A recent article in Bloomberg Businessweek, titled “Agriculture: India’s Farmers Benefit From Better Roads” described how for 30 years a rice farmer barely earned 2,000 rupees ($32) a month because there were no roads to access markets and no roads to easily obtain fertilizer and other supplies to his village.  Then in 2010 a road was finally created connecting his inland town of Kainad to the coastal town Dahanu.  The road transformed a 3 hour journey by foot into a 25 minute car ride.  The change was almost instantaneous.  Within a year, the farmer could easily obtain supplies to grow more, healthier crops and he obtained access to an area where he could sell his rice to the highest bidder, not just the nearest purchaser.  As a result, the farmer now checks his cell phone to find the best prices to sell his crop and buy supplies.  His income has tripled to about $100 a month (6,000 rupees).  The article then discusses how over the last 10 years the current Indian government has transformed 373,000 miles of dirt paths to paved roads as well as provides 327 million rural phone lines.  The combination of new roads and phone lines has led to almost a doubling of rice yields, 60% increase in real estate prices (farm land) and 10% rise in literacy.   The lesson from this is fairly easy to see, infrastructure modernization brings about relatively quick improvement to standards of living (at least in developing lands).

I believe that the same is true for developed countries.  It is my belief that we as a nation often forget that maintaining and improving our infrastructure is vital for maintaining and improving our standard of living.  I remember reading about how Great Britain and France although winning World War II, unlike the defeated Germany and Japan, spent the next couple of decades neglecting their infrastructure.  By the late 1960s and early 1970s these countries were struggling to maintain their economies and standard of living while Germany and Japan, which received billions in reconstruction aid, had booming economies.  The economists I read all seemed to agree that Great Britain and France had done themselves and their people a disservice by not maintaining and upgrading roads, rails and phones.  When I was in France in 1970, the US had color television while France still had black and white.  Their phones did not have easy direct dial and air conditioning for homes was almost unheard of.

We in the US are doing the same thing that Great Britain and France did after World War II.  The last time we raised gasoline taxes, which are used to fund the maintenance of the US highway system, was in 1993.  Congress changed the law which enacted the highway act to stop the increases in the tax which was a breach of trust with the American people.  According to a website inflation calculator, a dollar in 1993 is worth $1.63 today.  So just to keep up with inflation, the maintenance part of the gasoline tax should be 1.63 times higher than it was in 1993.  It is not.  Consequently, the US highways and bridges are crumbling from lack of maintenance funds.  The same is true with our schools.  In Chicago, the 2014 school year is the first time they are not teaching FORTRAN, a computer language that has not been used in decades.  But, some schools continued to teach through 2013, much to the detriment of the students learning it!

Look at the increased productivity we are experiencing through tablets, smartphones and social media.  Health care professionals are finally using tablets and smartphones to gather information conveniently.  Yet our wireless system is one of the slowest in the globe: most of Europe, Asia and South America have faster broadband than the US.  My children can text me and contact me through Skype, Facetime or other social media.  Apple claimed they built iPhones in China because the Chinese had the infrastructure to make manufacturing changes with a day or two notice; the same thing would take weeks to do in the US because our roads, etc. are too crowded.  Our average annual commute is increasing by about 4% per annum and that is only because the number of people working is declining as well as more young people are choosing to live in urban America.  So, in a  decade will China look at the US similar to my view of France in 1970?  We can choose to do better.