An argument in favour of streetcars

I am a noted streetcar skeptic. I have written blog posts about their issues. As an objective analyst, I will however admit an advantage streetcars or trams have over buses.

This is not the ‘permanence’ justification that is often heard and easily disproved (i.e. where are they now if they were so permanent?). But it is related, once laid down, tracks are harder to move than buses, and tracks are more expensive, so it is harder to make routes circuitous. Many bus routes look like they were designed by drunk transit planners. One local bus the 370, which runs near my office and my home is so circuitous it is faster to walk even ignoring schedule delay. (It is not quite faster to walk end-to-end though, walking time is 2:30 vs. 1:14 on the bus, so the effective bus speed, assuming schedule compliance, is about 9.6 km/h vs. 4.8 km/h walking.) I have written about this before in Minneapolis, (and nearby Rosedale) and circuity is hardly an unknown problem.

370 Bus Route on Google Maps
370 Bus Route on Google Maps

Now there are undoubtedly reasons for every indirect deviation that diverts buses from the straight and narrow. However, every circuitous zig also loses passengers, and bus routes in the US are much more circuitous than travel by road. Serve this building, serve that one, cover this street, reduce pedestrian walking time.

In contrast, trams in practice are much more straight-laced, paragons of transit routing virtue. The historic Sydney Tram Map, as this map in wikipedia shows, gives a sense of routes that were pretty much as direct as possible.


Now it can be argued this particular bus provides and east-west service that no tram did, which is true in part. But that doesn’t mean trams could not. It also could be argued that almost no one rides the 370 end-to-end. Though I have not checked the Opal data, this is probably true as well. But a well-structured suburb-to-suburb transit network (my fantasy map is here, Jarrett Walker has done this as well) could avoid this. To be fair as well, the Sydney frequent network is not nearly as circuitous as the 370 bus, which has a roughly 20 minute headway

A Political Economy of Access: Infrastructure, Networks, Cities, and Institutions by David M. Levinson and David A. King
A Political Economy of Access: Infrastructure, Networks, Cities, and Institutions by David M. Levinson and David A. King

Road Rent – On the Opportunity Cost of Land Used for Roads

There are a number of ways to view the cost of automobile travel. For instance

This post looks at the idea of road rent. At the margins, what is the value of road space, and how might that cost look on a per vehicle-km traveled basis?

Real Estate

Land has value. Land used as roads has value both as a road and potentially for other uses. What if the value for other uses was higher than that for use as a road?

In Greater Sydney land values range from to $AU210,000 per m² in Barangaroo on Darling Harbour to under $AU1000 per m² in Western Sydney [link].  In Minneapolis, we estimated a few years ago that average assessed land value as $144 per m² for roads and $30 per m² for highways. [Junge, Jason and David Levinson (2013) Property Tax on Privatized Roads. Research in Transportation Business and Management. Volume 7. pp. 35-42.] It seems that assessed value is about 2/3 of market value in Minneapolis.

In some places it is much higher, in some places much lower, the examples used herein are simply an illustration.

The idea is that there is land holder (such as a government land agency) that has to decide whether to allocate land to road uses or for other purposes.

Parking Rent

Consider a typical suburban residential neighborhood with `free’ parking in front of houses. The land is valued at $1,000 per m². Each house requires one parking space out front, and parking is permitted 24 h per day. Conservatively, a car takes 10 m² when parked (the road is the access lane, we consider that separately). It would cost $10,000 for the land owner to purchase the land equivalent of the parked car. The annual rent on that would be $400 (at 4% interest).

In this example $400 is how much the car owner should pay annually  to their municipality for a permit to park their car to cover the cost of land (not the cost of infrastructure, or any other costs of roads and mobility, just the cost of land). This is a bit more than $1/day (more precisely $1.095/day). In more expensive neighborhoods, this would be higher, in less expensive neighborhoods, lower.

For Minneapolis, I have previously estimated about 220,000 on-street spaces. At $400/space per year, this would raise $88,000,000 per year, a not inconsiderable share of the city’s $1.3B annual budget. Instead it is mostly given away free.

Consider the implications if property taxes were reduced by up to $88M in total, and parking permits sold at $400/year (payable monthly with the water and trash bill). People would realize the cost of on-street parking, and there would be less of it, and less vehicle ownership at the margins, and fewer trips by car. Space freed up could be re-allocated.

Alternatively, $400 per year is the value of public subsidy from publicly-owned land to private car owners who get `free’ on-street parking. In short from the car-less to the car owners.

Alternative Uses of Road Space

The economic idea of opportunity cost is important here. Opportunity cost is value of the next best alternative. The next best alternative to road space might be renting it out. So for instance an urban US freeway that destroyed blocks of extant development when it was built has an opportunity cost associated with the value of that real estate.

So the question arises as to what other uses  could be made of the road; for if there were no other uses, you might as well store cars for free. Here are several other uses that could be  considered to replacing a parking lane:

  • Park or parklet,
  • Bike lane,
  • Bus lane,
  • Paid parking, via meters,
  • Shared car parking (rented to the car sharing company),
  • Shared bike parking (rented to the station-based or dockless bike sharing company),
  • Taxi or ride-hailing stand,
  • Bus stop,
  • Shared scooter parking (rented to dockless scooter sharing company),
  • Food truck or ice cream vendor,
  • Road for moving motor vehicles (a parking lane could be another moving lane),
  • Sold off for development.

The last item deserves some discussion. Consider that our road with two parking lanes (one on each side) is maybe 10 or 12m wide (~32 to 40ft). This is wider than some houses are long. The city could in principle retain the sidewalks and sell off the roadbed for townhouses or single family homes. Given the houses are already serviced by alleys, and so long as not all roads were sold off, some roads could be. An illustration of this is the Milwaukee Avenue in Seward in Minneapolis, as shown in the figure. You will see there is no paved street in front of the houses. This could be tightened up further or realigned should there be demand.

Milwaukee Avenue, Seward. Source:
Milwaukee Avenue, Seward. Source:

This is not appropriate for every street. However, (1) there are places this can be done, where roads are in excess and housing scarce, and (2) this illustrates that land currently used as asphalt to store and move cars has value, and that houses have value even in the absence of streets for cars in the front.

There are always excuses — utilities may need to be relocated, fire trucks would need to go slower down narrower sidewalks. But these excuses can be overcome, there are numerous examples of narrow paths that function as roads.

Driving Rent 

Note: 1 are = 100 m² and 1 hectare  (ha) = 10,000 m²

Typically each car is in use 1 – 1.5 hours per day, and parked for the remainder. In the previous section, we considered parking, the `remainder,’ in this section we look at the time in motion.

