By James Pethokoukis and Leah Brooks

How has infrastructure regulation changed over the past 50 years? Should we look to reverse those changes? What can the government do to ensure that future infrastructure spending is well directed? Recently, I explored these questions and more with Leah Brooks.

Leah
is an associate professor in the Trachtenberg School of Public Policy and Public
Administration at George Washington University, as well as the Director of the
Center for Washington Area Studies. She is the co-author, along with Zachary
Liscow, of the 2019 paper, “Infrastructure Costs.”

Below is an abbreviated transcript of
our conversation. You can read our full discussion here. You can also subscribe to my podcast
on Apple Podcasts or Stitcher, or download the podcast on Ricochet.

Your paper finds that, from the 1960s to the ’80s, spending
per mile on interstate highway construction tripled. What were the keys to that
increase?

First, we eliminated a couple of possible explanations. First, the rise in costs is not explained by the highway being increasingly built in places where it was harder to build. Second, there’s just no evidence that per-unit labor or material costs were increasing enough to explain the rise.

Ultimately, we identified two prime explanations for price increases. The first is a pretty standard economics explanation: As people got richer, they wanted more stuff — including nicer highways, which have things like noise walls. This is a trend we see in economics across all kinds of domains, not just in highways.

Yet that’s also only part of the explanation. I say that because,
even though there’s a really substantial rise in personal income in the ‘50s
and ‘60s, we just don’t see it hitting costs in the same magnitude as it does from
the ‘70s onward.

So what happened in the ‘70s that was absent during the ‘50s
and ‘60s?

A movement occurred in the ’70s that we think is important not only in understanding interstate highway cost increases, but also more broadly important in understanding American culture and politics. We termed this movement the “citizen voice,” which describes a set of changes in social movements, judicial doctrine, and statutes. Those three things together combined to empower citizens in decision-making, and empowered citizens were then able to make the government do things that it maybe wouldn’t have wanted to do before.

What we suspect happened in the ‘70s is that, because of this rise in citizen voice, the government had to start taking into account more than just broad societal costs. It actually had to start taking into account costs that were of private benefit to individuals — things we probably don’t think the government should be taking into account. That’s what led to these really substantial increases in costs.

So how does regulation — i.e. making policymakers take
into account citizen voice — translate into higher costs?

I think a great example of this is the National Environmental Policy Act (NEPA) passed in 1969. The day after NEPA passed in 1969, the Environmental Law Institute was founded. The whole purpose of this institute was to sue under the cause of action that’s granted by the passage of NEPA. And NEPA is just one example of the many statutes passed in that era that gave citizens the ability to sue whenever they thought that the government wasn’t faithfully following the statutory requirements. In response, the government had to change its spending behavior in order to satisfy the citizens making noise.

What’s suggestive in our paper is that we particularly see
this increase in costs in places where incomes increased the most. People with
money are best able to execute on their ability to speak to government — I
would strongly suspect that there is a high correlation between income and
lawsuits in these areas. That’s because the regulation really allows for lawsuits.
And even just the threat of a lawsuit could make you write a more careful
environmental plan, hold more public hearings, raise the costs of hearings, take
into account concerns so as to avoid lawsuits, or hire environmental
consultants. This is basically an entire industry that didn’t exist before the
1970s.

This was all 50 years ago. It seems like, over the past half-century, we would’ve figured out that this was a potential issue, but it appears to still be a problem today. Why aren’t we fixing it?

Well, I think there are a lot of winners from these
policies, and you could always see yourself as a potential winner even if
you’re not a winner today. Suppose you live near a metro line that’s getting
built very slowly, in part because of citizens who are voicing their concerns about
the impacts of the metro line in their backyard. That is absolutely within
their right to do. And while you might be aggravated that it’s taking so long, I
don’t think you would be in favor of changing these laws. What if they decide
to run a metro line behind your house? You would want the power to protest that.

I also think it’s just really difficult. It’s like
changing the direction of an aircraft carrier, because there are all these
parts and fixing one part alone is not enough. Even if you got rid of NEPA, I
don’t think you would see a substantive change because there are so many
statutes and factors that contribute to this problem. For example, we now have
a much more litigious system than before — a system in which the Supreme Court has
given citizens the right to sue executive branch agencies. So addressing all of
these things together would require some kind of monumental change.

If President Biden came to you and said, “We want to improve
infrastructure and build America back better, but we’re worried about costs and
delays,” what would you advise?

I would say that the politically feasible, but still powerful, thing to do is to require final cost reporting — and even to require interim cost reporting. The best way to control costs is to make them public and less opaque. A while ago, Congress asked the US Government Accountability Office (GAO) to try and understand whether US infrastructure spending was high. And as best as I understand it, the GAO basically responded by saying, “Well, we don’t really know. There’s not enough information on costs to even understand this.”

I think it’s a lot easier to have states report costs than it is to try and limit the public comment period on a project. Would I suggest the latter? Yes. But does that seem politically feasible to me? No.

James Pethokoukis is the Dewitt Wallace Fellow at the American Enterprise Institute, where he writes and edits the AEIdeas blog and hosts a weekly podcast, “Political Economy with James Pethokoukis.” Leah is an associate professor in the Trachtenberg School of Public Policy and Public Administration at George Washington University, as well as the Director of the Center for Washington Area Studies.

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