Society desperately needs more infrastructure investment

The recent incident of lead poisoning in Flint, Michigan has raised a great many serious questions. The first being, how could such a thing like this happen in a developed nation like the United States? This is the type of thing that you expect to see in the developing world, not something that you would expect to see in the United States.

The water supply in Flint, Michigan compared to that of Detroit. Source,

The water supply in Flint, Michigan compared to that of Detroit. The Flint River’s water is very corrosive to the lead and iron that makes up the pipes, due to the extremely high levels of chloride. This corrosion could also mean that there are increased risks of harmful bacteria growing in the water supply
Image Source:

The cruel reality is that lead pipes are a lot more common than that. I suspect that if we were to do widespread tests across the US, we would find many more communities affected by lead toxicity. I would not be surprised to find if there were other toxins too, such as other heavy metals, PCBs,  and other products.

To me, the big picture though has been a chronic underinvestment in public infrastructure.  In 2013, the American Society of Civil Engineers (ASCE) published a report card that gave the US a D+.  Drinking water received a D. I think that this accident was inevitable. It was the inevitable result of under-investing in infrastructure.  Also worthy of discussion is the impacts of poverty, race, and the collapse of America’s manufacturing base in the (now former) industrial heartland. Unless these are addressed, another, similar incident is inevitable.

If you have the time, I would recommending reading the full report, which I have uploaded to my website as well, in case the original is moved. Anyways, let us just say that it makes for some very grim reading and that public investment in infrastructure is desperately needed. I think that the more I read the report, the more convinced I am that an incident like what happened in Flint was inevitable, predictable, and entirely could have been avoided.


Canadians should not be so smug either

Lead in Canadian homes

One of the things that has irked me at times is that my fellow Canadians are at times, smug and feel like they are better than the US. In some areas, the hard numbers agree and yes, we Canadians have a lot to be grateful for, like universal healthcare (although I wish that it included universal dental care as well).  These numbers are reflected in the living standards measurements and mortality rates.  Another reason why  we Canadians should not be too smug is that there are nations that do even better in this regard, particularly the Nordic Social Democracies. I’d argue they are a model for how Canada should have used its tar sands and mineral wealth.

Even they are not perfect either of course. The Norweigians done a far better job of using their oil wealth, but even they may have wasted a great deal of money. The economist Arno Mong Daastøl, has argued that Norway has wasted a lot of its oil money and should have invested a lot more in infrastructure. Daastøl argues that Norway is wealthy because it is lucky to have such large oil reserves, in contrast to nations such as Germany or Japan, which are wealthy due to acquired knowledge (manufacturing as their key export) and their infrastructure. This raises the uncomfortable question of what happens when the oil runs. I can only imagine what Daastøl would think of Canada – probably also wasting away its natural resources.

Back to the grave topic of lead: In Toronto, tests have indicated that an alarming number of homes have high levels of lead in their water supply. Nor is Toronto the only city, Edmonton and several other cities have had high levels in certain households of lead detected in their water supplies as well. Some home buyers have learned this the hard way.  One lesson here I suppose is that if you are buying a used home, particularly from an older neighbourhood, you must test lead levels to make sure that it is safe.

Under the circumstances, I would  advocate for for a national program to check all major cities and especially older areas, buildings constructed before 1960 for high levels of lead. Perhaps a test for asbestos is also in order.

The consequences of lead toxicity are well known and I do not doubt that decades of drinking contaminated water could have very dire health consequences indeed on  those are affected. Certainly, I don’t deny that a massive lead testing program and replacing lead pipes across Canada would  be expensive, but I suspect that compared to the costs of doing nothing (especially to people’s health later in life, the effects on reduced productivity, and other consequences), I firmly believe that this is a money saver.

In 2000, Walkerton, Ontario had an outbreak of Escherichia coli O157:H7, which claimed 7 lives and made thousands more ill. Sadly, toxic water supplies are not limited to the US and Canada desperately needs to invest more in this area.

In 2000, Walkerton, Ontario had an outbreak of Escherichia coli O157:H7, which claimed 7 lives and made thousands more ill. Sadly, toxic water supplies are not limited to the US and Canada desperately needs to invest more in this area.

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Widespread underinvestment in Canadian infrastructure

There is a very similar report here in Canada, published by the Association of Consulting Engineering Companies in Canada (ACEC), published in 2010.  Should we trust this report? After all, this is a lobbying group and we must always be skeptical of what they say. There have been numerous independent studies that have seen similar conclusions. Arguments are mainly around improving living standards, competitiveness, and because the deterioration of Canadian infrastructure will have huge impacts on the future.

