Investing in infrastructure

Infrastruggles

Every country wants to build more bridges, roads and renewable-power grids. It won’t be easy

IN 1916 CINCINNATI decided to construct a magnificent new subway system. After decades of cock-ups it was abandoned in 1948, and today there are two miles of tunnels beneath the city that have never been used. That cautionary tale is still relevant. Politicians everywhere are calling for more infrastructure spending. Yet few industries have a worse record of coming through on time and on budget. If the incipient boom is to produce better results, governments and firms must learn to adopt best practice from around the world.

Most countries have enacted short-term stimulus plans to deal with the pandemic. Former President Donald Trump signed on December 27th a $900bn spending bill. But there is also appetite to binge on infrastructure. President Joe Biden wants to spend $2trn on roads, power grids and railways, and hopes to win bipartisan support for his plans. The European Union has just approved a €1.8trn ($2.2trn) budget, a slug of which is for digital and energy investments.

The new infrastructure infatuation is understandable. Public and private investment has stagnated at 3-4% of GDP worldwide. That is too little to maintain ageing assets in…