Private versus Government infrastructure costs

I was chatting with the owner of a small public-use (but privately-owned) airport. He’d gotten $3 million in state funding to repave the sub-3000′ runway and a parallel taxiway.

I said “That’s nuts. How do the airparks afford to maintain their runways when they might have only 30 houses?” (It would make a lot more sense to build the hangar homes next to a quiet publicly owned airport that is eligible for federal and state funds, but the regulations around “through-the-fence” access are complex.)

He said, “Oh, if you did it with private money it would be $1 million. When the state runs a project, the costs are a lot higher.”

He went on to explain that he had recently installed a Siemens-manufactured VASI next to the runway (these are the red/white lights that tell pilots whether they are above or below the standard glide slope for landing). With a bit of pitching in by based aircraft owners, the cost was $8,000. A nearby publicly owned airport installed the same Siemens-built equipment with federal money. The cost was $120,000 (15X).


6 thoughts on “Private versus Government infrastructure costs

  1. On July 21st, 1662, Samuel Pepys observed the operation of docking a ship for repairs in a Royal dockyard.

    “But, good God, what a deal of company was there from both yards to help to do it, when half the company would have done it as well; but I see it is impossible for the King to have things done as cheap as other men.”

    Inefficient government spending goes back a long way!

  2. This post brings to mind your recent Vietnam post on government spending. The United States is approaching the situation faced by the Soviet Union, where price signals no longer make sense due to fiat pricing and government domination of the economy.

    ‘Natural’ prices are what keep a market economy efficient. We are losing that benefit as state spending grows and therefore we are losing that efficient allocation of resources that leads to increased productivity.

    Our government largesse is making us poorer. Your post on ‘excellent’ teachers provides another example of this. The government spends more and more on education and the ‘product’ gets worse the more we spend. In the mean time, pure private spending on education relative to government spending shrinks. The shrinkage might even be there in absolute terms. Why the shrinkage in private spending? Firstly, the crowding out of private spending by public funds, as contractors will prefer paving government runways before private ones. Secondly, regulatory requirements make the accomodation of private spending costlier and more difficult administratively.

    Our society has reached that point in development where our government is, on the whole, deleterious to our prosperity.

  3. What’s great about anecdotes is that you can make it seem like you have evidence for your position without actually presenting any facts.

    I have no idea what that facts are in this case. What we have here is a second-hand rumor that a project would have cost 3x less if it weren’t funded with state funding. Even if that’s true (which we don’t know — the airport operator is comparing a real cost with a hypothetical one), we don’t know why. Did the airport owner not negotiate the paving costs well (intentionally or otherwise)? Did he charge extra overhead (legitimate or otherwise) for the state project? Are safety or labor or immigration regulations applied more stringently in a state project? (If that’s the reason, we can always debate whether they are *justified* regulations.)

    It is, of course, perfectly possible that the state’s cost is much higher for *unreasonable* reasons, e.g., that bureaucrats are bad at negotiating paving contracts, or that the state pays so slowly that contractors are unwilling to work with them, or that there is some sort of corruption at play. All those things are possible, but this anecdote gives absolutely no evidence for any of it.

  4. We choose to pretend that our problem is the government. In fact, our biggest national problem is governance. (Unless you happen to be a progressive: then your biggest problem is Trump and once he is removed from power the paradise ensues.)

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