EconomyPoliticsThe Macroscope

Making America a 20th century economy again?

What happened?

Earlier this week, the White House released its long-awaited plan to rebuild the nation’s infrastructure. The plan was met with much criticism as it provides little federal funding and shifts the burden of American infrastructural needs to local and state governments and private investors. The plan also raises a more fundamental question: what kind of infrastructure does a modern economy really need?

What does this mean?

Old-fashioned bridges and motorways are still critical in moving physical goods. It’s widely acknowledged that the U.S. economy is hampered by an outdated infrastructure of poorly maintained (rail)roads, waterways and a drinking water system in equal disrepair. In fact, according the American Society of Civil Engineers, the current budget would not even suffice for basic repairs, let alone any significant upgrading. It is thus somewhat ironic that a powerful economy like the U.S. (and Germany likewise) is struggling with its basic domestic infrastructure.

What’s next?

Although it is a gigantean challenge in itself, catching up with this infrastructural backlog is not enough for the U.S. economy. The future calls for a smartening of roads for autonomous vehicles and the electric grid has to be ready for ever more locally produced renewable energy. And, on top of that, many more fiber and wireless (5G) communication networks will be needed to enable all sorts of new digital services. None of these measures, however, are part of the White House’s plan. As with innovative infrastructures in the past, building these assets will be left to private (or foreign) investors.