When in use, the car is occupying not simply its area (the 10m² = 2m x 5m), but also is preventing the use of other space around it. On a freeway with a capacity of 1800 vehicles per hour traveling at a freeflow speed of 100 km/h, (i.e. just before the speed and flow drop due to congestion sets in) there is a critical density of 18 vehicles/km.

18 vehicles per km is 55.5 meters per vehicle. Lane width is 3.65 meters, so the area occupied is 202 m². Let’s round to 200 m². Each moment  a car is in use, it is using 200 m², on which it should pay rent. So for an hour a day, this is 720,000 m² s or 72 ha s.  (The meter-squared by second (or hectare second) is a new unit of measurement (a time-volume) that needs a catchier name).

It is the density that is the relevant number here, since vehicles are occupying space that we are charging rent for in this thought experiment. Though they are moving, and so the space they are occupying moves with them, there is always some space being occupied for the duration of their travel. Each of those vehicles per hour is occupying a moving window of space.

Roads are a Time Share

When roads are less congested, cars are consuming more space per vehicle. So uncongested urban are much more expensive per traveler than congested rural roads.  When traffic breaks down, they are consuming less space, but presumably are occupying that space for more time, since they are going slower. Induced demand [link] and travel time budgets [link] negate that to a significant extent.

Illustration of space occupied by cars. Note that most cars do not have 2 occupants. This particular layout is, surprisingly, in somewhat congested conditions. Cars often take up more space at higher speeds. Screen still from a 2002 Saturn car company TV commercial. Image source:  The San Francisco ad agency Goodby, Silverstein & Partners.  Article: Raine, George ‘Goodby, Silverstein agency celebrates 25 years’ SF Chronicle.

George Raine

In this example, the hourly rent on 200 m² is what we are interested in. Though cars move, over the course of 1 hour of travel in these conditions, they are claiming that much space. The specific space they are claiming moves with the vehicles, but this all balances out as other cars claim the space they vacated.

Empty roads still have to be paid for, and paid for by actual road users. Even when a road is not being used, it is available to be used. Travelers have the option of traveling. Pavements cannot be easily be rolled up and allocated to other purposes on the fly, particularly purposes like buildings. (Roads can occasionally be closed for special events, but this is rare during business hours.)



Consider a car trip that uses 3 roads:

  • Road section 1 (suburban residential): l=5 km, w=3.65, v=30 km/h, q=1000 veh/h, k=33.33 veh/km, AADT=10,000 vehicles/day/lane, p= $1000/m².
  • Road section 2 (motorway): l=10 km, w=3.65, v= 100 km/h, q=2000 veh/h, k= 20 veh/km, AADT = 20,000 vehicles/day/lane, p= $5000/m².
  • Road section 3 (downtown): l= 1 km, w=3.65,  v=40 km/h, q=1600, k =40 veh/km , AADT=16,000 vehicles/day/lane, p= $10000/m².

where: l = length (km), w= lane width (m), v=velocity (km/h), q=flow (veh/h), k=density (veh/km), AADT = Average Annual Daily Traffic, p= land value ($/m²), i=interest rate = 0.04, r= land rent ($/year/m²), d = days/year

Consider each road section to be a homogenous pipeline. (With heterogenous traffic, this is obviously far more complicated, and we would make use of the q, k, and v variables to compute an area-time.)

The annual rent (R) for  each road section is the R=p*i*l*w

  • Road 1: R=$1,000/m² y * 0.04 * 5,000 m * 3.65 m  = $730,000/y
  • Road 2: R=$5,000/m² y * 0.04 * 10,000 m * 3.65 m = $7,300,000/y
  • Road 3: R=$10,000/m² y * 0.04 * 1,000 m * 3.65 m = $1,460,000/y

This annual rent is paid by the road agency to the land owner for the use of land as a road. The road agency then wants to recover this cost from its customers, the travelers.

The question of how to allocate always has some subjectiveness to it. Another way of thinking about it is based on elasticity of demand. Peak hour work trips are perhaps the least elastic (least sensitive to price), and so from an economic efficiency perspective should bear the greater cost.

In this example, we take a simpler tack.

The allocation is R/AADT to get cost per year per daily tripmaker, and divide by 365 to get cost per trip, and by section length to get cost per km. In this example:

  • Road 1: $730,000/10000 = $73/y = $0.20/trip = $0.04/km
  • Road 2: $7,300,000/20000 = $365/y = $1/trip = $0.10/km
  • Road 3: $1,460,000/16000 = $91.25/y = $0.25/trip=$0.25/km

The total is thus $529.25/year or  $1.45/trip to cover land rent. `Your mileage may vary,’ as the saying goes.


The implications of this are several.

  • At an additional $1.45/trip, travel by car (and congestion) will diminish.
  • Road rent is essentially additive with annualized infrastructure costs, which generally does not consider the cost of land (rather, land is often implicitly considered `free’ or a sunk cost).
  • If travel by car diminishes sufficiently, road space can be clawed back and redeployed for other public purposes.
  • Narrower lanes impose less road rent. But not necessarily proportionately so, as the throughput on narrower lanes (with human drivers) may be lower as drivers are less keen to be immediately adjacent to nearby high-speed vehicles.
  • Slower moving vehicles take up less space, but take that space for longer.
  • While pedestrians and bicyclists use space as well, they use much less space. (See discussion of flux.) Sidewalks (footpaths) are often considered part of the adjacent private property, and are thus already paid for with property tax.
  • Land used for roads instead of development is not on the books for property taxes.
  • The revenue raised can be used for many transport purposes or redistributed back to taxpayers through some other means.
  • We expect the additional road rent reduces the effective land rent that landowners can charge. If people have to pay more for travel, they will pay less for real estate.
  • Rural areas have much lower, perhaps negligible, road rent. Though the number of users drops significantly (so there are fewer travelers who must pay the burden of road rent), the cost of land drops even more significantly.
  • Were there no (fewer) roads, land would also have very little (less) value, since it would be difficult to access and egress.
  • If roads were fully built on, views would be terrible and the existing buildings would diminish in value. But none of that is to say we have the correct amount of roads now. Clearly urban roads are undercharged in a real estate sense.

