How Do We Benefit From Infrastructure Spending?

This question should be asked in a way that doesn’t diminish the political leanings and aspirations of the average American. I should ask more precisely, “does infrastructure spending benefit everyone, some more than others, or is vastly overstated in terms of its value?This is an important question within contemporary hyper-partisan politics where seemingly every facet of life has become a bifurgation of political thought. In other words, there remains little in the way of even mundane daily action which isn’t diverted into political context, and infrastructure is no exception.

Suppose for a moment that we were to recreate the way our political system organizes infrastructure spending. This is a valuable thought exercise which you can do to see whether you can find a better apparatus to mediate specific issues. Let’s say for instance, we need to build a road to connect a neighboring community. Is this a local, state, or federal issue? Certainly this is a local issue. The road may require greater funding than what one or both communities are able to pay. This is where the county may play a part. The county also has an interest in this project as it will benefit, along with both communities, by the increase of economic development the road produces. While abstract, increased transportation is a known economic multiplier; for each dollar invested in transportation(via the road), all parties can experience a greater benefit than each dollar invested. These issues are presented at town halls and government centers all across the country, and usually without much resistance.

When presented with an increasing return on investment, most taxpayers will agree with a proposed investment because it means an increase in property values across the board. A rail line, a successful corporate chain, an entertainment center and so on. Thriving communities diversify their civic and commercial attractions with the understanding that as more money moves into the community, those community members benefit, if not directly, at least abstractly.

As an example, a city is considering whether to build a new ampitheater. Typically, something like this would be a “revenue-based” project, meaning that it is paid in the present by the promise of future revenues for its use. It may, however, be partially subsidized through taxes from city taxpayers. How can my tax dollars benefit me, even abstractly in this situation? Even if I never use the ampitheater, I can still benefit. Vendors and other retail may develop in the area, increasing my access to goods and services. Transportation options may increase due to the amount of people visiting the area. The city will have a larger tax base due to sales, which can allow the city to update old water or sewage systems. If the economic impact is great enough, I may even see a rise in my property values.

Consider for a moment that direct costs produce an abstract reward which ultimately yields personal or community growth. This enters a longer time horizon, whereby an investment in state or national resources may take years or even decades to realize the benefits. Think of this investment as a chart; there is an inverse relationship between abstract investment and realized gains through time. For each dollar which is sent to the state, regional enterprise, or the national government, the gain is only realized abstractly, and rarely directly. This doesn’t mean that the dollar invested has no value, in fact the multiplier effect is often greater when those dollars are sent upwards. Public perception is rather the suppressing force which tempers the gains which have the potential to transform.

This concept, of abstraction, is an important one when carried into the regional or national sphere. It’s difficult for a person to imagine not only the tax dollars withdrawn from their paycheck as a unit of value to be put to use, since they never “see” it, and even less that the dollar taxed provides a direct or indirect value. Coming to terms with the value of tax investment has been a divisive topic, particularly among between the libertarian wings of both parties. A dollar which joins a scaled endeavor separates by several degrees its producer from its ultimate use.

In interesting analogy for this is voting, where many people feel as though one vote can’t do anything within a system where hundreds of millions of people vote; the irony is that if everyone felt that way only an extreme minority would benefit. If a broad coalition of voters rallies large groups of people from multiples states, a voting block is formed to advocate for certain policies. As issues become larger and more complex, the voting block must convince voters that while they personally might not benefit directly, it is in their interest to vote with the bloc to benefit the group.

The same holds true for state and federal taxation. The distance between the citizen taxed and the value that the taxed dollar produces widens as the dollar is scaled into larger forms of government. This entails that a dollar taxed to a Colorado resident to the federal government becomes incredibly abstract when used to fund a dam in the Tennessee Valley. Are we to believe as a country that federal endeavors are taxation theft if they don’t benefit the localities taxed? I would challenge even the staunchest libertarian to disagree that the moon landing, funded by the government, was not in the nation’s best interest.

To round this post out simply, infrastructure spending provides known and unknown positive externalities. An externality is a result of investing in infrastructure which isn’t about the infrastructure itself. A road connecting two cities allows cars to travel between the two, but it also allows electricians to service clients in both cities, instead of one. A high speed internet connection helps a rural city advertise a new industrial park, as well as provide an incentive for businesses to move there. An electric charging station in the city center allows electric car owners to conveniently drive within the city, encouraging more electric car owners. There are myriad examples of why infrastructure spending is a good investment. In almost all cases, the public receives a return on investment, in that for each dollar taxed, multiple dollars are created.

I don’t want to end the post on a down note, but I do acknowledge that many agencies of the state and federal government are in dire need of audit to ensure that taxpayer money is being used wisely. At the same time I still do advocate for the scaled use of taxpayer dollars as a means to advance our country’s interests. Abstraction of use for taxed dollars is inherently a conflict for an individual, but if our country is every going to undertake national or regional projects for the betterment of large swaths of the public, abstract use of taxation is a reality we should live with.

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