Pacific Maritime Magazine - Marine Business for the Operations Sector

By Chris Philips
Managing Editor 

Infrastructure

 

May 1, 2020



The University of Maryland has released a new report, An Economic Analysis of Spending on Marine Transportation System (MTS) Infrastructure, based on a study conducted for the US Committee on the Marine Transportation System. The study has found that increasing investment in marine transportation system (MTS) infrastructure above a business-as-usual scenario will improve US economic performance.

The report says additional MTS investment would deliver higher levels of GDP, more jobs, increased incomes, improved trade performance, and higher productivity.

This seems like a foregone conclusion, but the wheels of the federal government turn slowly, sometimes in reverse, and often out of true.

Tim Gallaudet, a retired Rear Admiral in the United States Navy who is serving as Chair of the committee’s coordinating board, says “This report illustrates that our marine transportation system is an essential part of the Blue Economy and the Nation’s GDP, making a persuasive argument for how infrastructure investment could aid in economic growth.”

The report notes that spending for roads, maritime infrastructure, and many other types of public infrastructure has lagged, likely contributing to slower economic growth. On the other hand, spending for some privately-owned infrastructure, such as freight rail and electric utilities, has been steady and relatively strong.

No surprise there. In the words of a fictional university professor in the mid-‘80s, “You don’t know what it’s like out there! I’ve worked in the private sector. They expect results!”

The report also says overall investment for public infrastructure rose along with GDP growth from 1956 through 2001. Between 2001 and 2017, real infrastructure spending contracted by 0.2 percent per year, lagging GDP growth by 2.2 percentage points.

Investment in water transportation infrastructure, including waterways, ports, vessels, and navigational systems, increased by more than 4 percent annually from 1985 to 2001, but spending has declined since 2001, with water transportation spending falling 1.4 percent per year.

Enhancing the level of infrastructure spending in the short term would boost jobs by between 54,000 and 182,000 in 2025, depending on the scenario.

By 2030, the level of real GDP would rise between about $8 billion and $41 billion in 2012 dollars, and because of cumulative effects through time, by 2045 infrastructure investments could produce economy-wide returns of between $2 and $3 per every $1 spent, after adjusting for inflation.

All of this infrastructure investment, and the associated increase in employment, would go a long way toward bringing the economy back to where it was before our well-compensated elected representatives shut it down. The need for infrastructure investment seems to receive bipartisan support, but that support evaporates when the time comes to actually make policy.

While many of us in the private sector have been affected, either slightly or dramatically, by the shuttering of the economy, it’s important to remember that our policy makers continue to bring home a reliable salary, without having to fill out extra paperwork. In the month that the country has been “closed for business,” Congress wrote itself a paycheck of more than $7 million.

At press time, west coast Governors Brown, Inslee and Newsom, who were also still getting paid, had fashioned a “Western States Pact” for reopening a large segment of the states’ economies, but hadn’t announced a timeline for when businesses might be “allowed” to reopen.

The MTS report lays out a roadmap that even Congress should be able to follow. After nearly 20 years of negative public infrastructure investment, it’s time for our elected representatives to start showing results.

Chris can be reached at chris@pacmar.com

 
 

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