Speed vs. Safety

March 21 [Updated with more accurate estimate/figure after fixing an excel bug] How fast should we drive? From a social cost perspective, faster speeds save time, which has a value, but faster speeds cost lives, which also have a value. To illustrate the trade-off I did some back of the envelope calculations, imagining, like a macro-economist, a single road represents the whole t

Speed vs. Safety (updated)
Speed vs. Safety (updated)

ransport system. Annually there are about 30-40,000 people killed in the US, there are an annual Vehicle Miles Traveled of 3,208,517,000,000. The average speed of travel isn’t known directly, but if we assume the average person travels in a car 60 minutes per day (the 1 hour travel time budget) this implies, at approximately 30 miles of travel per day per traveler, about 30 MPH, which seems about right (including 1/4 of travel on freeways at higher speeds and 3/4 on surface streets and roads at lower speeds, and including traffic signals). As the saying goes, Your Mileage May Vary, and this is intended to be indicative — not a universal answer. Some additional assumptions:

  • We take the Value of Life to be $10,000,000, and assume fatalities are the only cost associated with crashes (they are about 78 % of total crash costs according to our analyses, so we should inflate this number to get total crash costs) [US DOT says $9.6 M]
  • We take the Value of Time to be $15/hour [US DOT gives a lot of ranges, but this number is high for all surface travel excluding freight]
  • We assume the number of deaths drops linearly with speed, to zero at zero MPH. The improvement is likely non-linear, as reductions in speeds from high speeds are more valuable than from low speeds.
  • We assume the value of travel time savings is constant, independent of the amount of time saved.

To be clear, these are huge assumptions. Examining the figure we see the lines cross at about 75 MPH, which is the minimum total cost. So why don’t we set the speed limit to  75MPH? Note that:

A Political Economy of Access: Infrastructure, Networks, Cities, and Institutions by David M. Levinson and David A. King
A Political Economy of Access: Infrastructure, Networks, Cities, and Institutions by David M. Levinson and David A. King
  • Travel time savings are, while still speculative in terms of their valuation, both private and real,
  • The statistical value of life is far more abstract. The value of my life to me is infinite. The value of your life to me is, sadly, not. Yet, I am willing to take risks that increase the probability of my dying in order to save time or earn more money. These are the kinds of factors that allow an estimate of value of a statistical life.
  • Death and crashes are probabilistic affairs, while the time lost is deterministic. People are gamblers.
  • There are some other benefits to faster travel not accounted for, such as more or longer trips (to better destinations, or the ability to get better real estate at the same price), which increase consumer surplus. The analysis here does not consider user response to lower speeds, which would be to travel less (or higher speeds and travel more).  There are also issues like travel time reliability.
  • Since 1988 The Statistical Value of Life has risen 6-fold in US DOT estimates, the value of time has little more than doubled. (If we cut the value of life to $3M, (effectively holding the tradeoff more similar to 1988 levels), the tradeoff is much higher .)
  • Speed limits reflect what travelers will travel at, not what we wish they would travel at.

If you dislike these number, you can roll your own analysis on individual roads. The difficulty is not measuring the speed of those roads, but measuring their safety. There is a Highway Safety Manual for such purposes, but crashes are highly random events.

UPDATE 2: Axel Waleczek made an interactive Tableau, so you can test your own scenarios.

Additional Readings

Fielding Dreams – Hypotheses about Induced Demand and Induced Supply,

In the Kevin Costner film  Field of Dreams, a ghost whispers “Build it and they will come”  ‘it‘ refers to a baseball field; ‘they‘ are the ghosts of past baseball players.  This has been adopted by planners to describe the idea of induced demand, which applied in transport is that if you build a new facility (road, tracks, etc.) demand will respond and use it, making trips that previously would have been unmade.

The Field of Dreams

This has been illustrated using economic supply and demand curves, and to an economist this “induced” or “latent” demand was always there, just unrealized until the cost of travel was lowered by the new capacity. The road (or train) fills up, congestion returns (or at least the expected congestion reduction benefits do not last long, as travelers adapt to the new environment. The consumers’ surplus increases, as people can now do things they want to do at lower cost. In the planner’s telling, only the hapless traffic engineer (or traffic modeler who is as often a planner as engineer), who made the partial equilibrium assumption that demand does not respond to supply, is surprised by this growth.

A Political Economy of Access: Infrastructure, Networks, Cities, and Institutions by David M. Levinson and David A. King
A Political Economy of Access: Infrastructure, Networks, Cities, and Institutions by David M. Levinson and David A. King

Of course induced demand is not surprising to anyone who has thought about this, and the idea of induced demand has long been well understood, even if the magnitude of induced demand associated with any given project are hard to estimate, and the models are not used appropriately, and internal consistency between model inputs and outputs is still not standard practice [I did my MS Thesis on this more than 25 years ago, and it wasn’t a new idea then.] A related notion is Say’s Law, from 1803: Supply creates its own demand, or more pedantically as per Wikipedia “that aggregate production necessarily creates an equal quantity of aggregate demand.” Induced demand has been dealt with previously on the blog, here we lay out the hypotheses a bit more formally.

But there are 4 specific hypotheses (and 4 null alternatives) that can be generated here, varying three dimensions: construction (supply), demand response, and sequence:

  • If you build it, will they come? [Induced Demand Question]
    • H1: Build it and [then] they will come. [Because demand responds to supply, or because it was coming regardless] [Compare H2]
    • H1null: Build it and [then] they won’t come [Because demand is independent of supply]. [See H4]
  • If they come, will you build it? [Induced Supply Question]
    • H2: They come and [then] you will build it. [Because supply responds to demand, or because you were building it regardless] [Compare H1]
    • H2null: They come and [then]  you didn’t build it. [Because supply is independent of demand] [See H3]
  • If you don’t build it, will they come? [Exogenous Demand Question]
    • H3: Don’t build it and [then] they will come [anyway]. [Because demand is independent of supply] [See H2null]
    • H3null: Don’t build it and [then] they won’t come [Either because demand is independent of supply, or because you didn’t build it]. [See H4null]
  • If they don’t come, will you build it? [Exogenous Supply Question]
    • H4: They don’t come and [then] you build it. [Because supply is independent of demand] [See H1null]
    • H4null: They don’t come and [then] you didn’t build it. [Either because supply is independent of demand or because they didn’t come.] [See H3null]

Each of these tells us something a bit different. There is both the dependence of the supply-demand question (are they dependent or independent), and there is the sequencing (which comes first, transport or land use).

Of course these are binaries, and we could consider how many of “them” need to come for us to say “they came”. So you built a stadium to seat 10,000 and 5,000 came, is that evidence of induced demand? In short, yes, but not as much as you planned for.

Karl Popper developed the idea of  falsifiability, which a website says: “is the assertion that for any hypothesis to have credence, it must be inherently disprovable before it can become accepted as a scientific hypothesis or theory.”

