Boon or Boondoggle

Boon, from the word Bon meaning “good” and Boondoggle, of uncertain origin, are the opposites.

For every infrastructure project there is one side claiming it will be a boon and another saying it will be a boondoggle. Whether something is a boon or boondoggle depends on where you sit. If you get the benefits and pay few costs, it’s a boon. If you pay only the costs (including not only money, but also inconvenience, noise, pollution, or other externalities), and receive few benefits, it’s a boondoggle. What is special about publicly provided public works is that the beneficiaries and the cost-bearers do not align well. While it is hard for these to align perfectly, they could certainly align better.

People have a very good instinct about what is in their own best interest. Certainly I don’t always agree with them (the What’s the Matter with Kansas? argument perhaps), but in general they know what they want better than the government does. If after considering not only the private benefits* they gain, but the full costs they shoulder, they still think something is a boon, it probably is.

While analysis from a welfare economics frame is theoretically objective, it is also disbelieved. To reveal whether something is worthwhile, we need to move transport toward full cost pricing. This is something the blog has long called for, but we are so far from it in the US, it is like blowing against the wind. This is one thing that federalism, and especially privatization — the separation of the provision of infrastructure from government — in one of its many forms, public utility, non-profit organization, temporary concession, or what have you can achieve better than the existing framework, raising costs for users to closer to full costs so that the apparent benefits are closer to the real net benefits.

Politically the challenge is that the groups that are pro-environment and should want higher prices are in a coalition with labor and thus wants lower prices and more construction. While road pricing (and transit pricing and land value capture) and the environment are an unlikely wedge issue, the only way it seems to get from here to there is to form new coalitions.

Now perhaps technology will lower the costs of transport infrastructure in various ways (EVs will be cheaper than ICE vehicles, automation may reduce construction costs as it reduces the costs of operating vehicles and increases capacity) so more will be feasible, or demand will rise justifying higher expenses, the dynamic remains the same. We have much less virulent arguments over what people do with private property (zoning in a few expensive cities notably excepted) than what the public should do with public funds. Of course private owners require tolls, it only makes sense. Of course public goods should be free. This mindset changes when the institutional structure that owns and operates transport changes.

* There are also in theory positive externalities that private sector does not capture, and may justify subsidy. This issue is murky, and often depends on mispricing in the rest of the economy.