The use of Public Private Partnerships (P3s) has been explored, as have several other viable methods to fund these projects. Others have argued that given the low rates of interest, now is the time to begin massive borrowing.  The infrastructure will more than pay for itself in the long run.

Canada also has the unique challenge of being a nation with a low population density, mostly populated along a long thin line hugging the US border, and with exceptionally harsh winters that affect infrastructure.

Some inconvenient thoughts

A failure of Neoliberal economics

Although there are topics I disagree with the economist Paul Krugman about, one thing he has done a very good job of doing is calling out the Freshwater economists for their failures. The policies that they advocated for helped cause the 2008 Financial Crisis.

I would also argue that they also caused this infrastructure crisis. By lowering the tax rates for the very wealthy, corporations, and other special interests, there isn’t the money needed to maintain existing infrastructure, much less consider new projects.

There are some things that the private sector cannot do. A case could be made that a command economy is a terrible idea, but we need a strong public sector. There are long-term, large-scale projects such as infrastructure, education, scientific research, and healthcare that the private sector won’t do, or will not perform as well for the end user.

To me, the destruction of the manufacturing base across the Anglo economies (which also eroded the tax base of so many communities), the rise in inequality, the various financial crises,  the loss of scientific leadership, and  the decline of infrastructure have totally discredited the ‘small government’ ideals.  If Communism was discredited with the collapse of the USSR, then freshwater economics should be as well with this financial crisis.

The short-term mentality

One of the things I have find most disturbing about our political system is that politicians do not think decades ahead. They are worried (for entirely rational reasons) about the next election cycle.

The problem with that is infrastructure takes decades to invest in, and the payoff times can be very long. There is also the fact that it has to be maintained. There isn’t always the “sexy ribbon cutting” that we associate with infrastructure. This is not something that politicians will find appealing.

It is also why the corporate sector’s ability to invest in infrastructure is limited, at least amongst Western companies. This can have dangerous consequences times. I’d argue that a lot of the rise of East Asian since WWII compared to the West (and especially the Anglo economies) was due to the dangerous obsession with the next quarter or year, versus the long-term orientation. That is not to say that Asian companies are perfect. They stumble too. I have argued before for less power distance culture. But in regards to orientation, the East Asians have it right.

A lineman repairing a power line.

Maintaining infrastructure isn’t nearly as sexy as ribbon cutting, but every bit as needed as building new infrastructure. Unfortunately, politicians are far less likely to invest in maintaining infrastructure, despite its incredible importance to society.

Image Source: Wikimedia
Photograph by: Marvin Nauman

Our collective failure as citizens

Whenever I hear about citizens complaining about taxes, I ask – what is the alternative? I do not like paying taxes for paying taxes. Actually, I  think that our tax system is desperately in need of reform, but that’s another post.  Ultimately, there are services that we need, and there isn’t an alternative. There is also the fact that often, the private sector does a worse job than the public sector of providing certain services, an inconvenient truth that many would prefer to ignore.

What taxes are is delayed gratification and as Bill Gates noted, an investment. Warren Buffet has publicly called for high taxes for the very rich. The reason I regard taxes as delayed gratification is because taxes go into infrastructure, education, healthcare, research, and various other expenditures that help society.

That does not of course mean that there is no waste in taxes. There is. Much more that I like, actually. What slice of the pie should be allocated to where is a very, very political topic. However, that does not mean that there should be zero taxes. I think that people who resent taxes the most think that if taxes were lowered, they would be able to consume more and therefore become wealthier. What they miss is how such consumption would be harmful in sustaining long-term growth. The money used will be invested in things like basic research, infrastructure, and productivity growth.

Conclusions and hopes for the future


Japanese JR500

The Japanese 500 Series Shinkansen train.

Many of the East Asian nations have invested heavily in infrastructure. China in particularly, has rolled out a high speed rail system at an astonishing pace over a few short years. I am a firm believer of low power distance and oppose authoritarianism, but the Chinese government has done a far better job of investing in public infrastructure than we in the West have. So too have the Japanese, as pictured above – the continue to lead the world in high speed rail technology.

Image Source: Wikimedia


I think that one of the biggest reasons why China has risen so rapidly in the past few decades is because of their investments. The Irish journalist Eamonn Fingleton called it suppressed consumption and the reason why East Asian economies have so high savings is because their governments have adopted strategies to artificially boost their savings. The savings is then allocated into productivity investments, research, infrastructure, and building up a powerful domestic base. Combined with often undervalued currencies and they have been able to rise so quickly.

