Improvements to the nation’s infrastructure have been a major contributor to the success of American businesses throughout the course of United States history. In my new book, Politics and American Business: The Growth of Industrial America, 1860-1960, I document how three major infrastructure initiatives benefited American business. These three were the building of railroads and canals in the 19th-century, the construction of bridges, public buildings, highways, public parks, and airports under Franklin Roosevelt’s New Deals in the 1930s and 1940s, and the construction of the interstate highway system starting in the 1950s.
Given the deteriorating infrastructure in the United States today, the Trump Administration has proposed a major infrastructure initiative with potential expenditures of up to $1 trillion. While the specific parameters of the Trump Administration infrastructure plan are presently unclear, Donald Trump, while campaigning for the presidency, proposed implementing “a bold, visionary plan for a cost-effective system of roads, bridges, tunnels, airports, railroads, ports and waterways, and pipelines in the proud tradition of President Dwight D. Eisenhower, who championed the interstate highway system.” President Trump expanded on this in his inaugural address, pledging to “build new roads, and highways, bridges, and airports, and tunnels, and railways all across our wonderful nation.”
Elaine Chao, the new Secretary of Transportation, has announced plans to set up an infrastructure task force as one of her top priorities to flesh out a specific infrastructure plan. The model which is ultimately proposed is critically important. Will it be jobs-oriented, as the New Deal programs were? There is some suggestion of this in the Trump infrastructure proposal published during the election. That proposal referred to a purpose to “create thousands of new jobs in construction, steel manufacturing, and other sectors.”
Alternatively, or perhaps in combination with jobs creation, the ultimate proposal may attempt to expand business markets, as with the historical railroad and highway construction initiatives of prior centuries. Once again, there is some suggestion that any Trump Administration proposal will be sensitive to such a goal. Thus, during the campaign, candidate Trump indicated that there is a need “to build the transportation, water, telecommunications and energy infrastructure [which is] needed to enable new economic development in the U.S.”
Specifics thus become extremely important. As Rich Karlgaard of Forbes has aptly observed, there is “good infrastructure spending [and] bad spending. (Example: Road maintenance is good; bullet trains to the boonies are just dumb.”)
For another example, consider new highway construction. Constructing new highways must take into account what effect they will have on the economy. Will a new highway make it easier for businesses to transport goods to markets now difficult to reach by road? If so, such highway construction can expand business opportunities. Indeed, even the repair of older roads can assist businesses in ways which may not be immediately apparent. One good example of this comes from the testimony before the House of Representatives’ Transportation and Infrastructure Committee on February 1, 2017, by Fred Smith, the Chief Executive Officer of Federal Express. Smith testified that the present highway system is so substandard and in need of updating that drivers are paying some “$67 billion, or $324 per motorist, annually in vehicle repairs and operating costs.” Smith also testified that Federal Express is now replacing tires twice as often as it did 20 years ago because “the road infrastructure has so many potholes in it it’s tearing up tires faster than was the case before.”
These few examples are meant to underline the necessity for careful planning in any infrastructure proposal. Such planning should carefully study the successful experiences in the past with railroad construction, the New Deals’ public works programs, and the construction of the interstate highway system. Details on each of these previous successful infrastructure initiatives are documented in my Politics and American Business.
“Infrastructure,” at www.donaldjtrump.com/policies/an-americas-infrastructure-first-plan, accessed January 22, 2017.
Rich Karlsgaard, “Trump Infrastructure Smart?,” Forbes, December 20, 2016, at 39.
Andrew Liptak, “Poor US roads mean FedEx is going through tires twice as fast,” The Verge, February 5, 2017, at www.the verge.com.
Melanie Zanona, “Trump’s infrastructure plan: What we know,” The Hill, January 13, 2017, at www.thehill.com.