Infrastructure: A Question of Priorities

By Matthew Yglesias

It’s impossible to come to China and not be struck by the rapid pace at which infrastructure is advancing. Shanghai is criss-crossed by a series of new looking elevated highways that the city will almost certainly regret in 20 years, as well as by an impressively large Metro system that, as illustrated below, has grown at a pace that’s completely inconceivable for an American city:

One’s thoughts immediate to turn into the ways that the Chinese political system facilitates such actions—no need to worry about NIMBYs or environmental impact reviews here. But there’s also of course the question of money. China spent something like 7 percent of GDP on infrastructure back before the recession and boosted that to 10 percent more recently. The United States simply doesn’t try to invest on this scale. But that’s not because we don’t have the resources to do it. Our overall spending on the military in dollar terms is higher than what China spends on infrastructure, and it’s much higher on a per capita basis. And what we spend on health care for old people dwarfs anything China does in that regard. We, in other words, are perfectly capable of mobilizing major public resources for major public purposes, we just choose to do it for different things.

And to an extent that’s defensible—we don’t have the kind of infrastructure needs that China has. But still there’s such a thing as return on investment and that applies to the public sector as well to the private. Plonking down huge sums of cash on military adventures and maintaining the capacity for future hypothetical military adventures is not doing much to boost the forward-looking prospects for the country.