I strongly oppose authoritarianism, but I do believe that one thing the East Asians have gotten correct is their massive public investment. Infrastructure in the Western world needs to be higher, much higher. Perhaps as high as 10% of GDP (admittedly a very flawed way to measure an economy).  Over a long period of time, the infrastructure would pay for itself.

Barring major changes like this, disasters like bridges collapsing or what happened recently in Flint are inevitably, going to occur again. I just hope that as a society, we can collectively learn from our mistakes.


  1. Benjamin David Steele

    I find it odd that century old pipes are common in many cities, at least in the US. And many of them are lead.

    Over the past century, the US federal and local governments have spent gazillions of trillions of dollars funding the military-industrial complex, prison industry, police state, corporate welfare, above market cost crony no-bid contracts, foreign aid (mostly arming and training allies, not feeding the poor), alphabet soup agencies, covert operations, cleanup of corporate-caused pollution and environmental destruction, etc. The amount of wealth and resources that are wasted is beyond comprehension.

    In all that time, they couldn’t have found some spare change in the couch cushions to replace the old lead pipes, really? Even without raising taxes, we Americans could easily have rebuilt our entire infrastructure, fully funded education and job training, ensured healthcare for all citizens, offered housing for all the homeless, etc. After all that, we’d still have had money left over. But instead we wasted and continue to waste it all on the shortsighted benefits to the ruling elite.

    It’s not a lack of wealth and resources that keeps the US government from doing all of this. It’s a demented sociopathic worldview that sees the poor as deserving all the horrors of being poor, including having their children’s brains poisoned with lead. And, in this worldview, everyone who isn’t part of the upper classes is poor and hence nearly worthless, beyond being mindless drones for corporations and useless idiots during campaign season, not to mention cannon fodder for ensuring the interests of the military empire.

  2. Chris Liu (Post author)

    It seems like the developed world is increasingly failing its citizens of the most basic of necessities. Clean water, food security, and increasingly, people are falling between the economic cracks. Forget for a moment about the more advanced infrastructure projects. It seems like even the basics are too much to ask for.

    Now on the subject of the more advanced projects, the future belongs with those who invest in infrastructure, science, and manufacturing. This may seem like conventional wisdom, but we do not embrace it. The future belongs to those who think long term.

    On the note of military spending: Given that the costs of the Iraq war are estimated to be $4-6 trillion (2013 USD). Apparently, the US actually spends one trillion dollars on the military. It has become a huge drain on society. I should also note that the military has a very bad spending to jobs created ratio, that civilian R&D spending is more effective on a per dollar basis, and that the majority of the products the military spends will not be able to directly benefit society.

    I would argue that the very wealthy also benefit from infrastructure. Those high speed trains you see are used disproportionately by business travelers. In the US especially, there does seem to be the view that public spending disproportionately benefits the poor. That phenomenon is less strong here in Canada (although regrettably, I have met Canadians who share that view), and in many parts of the world, non-existent. Often, in such nations, spending a lot on infrastructure is viewed as common sense.

  3. Benjamin David Steele

    All the time I hear people say that we have to fund the military to keep America safe. But how does invading countries that have never attacked us and then killing people in their homes make us safer? Besides it defying common sense, even ignoring it being fiscally irresponsible, it simply is mentally deranged.

    Would the police accept that excuse for why I broke into my neighbor’s home and killed the entire family, if I told them I felt threatened by their mere presence and had to preemptively defend against my neighbor from doing what I did? What kind of person thinks that way? Yet apparently that is what goes for a normal thought process here in the US.

    1. Chris Liu (Post author)

      It does not make the US safer at all, as the Iraq war has unfortunately demonstrated. Worse, it leaves less money for everything else and harms people who are totally innocent. Excessive military spending played a role in the demise of the Soviet Union. It would seem to be doing so too for the US as well.

      Yes some military spending is necessary, but not the extremes the US seems to have gone. I actually think that Canada has underspent in its navy in particular. It is necessary to enforce Canadian sovereignty and due to the sheer size of the Canadian coast. Again, Norway may be a nation to emulate here.

      I am not saying here that infrastructure spending would solve all of society’s problems. It would not. The net benefit though, would vastly exceed the costs over the long-term and that is the main reason why infrastructure spending is so attractive. I guess the way to say it is that it would go a long way to solving many of society’s problems.


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