Sequencing, matters here, and it’s hard to prove a negative. A single sequence of events cannot provide proof for induced demand, maybe everyone was going to show up in Kinsella’s Field anyway, and the field just accommodated them. Just because they never showed up before he built the stadium is not the evidence we require. Instead, we need to compare multiple cases to justify our case, and build the evidence for it.

A sequence of events can however disprove induced demand (or supply), as the list above illustrates, there are several cases where construction does not result in demand (we can conclusively disallow induced demand in that case) or where demand does not create supply (we can conclusively refute induced supply).

There are some other issues, what if they come and you didn’t build it (or you didn’t build and they come)? It is sort of hard to get the sequence correct in the absence of an event, when did the event of non-construction happen (or when did construction not happen)? Always. The related question is when did the absence of demand occur?

In either case, negative externalities ensue, this is the NIMBY fear of growth without supporting infrastructure. NIMBYs may not want the growth with the supporting infrastructure either, but their main complaint, on face value, is growth without it, which realistically may negatively affect their personal quality of life and property value. Whether or not you believe they should prevail, you at least understand their point-of-view.

Policy responses to ensure consistency between supply and demand  include concurrency or adequate public facilities ordinances. Having worked on these before, these are rightly treated skeptically by the public.

On Power and Multi-sided Markets: Internet, Cities, Universities, Hollywood, and Politics

The idea of the two-sided market is best exemplified by eBay. This is hardly a great website (c. 2018), but it remains valuable because it connects buyers and sellers. I look for stuff there because vendors are there. Vendors sell stuff there because buyers are there. eBay gets its middleman cut, and better websites can’t get a foothold since shifting everyone simultaneously is hard. Many tech companies try to do this. Amazon in a similar vein, though it also takes the role of vendor. Uber matches taxis with passengers (but loses money still, and may need to become a fleet operator).  There is lock-in because of the two-sided nature of the marketplace and the value to consumers of a variety of suppliers, and to producers of numerous consumers, despite the competitors. Dating services match people seeking contact.

A Political Economy of Access: Infrastructure, Networks, Cities, and Institutions by David M. Levinson and David A. King
A Political Economy of Access: Infrastructure, Networks, Cities, and Institutions by David M. Levinson and David A. King

eBay is just the virtualization of a flea market (or shopping mall). Those are physical places where everyone goes to trade. The shopping mall (and parking lot owner) collects rent from the vendors to be able to participate. In some cases they may also collect rent from the shoppers (charging for parking, for instance). Bars and clubs collect rent (in terms of alcohol sales) from potential mates seeking each other.


Cities can be thought of as two-sided markets as well. The primary economic function of cities is production.

I am here because you are here, you are here because I am here.

In this case, it is the production process, rather than (or in addition to) the consumption process that is relevant. Laborers and Employers co-locate, people to get jobs, employers to attract workers. Cities (or those who own them, the landowners), if managing this properly, profit from this through taxes and increased property values. In a democratic context, this is an argument for land value taxes, since the land value appreciates because of the actions of others.

Cities compete with each other, but each has some spatial monopoly aspects as well. They also have specialization. Los Angeles for instance specializes in film-making among other things. Everyone is there because everyone else is there. It’s not impossible to make movies elsewhere, yet many if not most are made in greater “Hollywood”.


Each film producer is also a multi-sided market, connecting all the elements of film production (writers, actors, set-designers, directors, sound production, cameras, editing) and distribution, which are otherwise largely independent individuals and organizations that come together to create art and entertainment, and then disband.  As such, producers have power over the system in their coordinating function. Though technically anyone could put together a team, a producer has  connections that cause people to believe that he (or she) will put together a more artistically and remuneratively successful team, and thereby attract people to want to be part of it. Success breeds success and power.  The recent Hollywood scandals relate to the exploitation of power by immoral actors and producers.


Universities establish several multi-sided markets. Students and  Professors are matched. Now in the modern world, students don’t directly pay the professors, it is mediated by the university, but we can go back in time, and imagine the professors paying rent to the university to have the privilege of teaching, and collecting directly from students. Instead universities commodified teaching and turned professors into laborers.

Researchers and funders are mediated by universities as well. You can’t be an independent professor and expect to get funded by science agencies in the modern world. This is mediated by universities and similar organizations with Sponsored Research Offices. In fact researchers who are not tenured faculty do pay rent to the university in terms of “overhead.”

Perhaps the most cynical relationship is between students and employers. Students come to the university to learn and get a degree, but also become certified as employable, and to get some assistance in finding work (access to job fairs is baseline for this, some schools, especially business schools, go much farther in assisting job placement). So the university is selling itself to students as a place where they can get a first job, and they are selling themselves to employers as a place where they can find labor. In fact universities often speak of training the workforce, as if finding a job with a large organization (as opposed to becoming an independent entrepreneur who starts new companies, much less a well-educated human being) is the goal.

Power and Politics

A different kind of power
A different kind of power

Power accrues to the middleman. Most power comes from being the middleman in a difficult-to-disintermediate multi-sided market. Everyone agrees you have power because of common rationality of beliefs. If everyone thinks that everyone thinks you have power, then you have power, because changing everyone’s beliefs simultaneously isn’t just hard, it’s the veritable herding cats.

People feign loyalty to powerful individuals. Many want to appear to be loyal. Society rewards that characteristic, as someone who exhibits loyal to someone else might be loyal to me. They may even feel loyal (as what better way to appear to be loyal than to be actually loyal). But in the end almost all who claim loyalty will leave when the going gets tough. They will ‘defect’ in game theory terms if they believe that serves their long term interests, like rats fleeing a sinking ship.

Likewise, if everyone believed you didn’t have power, then you wouldn’t. I could act against you and no one would back you.

Power is an interesting thing:

Saudi Arabia has power. Where does it come from? Oil is the surface answer, but it’s not just that, it is how they use oil revenue (and promises of future revenue) to buy friendship. I am not privy to the specific conversations, but if the oil keeps flowing, other people with power (Presidents of the United States) still yield to them.

The following people have been paid by Goldman Sachs, a large investment bank:

Goldman Sachs has power and used the revenue it generated to pay a relatively small amount to cover its bases in the 2016 Presidential election to ensure it had access to power after the election. This is important so that it will be considered Too Big To Fail during the inevitable next crisis, as well as getting better tax treatment in more ordinary times.

U.S. Vice President Dick Cheney shot Harry Whittington during an alcohol-infused car-based quail-hunting trip. Harry Whittington apologized for getting in the way of the bullet and inconveniencing the Vice President. Dick Cheney had power.

