People know the phrase “the Lord giveth and the Lord taketh away,” without realizing that is true for government as well. We know that income redistribution programs like Medicare involve government taking from one group and giving it to another. But the same happens, albeit at a smaller scale, when government builds infrastructure such as a bridge over a pristine river valley.
The intent — the “giveth” — is to provide a “public good,” something necessary for society that would not be furnished by private markets. But the “taketh away” is that even though society as a whole gains, particular individuals and specific groups may be made worse off while others reap windfalls.
This is exemplified by the opening this month of the St. Croix Crossing Bridge, newly connecting Minnesota and Wisconsin by highway. Debated for at least 30 years, the $600 million structure leaps the valley downriver from Stillwater, whose scenic downtown for years endured jams of cars waiting to cross an 86-year-old two lane bridge over the St. Croix River.
When contemplating a major undertaking like this, government much consider how much the proposed structure will cost society as a whole vs. what the value of all benefits will be.
Engineers are good at estimating the cash outlays. Yes, there can be cost overruns, particularly when, for example, soil or rock for foundations is not exactly what tests had indicated. But civil engineering is a pretty exact science. And a cable-stayed bridge is not a new-generation aircraft carrier.
Quantifying even the most direct benefits is a bit harder. New bridges are built to facilitate the movement of goods and people. So one can measure drive times over the old bridge and estimate what they would be with the new bridge in place. One can add up the fuel saved, reduced wear and tear on vehicles and infrastructure. More knotty is adding up the value of regained productivity from shorter commute times. This takes a few more assumptions than gasoline saved because the opportunity cost of hours of human life varies between individuals and is inherently ambiguous. It is done often enough, however, that there are accepted metrics.
Construction costs are known when the bridge is done, but travel cost savings stretch many decades into the future. The number of vehicles using the bridge probably will grow, perhaps dramatically. Past experience tells us, however, that before-the-fact estimates of transportation use are often wildly off once a few decades pass.
And then there is the potential changes to development and demographics.
The very presence of the bridge changes where population growth will occur. So it becomes not just a matter of counting people currently commuting between Wisconsin and Minnesota and assuming that this population would grow the same with or without a new bridge. Much easier transportation will motivate much more housing development than otherwise. It will motivate more commercial development. Estimating just how much will occur, however, and when, isn’t easy.
But one can certainly estimate ranges and then do sensitivity analyses looking at how costs and benefits vary under many different plausible outcomes.
Once beyond the direct costs and benefits and into indirect or external ones, things get even murkier. Plunking $600 million worth of concrete and steel smack dab across one of our most beautiful rivers certainly has external costs on the environment. This is even before considering noise, exhaust and other negatives from tens of thousands of vehicles daily.
This has been the most contentious issue and one that held up construction of the bridge for decades. The St. Criox long has been designated a Federal Wild and Scenic river. As such, development within a zone that affects the river and sight lines from its surface is strictly limited. Yet at the same time, the 1965 federal act establishing this preservation system never was intended to create impenetrable barriers hundreds of miles long to all future transportation development.
This is an issue on which informed people of good will can still disagree. Walter Mondale, for example, thinks the bridge a mistake and argues that it could have been stopped based on yet different legislation. Many others still think it wrong. I’m an admitted bridge nut, but I think the outcome is, on the whole, good.
But again, this is particularly knotty. If construction kills rainbow trout or mussels, there are accepted procedures for valuing these. But what is the social cost or benefits of an altered landscape? While some people are outraged by what they see as the desecration of a wilderness, some see a beautiful work of engineering art, perhaps not approaching famous spans like Switzerland’s Salginatobel or the new Millau Viaduct France, but positive nevertheless. Others just shrug their shoulders. What is the net cost to society? Can it be put in dollars? Is that even an appropriate question?
New highways and bridges always affect economic activity, although much more in terms of where it occurs rather than the total amount produced. Gas stations and convenience stores near the new highway see business burgeon. The values of the businesses go up. Sales at similar businesses now economically marooned by closing the old route dry up and the value of the properties slump. The net change may well be positive, but while the government action increases the income or net worth of some, it decreases it for others. Losers cannot get compensation for their ruined business because what happened was not a legal “taking” — in the Constitutional sense — as it would be for owners of land used for actual construction. And winners have a windfall.
Faster, cheaper commutes to the Twin Cities make the Wisconsin side of the river a more desirable place to live. So the market values of existing housing and developable land rise. Expectations trigger this even before construction begins.
With more housing available in a different state, but close to major Minnesota employers, far western metro suburbs are marginally less attractive. Effects are small, but there is slightly less construction in the direction of Buffalo or Belle Plaine than their might have been if the St. Croix had remained a barrier. Even on the Wisconsin side there are minute changes. Fewer commuters funnel down to the existing I94 bridges, so some streets in Hudson see less traffic and are better places to have a house, but worse ones to have a business. There are fewer customers getting a quick espresso in the morning or picking up milk and bread on the way home. And kids who have to cross a busy street to get to school are slightly safer. But these effects are reversed for counterparts along Highway 36.
Pulling even a few thousand cars off thee I-94 bridges reduces congestion by a tad for people driving in from Baldwin or River Falls. Minnesotans wanting to enter the freeway in Maplewood, or even St Paul, find waits shorter. But Stillwater residents who used to enter the empty end of a stream of vehicles now must look for gaps to merge into.
Such myriad minor adjustments take place over multiple counties. They are so small and diffuse that few people see cause and effect.
But it was always such as development changed. Prairie towns boomed when a railroad passed through while bypassed ones withered. Famously kitschy diners and motels along old Route 66 across the American plains became nostalgic casualties of the interstate highway system. As now in Stillwater, the decades-long process of bypassing Highway 60 around towns like Madelia or Mountain Lake hurt some businesses and helped others. It drove the value of some land up and that of other down. Even on a single main street, some store owners rued the loss of business from less traffic while another saw more shoppers who welcomed less traffic and easier parking.
Government acts. Some win and some lose as a result. But on the whole, government provision of key infrastructure has benefited our nation’s economy. The Erie Canal, an early example of a “public-private partnership,” gave a cheaper outlet to products of agriculture and commerce from thousands of square miles. Whigs like Henry Clay and Abraham Lincoln were right about the need for “public improvements.” Transcontinental railroads, highly subsidized by government, opened even more opportunities, as did the interstate highways of the ’50s and ’60s.
I think that we have been underinvesting in infrastructure and living by depreciating out the investments of our ancestors. Some politicians give lip-service agreement. But we cannot raise a 23-year-old gas tax, oh no. That would hurt the economy.