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The true costs of subsidised infrastructure

  • by JW

“Politicians and developers ruthlessly building motorways, new towns and suburbia, scattering the population and eating up the countryside around our cities.”

“This is why the Local Plan and Neighbourhood Plan processes are so important.”


Following on from a post earlier this month:

Creating neighbourhoods: celebrating Jane Jacobs – Vision Group for Sidmouth

… the following comment was received by a regular correspondent:

“Thanks for the Jane Jacobs blog.

Sometime ago I read her seminal book “The Death and Life of Great American Cities”.

She was a remarkable person who fought off the zonal planners influenced by the major automotive and oil companies lobbies who wanted highways everywhere at a time when gas-guzzling saloons were all the rage.

Against the grain, she saw value in conserving the existing historic urban fabric and community networks while elsewhere politicians and developers were ruthlessly building motorways, new towns and suburbia, scattering the population and eating up the countryside around our cities.

This is why the Local Plan and Neighbourhood Plan processes, tedious as they are, – are so important.”


An excellent BBC Four documentary has looked at the life of Jane Jacobs:

Futures Forum: Citizen Jane: Battle for the City @ BBC Four >>> ‘a willingness to be sceptical’ about modern town planning


The commentator Kevin Carson has also looked at the major automotive and oil companies lobbies who wanted highways everywhere”.

He looks at how the drive to literally drive everywhere without hindrance has destroyed local business:

Futures Forum: We are all truck-drivers now … The free movement of goods, increased carbon emissions and the destruction of manufacturing industry

He suggests that corporate welfare, aka lemon socialism, aka state capitalism is actually destroying the planet:

Futures Forum: Climate change: “Government is the problem, not the solution” >>> “The best way to combat anthropogenic global warming is for government to stop doing stuff like actively subsidizing or mandating sprawl, subsidizing long-distance shipping and transportation, and subsidizing energy consumption.”

And that actually, building roads is a free ride for big business, again at the expense of the local:

Corporate capitalism is built on subsidized inputs, and profitable in large part because of them. It achieved growth in the 20th century through the extensive addition of subsidized inputs, like subsidized fossil fuels and large tracts of cheap land previously preempted (stolen) by the state, rather than the intensive approach of using existing inputs more efficiently.

A basic law of economics is that when you subsidize an input, people tend to use more of it. And businesses will tend to substitute that artificially cheap input for other inputs. The distorted price system gives an artificial advantage to firms most heavily dependent on that input. For example, subsidies to long-distance shipping infrastructure tend to benefit the firms with the largest market areas and the largest-scale production facilities shipping their output the furthest distance. It makes them artificially competitive against smaller, more localized — and more efficient — forms of production. It creates artificial economies of scale at levels where they would otherwise have leveled off, leading to an economy of artificially large firms serving centralized markets.

Futures Forum: Subsidies and social engineering: or why we build roads.


Here are a couple more reads:

The Distorting Effects of Transportation Subsidies – Foundation for Economic Education

Political Economy of Waste – P2P Foundation


Here he’s all at sea:

The single largest component of US “defense” spending is the US Navy, due to the enormous capital outlays embodied in its ships. And the main purpose of all those carrier groups in the Indian Ocean and western Pacific is to keep maritime choke points open and suppress piracy. Absent a state with the ability to tax society at large for the benefit of particular economic interests, merchant shipping (including oil tankers) would necessarily bear the full cost of this policing activity, adding significantly (to say the least) to shipping costs.

It’s hard to deny — unless one is economically illiterate — that this is a massively distorting subsidy, or that the provision of maritime protection on free market principles would result in a powerful shift of incentives toward supply chain relocalization and energy conservation.

Center for a Stateless Society » But Who Will Build the Roads? (Maritime Edition)


Finally, here he is looking at the ultimate free ride infrastructure of the internet, and quotes Chomsky:


Spending on transportation and communications networks from general revenues, rather than from taxes and user fees, allows big business to “externalize its costs” on the public, and conceal its true operating expenses. Chomsky described this state capitalist underwriting of shipping costs quite accurately:

One well-known fact about trade is that it’s highly subsidized with huge market-distorting factors…. The most obvious is that every form of transport is highly subsidized…. Since trade naturally requires transport, the costs of transport enter into the calculation of the efficiency of trade. But there are huge subsidies to reduce the costs of transport, through manipulation of energy costs and all sorts of market- distorting functions [“How Free is the Free Market?”].

Every wave of concentration of capital has followed a publicly subsidized infrastructure system of some sort. The national railroad system, built largely on free or below-cost land donated by the government, was followed by concentration in heavy industry, petrochemicals, and finance. The next major infrastructure projects were the national highway system, starting with the system of designated national highways in the 1920s and culminating with Eisenhower’s interstate system; and the civil aviation system, built almost entirely with federal money. The result was massive concentration in retail, agriculture, and food processing.

The third such project was the infrastructure of the worldwide web, originally built by the Pentagon. It permits, for the first time, direction of global operations in real time from a single corporate headquarters, and is accelerating the concentration of capital on a global scale. To quote Chomsky again, “The telecommunications revolution… is… another state component of the international economy that didn’t develop through private capital, but through the public paying to destroy themselves….

The Iron Fist Behind the Invisible Hand