So today, the President of the United States has power because enough people continue to agree that he has power, despite a glaring incapacity for the role. If instead he were continuously disobeyed by his staff and the federal government, he would not have any. The risk is that this would bring the whole system down, and people are (rightfully) nervous about the unintended consequences. Revolutions have a mixed history. But the ability to grant power is in our collective selves, and we can choose to not grant it. Consent of the governed is an important concept, but the difficulty of displacing the lock-in of multi-sided markets should not be underestimated.




15 Strategies to Solve Global Warming

Venus from Mariner 10. Source: Wikipedia.

So your planet has global warming.[1] Venus says “Welcome to the club!” CO2 pollution [2] not only destroys the environment and adds to remediation costs, the traditional air pollution that comes with it shortens your life.  While this undoubtedly annoys you as a human being, it could be worse; your planet might not have excess carbon dioxide emissions or pollution because no one wants to be there (hello Mars). Still, it would be great to have a thriving planet without pollution. People could do more things over their longer life.


Pollution like congestion can be thought of as a queueing problem. There is a demand side (production of pollution) and a supply side (the ability (capacity) of the environment to process pollutants). When the production of a pollutant exceeds the ability of the environment to process, the pollutant builds up, e.g. there is more CO2 in the atmosphere because humans produce more CO2 than nature can absorb in the short run. So like traffic in a queue, CO2 in the atmosphere rises. This is a straight-forward physical process.

Description English: This figure shows the history of atmospheric carbon dioxide concentrations as directly measured at Mauna Loa, Hawaii since 1958. This curve is known as the Keeling curve, and is an essential piece of evidence of the man-made increases in greenhouse gases that are believed to be the cause of global warming. The longest such record exists at Mauna Loa, but these measurements have been independently confirmed at many other sites around the world [1]. The annual fluctuation in carbon dioxide is caused by seasonal variations in carbon dioxide uptake by land plants. Since many more forests are concentrated in the Northern Hemisphere, more carbon dioxide is removed from the atmosphere during Northern Hemisphere summer than Southern Hemisphere summer. This annual cycle is shown in the inset figure by taking the average concentration for each month across all measured years. The red curve shows the average monthly concentrations, and blue curve is a smoothed trend. The carbon dioxide data is measured as the mole fraction in dry air. This dataset constitutes the longest record of direct measurements of CO2 in the atmosphere (data for 2016 are preliminary). Date 11 January 2017 Source Own work. Data from Dr. Pieter Tans, NOAA/ESRL and Dr. Ralph Keeling, Scripps Institution of Oceanography.
From Wikipedia. Description: This figure shows the history of atmospheric carbon dioxide concentrations as directly measured at Mauna Loa, Hawaii since 1958. This curve is known as the Keeling curve, and is an essential piece of evidence of the man-made increases in greenhouse gases that are believed to be the cause of global warming. The longest such record exists at Mauna Loa, but these measurements have been independently confirmed at many other sites around the world. The annual fluctuation in carbon dioxide is caused by seasonal variations in carbon dioxide uptake by land plants. Since many more forests are concentrated in the Northern Hemisphere, more carbon dioxide is removed from the atmosphere during Northern Hemisphere summer than Southern Hemisphere summer. This annual cycle is shown in the inset figure by taking the average concentration for each month across all measured years. The red curve shows the average monthly concentrations, and blue curve is a smoothed trend. The carbon dioxide data is measured as the mole fraction in dry air. This dataset constitutes the longest record of direct measurements of CO2 in the atmosphere (data for 2016 are preliminary). Date 11 January 2017 Source Own work. Data from Dr. Pieter Tans, NOAA/ESRL and Dr. Ralph Keeling, Scripps Institution of Oceanography.
When the CO2 in the atmosphere rises, the heat of the planet rises with it. This is also a straight-forward physical process, noted by Arrhenius in the 19th century. Now like transport and behavioral systems, environmental systems are complex, so even though the direction is clear, the rate of change is hard to ascertain, and there are many mitigating or exacerbating feedbacks. Still more CO2 emissions means more heat.

Some of that gets absorbed in trees or the ocean, or is not measured, but the temperature will rise. If the rate of human production of excess CO2 falls to zero, the excess CO2 in the atmosphere will eventually be absorbed by nature, the queue will be discharged. But nature will have been changed by the whole process. For as long as we don’t have net zero or net negative carbon emissions, the queue of unabsorbed pollution will continue to lengthen.

There are a number of proffered solutions out there. Pollution is, in principle, a mostly solvable problem, even if no fast-growing planet has, to the best of our knowledge, fully solved it.

This article outlines ways that pollution could be solved. Some of these are dumb, many are good, one is great.

  • Capacity [Bio-Engineering] – Perhaps the most obvious, ‘common sense’, solution when demand (pollution) is in excess of supply is to expand capacity.  This is what we do with most things if we can. If our house is too small, we make it bigger. If our wallet can’t hold all of our cash and ID cards, we get a bigger one. If the internet is too slow, we add capacity. In roads, this usually means adding lanes to existing roads. Perhaps we could plant more trees to absorb more carbon pollution.  Unfortunately, there is not enough space for enough trees to offset the problem. Maybe algae in the oceans, but that sure seems like that would have adverse consequences.
  • Capacity [Geo-Engineering] – Besides planting trees, perhaps we could do something faster, typically called geo-engineering, using the power of chemistry to capture CO2 gas or change CO2 gas into something more benign. Wikipedia lists a bunch of inter-related topics:

    The first problem with this set of solutions is that it is potentially expensive. Adding to the ability of the planet to absorb pollution is difficult. Unlike transport, people have only done this kind of geo-engineering speculatively. So there is a huge risk associated with some of these techniques, especially the more speculative ocean fertilization. But you know, “what could go wrong?” For the less expensive methods, the question is whether they can scale to be significant contributors.

The first set of strategies are basically supply side. But pollution problems are caused by a mismatch of supply (ability to absorb) and demand (production). So let’s turn to demand. The main sources of demand are transport, industry, agriculture, and residential, with the electric power sector serving these indirectly.

A Political Economy of Access: Infrastructure, Networks, Cities, and Institutions by David M. Levinson and David A. King
A Political Economy of Access: Infrastructure, Networks, Cities, and Institutions by David M. Levinson and David A. King


The basic equation for emissions in the transport sector is given by:

Emissions = Liters/KM x Carbon/Liter x Vehicle KM Traveled.

