Wednesday, July 18, 2012

LaGuardia shame

We just flew into LaGuardia after a week travelling in the Southwest. I'm proud of New York City in so many ways. But LGA is a disgrace. The ratty Central Terminal feels like arriving in some run-down developing country, and that impression is reinforced by the scammers trying to sell illicit taxi service to tourists just outside. It is a terrible first impression of the city.

JFK is much better than it used to be, with Terminals 4, 5 and 8 all relatively new, as well as the Airtrain connections built a few years ago. But the Airtrain just takes you to Jamaica or Howard Beach. Contrast that to, say, Zurich Flughaven, with mainline connections across the country, or the TGV connections from Charles De Gaulle, or the amazing Hong Kong airport and the express connection to downtown.

It is remarkable that there is no subway connection at all to LGA, which partly explains the taxi lines and general air of chaos outside the terminal.

It is far too hard and far too expensive to build infrastructure in the city. We've swung to the opposite extreme from the days of Robert Moses, who seemed to knock down whole neighborhoods on a whim to build projects like the Cross Bronx Expressway. Fifty years ago America could build the interstate highway system. Could we do anything on that scale now? Yes, but it would take five times as long and cost fifty times as much. It is a disturbing contrast to the traded goods sector of the economy where costs have plunged.

It now seems to require Herculean effort to do anything at all. The Second Avenue construction, the LIRR connection to Grand Central and the Fulton Street Project are both over budget and behind schedule.

We can see World Trade Center One topping out. But in the same time they've built a whole city of high rises in Dubai. The Burk Khalifa cost $1.5 billion ( at least according to Wikipedia). That's a mere third of the cost overruns on the World Trade Center project between 2008 and today. Construction costs in New York seem vastly inflated compared to similar projects elsewhere. And some of that cost is just stupid bureaucratic infighting.

Here's an interesting example. Amtrak announced a proposal for high speed rail in the Northeast last week, at a cost of $151 billion and finishing in 2040 or later. It is possible we could achieve much of the same improvement in speed for 90% less, according to this detailed take, by upgrading rolling stock and switches, and getting the different agencies - Amtrak, MTA, New Jersey transit- to integrate operations and track usage better and function to the same standards that Japanese and French operators do.

I'm actually a supporter of high speed rail and similar infrastructure investment. But the pattern of vast cost overruns and delays and inefficiency in public infrastructure projects makes it far more difficult to make the case for it. We have an ossified, sclerotic planning system, erratic political decision-making and an inefficient public sector.

If public goods get too expensive, self-evidently we get less of them. Both parties need to realize this. Republicans need to concede that many things are naturally public goods. And Democrats have to admit that regulation can have a devastating effect on provision of them.

A similar example is the billion dollars or so it takes to get a new drug through the FDA approval system.

Productivity is the driver of wealth. And in large sectors of the economy, we actually see lower effective productivity. It takes steadily more effort and expense to accomplish the same thing.

I talked about Baumol's disease some time ago here. In general, I think the problem in the economy is dealing with abundance - the fact that we have such high productivity in sectors producing material goods that cater to our basic needs. But we have problems of relative shifts in costs that make some desirable things seem much more expensive. Public goods, education and medical care get more and more expensive relative to basic goods.


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