RALEIGH – Who could doubt that building and maintaining good infrastructure is a key component of any economic-development strategy?
Not many. Virtually all of us commute to work, purchase products shipped from elsewhere, and traverse local roads to patronize service and retail establishments. We surf the net on local broadband or wireless networks. We power our homes and businesses with electricity. We bear the cost when the infrastructure is inadequate – when traffic jams make us late or gobble up precious time, for example – and benefit from safe, reliable transportation and transmission corridors.
None of these undeniable facts is sufficient to justify some massive new government borrowing binge for infrastructure, however.
When it comes to transportation, for instance, the fact that North Carolina is not keeping up with the demand for good-quality roads and bridges in fast-growing areas does not justify the government’s fascination with choo-choo trains, bicycle paths, and the resurfacing of little-used rural roads. Before Washington or Raleigh even contemplates raising gas and car taxes to pay for these frivolities, it should make better use of the existing flow of transportation dollars to solve real-world problems of traffic congestion.
When it comes to broadband – a competitive, fast-changing market – the government’s best policy would be to avoid sinking taxpayer money into speculative ventures. By all means reduce the barriers to competition among cable, telephone, satellite, and mobile providers. But focus tax dollars only on legitimate expenditures – on improving the connectivity and information capacity of government buildings and facilities. That job is plenty large enough.
When it comes to energy, the best thing Washington and Raleigh could do to ensure safe, reliable, and low-cost power would be to cease its efforts to force us to purchase unsafe, unreliable, and high-cost power from “renewable” sources. Adopting regulations that purport to enhance public health and safety, even though the expected gains are scarcely measurable, is no different from raising tax rates on North Carolina businesses and households, flushing the resulting revenue down the toilet, and then claiming you have improved the state’s business climate.
There is no question that some infrastructure issues resist easy solution. Chief among them is our broken system for funding transportation. Gas and car taxes may have sufficed in the past as a sort of rough approximation of a user fee for motorists. But increases in the fuel efficiency of cars have weakened the relationship between highway use, highway cost, and highway revenue. Motorists actually pay less gas tax per mile driven than they did a generation or two ago.
As for broadband, the practice of granting exclusive telecom franchises has outlived its usefulness. Consumers are eventually going to have to adjust to more rational pricing mechanisms that connect how much of the capacity of the network you use with how much you pay to use it.
And in the energy sector, there will likely be more smart metering and variable pricing to encourage households and businesses to consume power more wisely.
A truly modern, market-friendly infrastructure strategy would embrace these necessary changes. It would seek to minimize government distortions of the transportation, broadband, and energy markets. In areas where the public sector will continue to be involved for the foreseeable future, such as unlimited-access highways, policymakers should follow the user-pays principle as much as possible. And in areas where the public sector isn’t yet or no longer needs to be involved, the operating principle should be for the government to find something else to do.
I would submit that those who think that our infrastructure problems merely reflect a lack of sufficient taxes or government debts have not really thought enough about our infrastructure problems. The solution isn’t to throw more money into archaic, market-unfriendly institutions. It is to reform those institutions.
Let’s get started.
Hood is president of the John Locke Foundation.