If cars had better fuel consumption, less emissions per fuel consumed, or traveled less, there would be less emissions. All three of these things can be worked on together.

The first few are technological shifts, the latter will require behavioral change.

  • Bio-fuels – If all of our fuel was from recently deceased plant matter, rather than oil (long deceased plant matter), and those plants were replanted, net CO2 from burning fuels would be about zero (assuming the equipment used to harvest and transport the bio-fuels also used bio-fuels, (like turtles, all the way down)). The advantage is that the energy density of liquid fuels is generally better than batteries. The disadvantage is the large amount of area needed for bio-fuels, which will compete with food agriculture for the best farmland. This is likely to be especially important for aviation.
  • Controls Better pollution control devices like the catalytic converter for Internal Combustion Engine vehicles have significantly reduced tailpipe emissions of EPA criteria pollutants. Something similar could be done for CO2 emissions. So the same amount of liters would somehow produce fewer tons of carbon. The difficulty here is chemistry. The gasoline is ultimately burned, producing CO2. Perhaps it can be captured and stored, or catalyzed into some other what we know believe to be innocuous byproduct. Arguably this is a supply side method, but I class it as demand side here as the aim is to reduce the amount of CO2 emitted, not improve the capacity to deal with emitted CO2.
  • Improve fuel economy in transport.  Better fuel economy for Internal Combustion Engine vehicles has significantly reduced fuel use, and thus CO2, and has plenty of generally good side effects for society, like reduced air pollution and less dependence of oil more generally. Increased energy efficiency overall throughout the economy is feasible.
  • Electrify the automobile fleet, switch the energy source for automobiles from fossil fuels to electricity powered by renewable sources (e.g. solar and wind and hydro and nuclear) or use fuel cells to transform the number of Liters/KM to zero.
  • Reduce (or end) automobile use. This works on the third part of the equation. Transport is about 1/3 of CO2 pollution, plus or minus. My earlier post “21 Strategies to Solve Congestion“, (which this not-coincidentally resembles), outlines how to reduce automobile demand, which is a large or the largest source of CO2 pollution. So long as cars continue to rely on the Internal Combustion Engine (in some form for a few more decades yet), reducing automobile demand and gasoline consumption will be critical to reducing CO2. There are many reasons to reduce automobile use, pollution among them. It turns out that biking is more efficient than driving. It turns out, more surprisingly, that eBikes are more efficient than bikes (after netting out the extra energy for the extra food for the extra calories burned biking).


The same basic logic applies outside the transport sector. Emissions depends on energy consumption, carbon content, and activity.

  • Conserve. Reduce electricity and natural gas consumption at home and work. Use LED light bulbs. Insulate your buildings. As Jimmy Carter suggested, put on a sweater and set the thermostat cooler in the winter. Strip naked and set the thermostat higher in the summer (though he didn’t say it, he may have thought it). Recycle. There are a thousand or more ways to reduce energy consumption.
  • Make production processes more energy efficient. This is related to conservation, in that it reduces consumption, but at a much bigger and holistic scale, and examines the process by which outcomes are achieved.
  • Use Renewable Energy in the Electricity Sector. Electricity is about 1/3 of greenhouse gas emissions in the US. Transformation from burning coal is well underway, and adoption of renewable energy sources like solar, wind, and hydro power, among others, are the best way to get this sector down to zero net CO2 emissions over the coming decades. There is a large amount of fixed capacity (sunk costs) out there now, so the transition will take some time.
  • Reduce industrial energy demand by closing industry – Industry is about  1/5 of CO2 pollution. Perhaps intuitively, if we shut down polluting industries, we reduce pollution. To the extent we want the thing the industry intends to pollute (aside from the pollution), this might be problematic. If we want it closed, but want the goods, the factory will pop up elsewhere with fewer environmental strictures.

Social Solutions

  • Exhortion – Tell people they shouldn’t pollute because it is bad for themselves, or society, or will condemn them in perpetuity to an unpleasant afterlife. Guilt can get you a little bit of benefit, but as evidenced by the state of the world, can only go so far. This is really a means to one of the other ways of actually reducing pollution.
  • Rationing – Give people and firms pollution credits, the right to emit a certain amount of CO2 per year. Reduce that credit annually. Allow them to trade credits for money. If it were cost effective to reduce pollution, they would do so to sell credits. If it were not, they could buy credits.  When people talk about cap and trade, that is a form of rationing.
  • PricingCharge people and firms for the amount of pollution they generate and they will generate less pollution.
    • How do polluters reduce pollution? This is the best part. Each individual or firm decides for themselves whether or how to consume or pollute less, what production processes to change, when to substitute clean power for dirty. With pricing, polluters will see the air, which is now treated as an unregulated commons  as a valuable resource, and if they increase throughput per unit of carbon, they will save money. They will try to be more efficient about managing the use of the existing clean air.
    • Isn’t this another tax? This is the second best part. It raises money by discouraging people from doing something that we don’t want them to do. Other high taxes on things that we do want them to do (like work) can be lowered. Done properly, this is revenue neutral.
    • Can this work? This is the third best part. There are many proposed strategies to implement pricing. Obviously this has been politically difficult, or it would already be widespread. Carbon taxes are the simplest intervention, and we already do this in some places (12% of the world’s Carbon is already taxed). Since it is assessed for industries rather than on individuals, it has a low cost of collection. For instance rather than metering each car, petroleum from refineries or fuel wholesalers can be taxed. This accelerates the uptake of electric vehicles, which should on the net be a good thing.

There are undoubtedly some other solutions out there not discussed here, and lots of details overlooked.


As John Lennon might have sung in the 1970s:

Pollution is over, if you want it.

Pricing is the answer and you know that for sure
Pricing is a flower
You got to let it, you gotta let it grow

  1. This post is basically a rewrite of my popular post about a different externality: congestion: “21 Strategies to Solve Congestion“. Perhaps we might call this `CO2gestion’.
  2. Yes, I know some people don’t accept CO2 as “pollution” and prefer “emissions.” Since it is above the ability of the environment to process in the short term, it imposes harmful or dangerous effects, and so it is pollution, even if it is a natural product. All pollutants are fine in small enough amounts, and everything is horrible in too great amounts.

On Politics and Politicians

A Court House
A Court House

Politics balances the ideal with the possible. In the first best world, we do the best thing assuming everything else about the world is ideal. In the second best world, we do the best thing recognizing everything else about the world will remain as dysfunctional as it already is.

Many political debates are because people disagree on values: I think a lot of freedom is more valuable than a little bit of safety, you may be more afraid, some people capitalise on that fear; I think the life of the unborn has value, you think a women’s body is her own.

