Was the Interstate Highway System a Good Investment?

At the Economist‘s Democracy in America blog, R.A. makes some good points in favor of skepticism on the question, riffing on Robert Fogel’s research on the economics of the railroad. Excerpt:

Highway construction generated some positive effects and some negative effects. We tend to focus on the positive effects and remark on how constrained the economy might have been without a highway boom. But absent a highway boom something would have been built and markets would have optimised to that something. It’s not clear that the savings from highways are so substantial that the American economy is clearly better off as a result of the system’s construction.

8 thoughts on “Was the Interstate Highway System a Good Investment?

  1. It seems to me that if you’re going to say something would have been built, then you have to acknowledge that in the real world the Interstate Highway system was that something. So even R.A. admits that the IHS had a beneficial impact as opposed to doing nothing (as does Fogel vis a vis the railroads.) Are there other, ideal alternatives? Possibly. But so what?

      1. But there’s no argument in the RA piece that the hypothetical alternative to the IHS would have been more efficient, and Fogel even admits that the railroads were more efficient than the hypothetical canals–only 1% more efficient, but still more efficient.

  2. The IHS is a huge subsidy to the long haul trucking industry. It was built to the detriment of the railroads, who to be fair, got their own kind of subsidy but they have been responsible for the maintenance ever since.

    To those who say everyone pays their fare share through gas taxes one has to consider fair share in terms of wear and tear on the roadways.

    The wear and tear on the road is in direct proportion to the cube of the axle weight.

    A tractor trailer weighs an average of 60,000 pounds and has six axles. Thats 10,000 pound per axle. A honda accord weighs, with passengers, about three thousand pounds or 1,500 pounds per axle. The ratio of wear and tear is 10,000 cubed times six/1,500 cubed times 2. Simplifying, the ratio is six trillion/6.75 Billion. Simplifying completely, 888 to one. That means one tractor trailer does as much damage as 888 Honda Accords.

    The tractor trailer should pay 888 times the gas tax as a Honda Accord. They don’t and until they do they are not paying their fair share. The Honda Accord user is subisdizing the tractor trailer driver. To add insult to injury, the Honda Accord user is also forced to pay for a highway which is over-engineered to a standard which only the tractor trailer requires and a tractor trailer uses as much lane space as three accords.

    Railroads are vastly more efficient at long haul cargo. Tractor trailers are only necessary for the last mile. And they don’t have to be anywhere near as big as they are for transport on that last mile.

    I say stop the subsidy to the trucking industry and turn the interstates into tollways.

  3. I think he did Bill. The money would have been spent one way or another (“But absent a highway boom something would have been built and markets would have optimised to that something”). Instead of trusting the government to understand what people want and then funding their supposition using tax dollars, people could have just spent in on what they wanted. If enough people really thought that the highway system was the best way to spend their money then I imagine that it would have become profitable for capitalists to start constructing it anyways.

    1. Individual capitalists don’t have the state’s coercive power which enables them to confiscate the land to build the highways on.

      1. I mean, it’s questionable that anyone even should have that kind of power. If the land is so valuable, it’s probably valuable to the guy who owns it too. Shouldn’t s/he be compensated for the loss? Who would want to live in a country where the State just takes your shit whenever it pleases? Property laws are supposed to define what’s yours, so if the issue is settled there, then it’s tyrannical for the State to all of the sudden go back on it’s assurance of your ownership. Best to let the market determine what the property is worth, and then compensate the individual appropriately for the loss thereof.

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