Top World Bank Economist: U.S. Should Invest in Infrastructure
In a recent report, the McKinsey institute argued that America’s poor infrastructure is holding back its economic development. The top economist at the World Bank, Justin Lin, appears to agree. Earlier this week Lin said playing catch-up with China’s infrastructure investments would do the United States good, Bloomberg reports:
China averaged 9.6 percent economic growth from 1979 to 2002, as it quintupled the size of the country’s highway system to 25,000 kilometers (15,000 miles), he said. The U.S. could profit from following China’s lead, Lin said, noting the fastest train in the U.S., Amtrak’s Acela, took 2 hours and 46 minutes to bring him from Washington to New York this morning. In China, he said, a high-speed train would make the trip in an hour.
Add one more voice to those in favor of infrastructure investment: Mary Meeker, financial analyst at Morgan Stanley and author of a new nonpartisan report called USA Inc. In recent decades, Meeker observes, the United States has been spending less on productive investments, such as infrastructure and education, and more on areas of preservation, such as health care. That combination has caused America to lose its innovation edge, writes the Atlantic:
In the last 40 years, we’ve pumped the breaks on productivity-enhancing investments in infrastructure, education and technology, while health care and income security costs have accelerated dramatically. Like an aging couple shifting its spending away from the kids’ clothes and tuition toward pills and doctor visits, the U.S. government has transformed itself from a defense-technology-infrastructure investor to a national insurance conglomerate for its aging population. …
Productivity-enhancing spending, according to Meeker, comes from three main sources: infrastructure, education and research and development investment. We’ve seen infrastructure spending collapse as a share of the budget since the 1960s.
Of course, entitlement spending is necessary to care for an aging population — but at some point America’s aging infrastructure is going to need some care of its own.
Image: via Atlantic
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