Other debates occur because people cannot agree about the relevant time frame: I think earning more dollars today will solve tomorrow’s problems, you think we need to sacrifice economic growth to reduce pollution now.

A Political Economy of Access: Infrastructure, Networks, Cities, and Institutions by David M. Levinson and David A. King
A Political Economy of Access: Infrastructure, Networks, Cities, and Institutions by David M. Levinson and David A. King

A few debates are because people don’t accept common facts: I think very few people attended the President’s inauguration, he purports to believe it was the biggest ever.

Finally, some debates are because people disagree about the model of the world: I think most threats (future dangers) are home-grown, you think they come from outsiders. This relates to the last two, but is distinct because it deals with future facts, not something evidence-based.

Often political debates are about how much change is possible. This depends on the model of the world. If I vote yes now, we move somewhat in the right direction, but we release the pressure to move farther in the right direction. If I vote no, we don’t make the move, hoping a better offer will be on the table later. There is no guarantee this will occur, and in the meantime we may have lost some benefits. Say, in the US context, I believe in what a real Green Party* would stand for, but don’t think they will win, should I vote for the Democrats instead, which will be closer than the Republican alternative to my preferred outcome? Given the current US single-member district, first past the post, no ranked-choice voting system, that’s a logical choice for most environmentalists. They are choosing the second-best rather than nothing. I can make a protest vote, or I can try to move the system. If everyone in my district (admittedly I am thinking of progressive Minneapolis here) thought the Greens had a chance, they would act as if the Greens had a chance, and the Greens would have a chance.  The possible is determined by what everyone thinks that everyone else thinks.

I believe there is no point in being a politician unless you want to accomplish something that improves the world around you. Sure some people get into politics for personal self-aggrandisement and wealth enhancement, but I believe for most politicians there is in the end no reason to accumulate power but to do something with it, that is to impose their values, their preferred temporal horizon, their perception of reality, and their model of the world on the government. Further, they must have the notion they can do this better than anyone else, not just better than a person in the opposing party, but better than the next best person in their own party.

Power is a means to an end, and usually the end is more significant than private wealth. Some politicians may forget this along the way, many try to combine their values with wealth-enhancement, but hopefully they remember near the end of the careers the whole point of doing what they did and expend some of their power to achieve their original aims.

It is the advocate’s job to move the politician in a particular direction.

It is the politician’s job to compute how far to move both to maximize future power by ensuring his constituency is along for the ride and to actually move in the ‘right’ direction consistent with the reason for being a politician in the first place.

* The US Green Party at the national level is of course highly problematic from an environmental and political perspective.



On Indulgences and Carbon Offsets

Catholics have a notion called “Indulgences”. Wikipedia summarizes it as “a way to reduce the amount of punishment one has to undergo for sins.” In the Middle Ages, indulgences were commercialized, so wealthy people could buy themselves out of punishment (or the loss of wealth might be considered the punishment, if you want to be charitable).


In the modern world, carbon emission is a great sin. Those traveling by air sin the most. Prominent environmentalists are often targeted for hypocrisy, and those hoping to avoid hypocrisy might purchase “Carbon Offsets“. These are the more equivalent of commercial indulgences. The airlines offer them to guilt-ridden passengers.

Perhaps the most obvious, ‘common sense’, solution when demand (pollution) is in excess of supply is to expand capacity.  This is what we do with most things if we can. If our house is too small, we make it bigger. If our wallet can’t hold all of our cash and ID cards, we get a bigger one. If the internet is too slow, we add capacity. In roads, this usually means adding lanes to existing roads. Perhaps we could plant more trees to absorb more carbon pollution.

Consider for instance the Boston to London round trip. It is 3255 miles each way (5237 km) and 1.1799 metric tons of Carbon roundtrip. For $14.16 or 1,888 Award Miles a United Airlines passenger can support the  Alto Mayo Conservation Initiative. Objectively this is not a lot of money in the scheme of things, and maybe it will offset your trip. I don’t have the impression most travelers purchase these indulgences.

More importantly, I don’t think this scales. Some estimates below:

A Political Economy of Access: Infrastructure, Networks, Cities, and Institutions by David M. Levinson and David A. King
A Political Economy of Access: Infrastructure, Networks, Cities, and Institutions by David M. Levinson and David A. King

A Trans-atlantic flight might require 11 trees per person per flight to do a full offset.  There are about 100 million international enplanements from the US per year.  Not all are Transatlantic of course, many are Trans-Pacific or to South America, and so longer. I will leave it to a research paper to figure out total distance. So that is on the order of 1100 million trees per year (probably more) to be planted to guiltlessly offset US international air travel.  Let’s assume 5m x 5m per tree (25 m^2). 25*1100M = 27,500 million square meters to offset international aviation from the US (excluding US domestic aviation and travel in other countries. That is 27,500 km^2, or an area of about 165 x 165 km on edge per year (for say 50 years until aviation switches to biofuels). This is the size of Massachusetts.

While that is technically feasible, since the US has lots of land (and is more than 50x the size of Massachusetts, as Massachusetts is a smaller than average state), no-one is actually doing this, and the offset is over the life of the tree, not immediate, so we would need one Massachusetts per year until the end of carbon-emitting aviation to make offsets work.

I like to think in terms of queues. The environment can clear (absorb) a certain amount of CO2 per year, basically the equivalent of net zero carbon emissions. If there is a positive amount of emissions, the CO2 queues in the atmosphere, waiting to be absorbed. (And probably doing things to the environment we wish were otherwise.)

If offsets are not employed, the alternative is that the accumulated CO2 queue from US Transatlantic enplanements will continue to grow. We could pull out Kant’s categorical imperative “Act only according to that maxim whereby you can, at the same time, will that it should become a universal law.” and argue since this doesn’t scale (can’t become a universal law), you shouldn’t do it. But that’s the sort of philosophical nonsense that we hope philosophers have recovered from.

Just because it can’t solve the entire problem and can’t become universal doesn’t mean it can’t be useful to plant more trees.  Trees are good. However, while a carbon offset indulgence may absolve you from guilt on a particular trip, it cannot absolve the industry, since it cannot scale.  Imagine the number of trees required for all aviation, not just international, and for auto travel (about 10x aviation). A more serious solution is required, one which either takes CO2 out of the air more efficiently, produces less CO2 per flight (through say biofuels or electric power), or reduces the number of CO2 emitting activities like flights (and internal combustion engine car trips) (by reducing travel).

