoming increasingly important. Over the next few decades, we’ll see more homes generating electricity and storing their own energy with home and car batteries. The U.S. model of growth—suburban private homes, big box stores, and malls with big flat roofs and huge parking lots—provides the perfect setting for increased installations of solar and electric vehicle charging stations. As technology improves and prices decrease, we can expect greater generation from distributed energy. Many homes will generate more energy than they use, and modern power grids will need to collect and transmit energy. Most current estimates of electricity demand assume we will have large windmills and solar farms and will need to expand the grid to handle the load. We need a modern grid, but the ratio of centralized generation to distributed energy depends entirely on the pace of technological development, which may make home generation and storage cheaper and more reliable. At that point, if homeowners can’t sell excess energy to the grid, they’ll likely cut the power. We’ve seen this with landlines, cable TV, and in some cases wired Internet service.
If you think I’m living in a tech dream world, let’s take a look at the tech that powers home viewing. Once, the only thing available was a weekly TV show called “Saturday Movie Night.” Then came videotapes, then DVDs, and cable stations like Home Box Office. Then there are streaming services delivered over cable internet.Today, these streaming movies are available from wireless Internet and check it out on your phone on the subway. Technological development has been steady and amazing. Energy is at least as important as movies, and assumptions about our energy future should be hedged cautiously.
But in any energy scenario, we need a modern, computer-controlled smart grid. Potentially built on thousands of local microgrids intertwined to form state, regional and national systems. Because of the need for public space dedicated to transmission lines, our current grid is built and maintained by private companies regulated by the state. The grid’s debt burden is paid for by our electricity bills, and utilities are limited in their ability to invest in modern infrastructure. One constraint on investing is that utility shareholders expect a return on their investment, and modern electric infrastructure may or may not increase utility profits. The second reason is that as energy use increases, it accounts for an increasing proportion of household income. This places a heavy burden on low-income households and limits their ability to pay higher electricity bills. The federal government needs to subsidize energy grid investment through grants, tax credits, tax credits, and low-interest loans. The Lower Inflation Act included these tools, but they must remain in place for decades to come as the energy system modernizes.
In addition to our energy infrastructure, our water infrastructure is in worse shape. Lead pipes, inadequate filtration and aging water mains all require repair and rebuilding. Sewage treatment and waste management also require public investment. Rail transportation in the United States has been in decline for more than half a century, and many places may be irreparable, but some places, such as the Northeast Corridor and cities such as New York, Washington, and Boston, need to continue to maintain and build public transportation. The transition to an environmentally sustainable economy requires reliable and growing public investment. Public investment has always been an integral part of America’s economic development. It doesn’t require ill-advised or even stupid token investments in large, high-profile private companies that can raise their own capital. Amazon and Tesla don’t need taxpayer money. But the transition to sustainable development does require investments in energy, water, waste, communications and transport infrastructure.
As I point out in my new book, Environmentally Sustainable Growth: A Pragmatic Approach, the transition to environmental sustainability is well underway. Economic transformation is often invisible until it is fully in place. In some cases, nostalgia interferes with understanding these changes. In New York City, people are still bemoaning the loss of manufacturing and desperately trying to rebuild it. It’s true: we lost half a million clothing manufacturing jobs. But we added 150,000 high-paying jobs designing and marketing apparel.New York City grew from a trading city built on the Erie Canal to a manufacturing city in the late 19th centurythe th and early to mid-20ththe th For centuries, this exciting service city has attracted international businesses, students and more than 60 million tourists a year. About 80% of the US GDP comes from the service economy. We will bring manufacturing back to America but it will be largely automated and not in cities like New York where the land is too expensive for modern manufacturing and too crowded for container shipping .
At the same time, corporate America is moving toward environmental sustainability. They are reducing energy and water use, installing solar panels, paying more attention to waste and environmental impact, and urging suppliers to do the same. The clear leader in this effort is Walmart. They found that environmental sustainability saves money and is only part of best management practice. Governments are also taking action. New York City is working to decarbonise and modernize its energy system and develop a way to reduce traffic and fund public transit through congestion pricing. Like the transition from manufacturing, the changes are slow and steady and often go unnoticed by the media and public.
The private sector is leading the shift, but it needs public investment in infrastructure to get the job done. This is not a “wake up” of capitalism, but an effort to ensure economic growth while maintaining the planet’s ability to sustain human life. The role of government is nothing new, but it is essential and must somehow be freed from partisan and ideological politics.