Now to be clear, if you expand the capacity of the planet to absorb pollution (i.e. plant more trees), and people pay for their pollution, the reduced cost of per unit of pollution means that people will pollute more. Drivers will travel longer, industry will use less socially efficient means for energy generation. There might be a small amount of GDP growth associated with both the geo-engineering and resource extraction, so it is not entirely a bad thing, but it may not solve your pollution problem.


Infrastructure Spending Done Right

I wrote a piece for the Van Alen Institute: Infrastructure Spending Done Right. This is part of a wider Van Alen Report: America’s Infrastructure,  including articles by

Infrastructure Spending Done Right

Van Alen Institute: America's Infrastructure. Report 19.
Van Alen Institute: America’s Infrastructure. Report 19.

Infrastructure spending as stimulus appeals to politicians and voters because it would appear to kill three birds with one stone. Ostensibly, critical infrastructure is repaired or newly constructed, job opportunities are created for the unemployed, and the greater economy is set on course for growth. But how and where funding is spent frustrates these objectives. Federal funding often winds up disproportionately in rural areas at the expense of dense, growing cities where long-term economic benefits would be greater. Moreover, job creation is dubious given the high level of skill required for construction work and increased role of technology on the project site. Although greater investment in maintenance could both give relief to the unemployed and boost the benefits of existing infrastructure, politicians eager for ribbon cutting ceremonies often choose new infrastructure over repairing the roads, bridges and railways we currently have. David Levinson, transportation expert and professor at the University of Sydney, takes us though past and potential future infrastructure spending initiatives, and explains how setting the right priorities can ensure our infrastructure provides greater prosperity over the long term.

A Political Economy of Access: Infrastructure, Networks, Cities, and Institutions by David M. Levinson and David A. King
A Political Economy of Access: Infrastructure, Networks, Cities, and Institutions by David M. Levinson and David A. King

On December 6, 2008, in the throes of the Great Recession, then President-elect Barack Obama laid out key parts of his Economic Recovery Plan. In his radio address he boldly said “ … [W]e will create millions of jobs by making the single largest new investment in our national infrastructure since the creation of the federal highway system in the 1950s… If a state doesn’t act quickly to invest in roads and bridges in their communities, they’ll lose the money.” This plan turned into the American Recovery and Reinvestment Act, with a total budget of $831 billion. It dedicates $105 billion to infrastructure, of which $48 billion went to transport.

The value of the projects from the 2009 stimulus remains questionable. Projects tended to fall in rural areas (mostly road resurfacings) not because the work was essential, but because they were “shovel-ready” and easy to do. The projects were easy because they were already designed and had environmental permits in place. But the fact that these projects were so far along in development, yet remained unbuilt, suggests that they were not the highest priorities for the local and state transportation agencies that oversaw their construction.

Though administrations have changed, the disproportionate allocation of federal spending to rural areas over more developed cities – where the majority of needed infrastructure work exists – will likely go unabated. President Trump has proposed various tax incentives to stimulate $1 trillion worth of private investment towards the nation’s infrastructure. While Trump has discussed urban-based projects, such as rebuilding New York City’s poorly-managed airports, the Republican party – which he leads but counts as its base mainly rural voters – will likely exacerbate the overfunding of rural projects even more, if only to get its own representatives and senators re-elected.

Along with project location, setting job creation as an objective of infrastructure spending can also undermine the economic value of projects. At the time of the 2009 stimulus, unemployment was around 10%. With more workers looking for jobs, spending on infrastructure during a recession may arguably bring labor off the sidelines, while also taking advantage of the temporary wage drop due to the joblessness spike. In short, the state can get more infrastructure built for less, and put people to work who would have been otherwise unemployed. Today, however, unemployment is around 4.7%. Competition for labor is up, and with it construction wages. And without slack in the labor market, new projects are more likely to shift employed workers around, not add new jobs to the economy. Worth noting is President Trump’s assertion that his proposed tax breaks will pay for themselves. If these privately-funded projects fail to increase the net number of jobs, the hope for additional revenue to offset tax incentives will never come into reality.

Further complicating the job scenario is the capital-intensive nature of construction today. Macro-economists or policymakers who think of highways and transit lines as engines of job creation are remembering grainy black and white images of Civilian Conservation Corps workers slinging pickaxes as they build roads through national parks. Construction projects are more capital intensive than they were in the 1930s, using heavier machinery and far less labor. As technology advances, and construction equipment becomes increasingly roboticized and automated, jobs will become highly skilled and decrease in number. Most infrastructure construction jobs already require two or three years of apprenticeship and on-the-job training. In the future, infrastructure stimulus may offer little for unemployed people without extensive construction experience.

While the creation of jobs from infrastructure construction is limited, there are potential long-term benefits of constructed infrastructure in terms of jobs. It is worth noting that our current surface transportation system is not just in need of repair. In most parts of the U.S., our system connects everything worth connecting, and does so as cost-effectively as possible. There’s little need for new infrastructure, but great urgency to rehabilitate the infrastructure we already have.

Local and state governments are largely responsible for preserving existing infrastructure. They can use additional federal support. But we should be sure that any support is pushed toward maintenance, not new infrastructure which largely serves as a distraction. We all know that maintenance, repair, and reconstruction are not sexy. They do not result in ribbon cuttings with smiling politicians getting their pictures taken and posted in the local news. Yet on a per-dollar basis, fine-grained maintenance work employs more people than large-scale greenfield construction. Moreover, it is ideal to run the capital equipment required for road construction at a continuous level, thus maximizing its productivity. Continuous utilization is achieved by a steady rate of spending on projects, not stimulus-related spikes or failures to authorize infrastructure expenditures.

Economic activity increases with accessibility – more specifically, the ability for workers to reach jobs and stores, and for firms to easily interact. This occurs with faster and more direct transport, denser land use, and increased access to developed urban areas over less economically active rural areas. That said, it is cheaper to build in rural areas than cities, so the cost-to-benefit ratio is not obvious. This ambiguity is worth noting. While infrastructure policies may aim to even out spatial inequities and “spread the wealth,” that ambition is at direct odds with the desire to maximize the productivity and efficiency of infrastructure.

Public works are justifiable when social benefits exceed costs, not because they create spikes in job growth or score political points. To maximize the amount of infrastructure society gets per dollar, the government needs to be efficient about how infrastructure money is spent. From an infrastructure perspective, if a road project employs some people, that provides a nice rhetorical flourish; but if projects are aimed solely to employ people, the state will be wasting money which in the long run shrinks the economy. The debt borrowed to build said projects ultimately comes due.