In the transit-related forums I participate in, people know that the US builds subways at higher costs than all other countries, because I talk about it often. This feeds into various stereotypes Americans have of government effectiveness; Americans of many political stripes understand that there are serious problems with US governance, and compare the US negatively with certain countries that are famous for getting things done. Thomas Friedman periodically raves about China’s massive infrastructure investment; when he was secretary of transportation, Ray LaHood made the same praise, and connected this to Chinese authoritarianism, while saying that American democracy was still overall a better system. More recently, there’s been praise for Germany, or more generally Northern Europe, as a place with effective infrastructure investment (even as the actual state of German infrastructure is in decline). I was reminded of these stereotypes in the discussion of New York’s shrug-worthy reinvention report at Second Avenue Sagas: once again, the commenters praised the usual-suspect countries, and sometimes connected low construction costs with authoritarianism.
Several more examples from this month have made me notice that people overstate certain cultural differences, especially ones that are in line with stereotypes, such as Western individualism versus Asian collectivism or Northern European efficiency versus Southern European corruption. Cultures are far too diverse to be reduced to these oppositions, and this is especially true on the level of political subcultures, such as transit investment.
The reality is that the places with the lowest construction costs do not really match the stereotypes. Peruse my various posts about subway construction costs again: the main three, but also some of the side ones. Authoritarian countries like China and Egypt do not have unusually low construction costs. Countries with reputations for efficiency run the gamut: Scandinavia and Switzerland are relatively cheap, but Germany and the Netherlands are expensive, with some German projects needlessly expensive because of political influence over alignment choices. Labor costs seem to have a weak if any effect on construction costs: India, by far the poorest country on my lists, is fairly expensive to build in, and within the first world, low-income Naples has cheap construction but so do high-income Swiss cities and middle-to-high-income Milan. Culture in the sense of Samuel Huntington’s civilizations has a weak if any effect, again: there are multiple examples of subway lines built in the Western world, the Islamic world, and East Asia, and the cost differences within each bloc are far greater than the cost differences between the blocs.
I try to avoid giving explanations for these patterns of construction costs. If I knew for certain what caused them, I would not be blogging; I would be forming a consultancy and teaching New York and other high-cost cities how to build subways for less than $100 million per kilometer. I have seen two explanations by professionals. Manuel Melis Maynar, the former CEO of Madrid Metro, explained briefly how Madrid has the world’s lowest construction costs, in terms of design compromises, avoidance of outside consultants, and structuring bids based primarily on technical merit and not cost. And Paul Barter’s thesis explains Japan’s relative lack of urban freeways as a result of high land costs and a costly eminent domain process; this also explains the pattern of Japan’s high urban subway construction costs compared with relatively cheap Shinkansen tunneling (the 50% underground Shin-Aomori extension was only about $55 million per km).
The key here is that neither of these two particular explanations has anything to do with cultural stereotypes of the nations in question. When people think of Hispanic culture, many stereotypes come to mind, but none of them involves having hyper-competent local agencies designing subway systems with small in-house staffs. On the contrary, given the stereotype of Southern European corruption, an American or Northern European who was informed that Madrid Metro awarded contracts based on a combination of technical merit, speed, and cost, and did not use outside consultants, might conclude that it has a bloated in-house staff and that it uses the discretion of technical merit to favor the politically connected. Likewise, although Japan is notorious for the expense of its urban land, it does not have a reputation for strong property rights protections; Anglophone and Western supremacists take it for granted that the West has stronger property rights protections than East Asia, even if in reality English common law makes takings easier than Japanese law.
In addition to the thread on Second Avenue Sagas, in which I felt compelled to constantly defend Southern Europe’s record on building rail infrastructure efficiently, I was recently exposed to another set of stereotypes, in a four-week-old blog post by Andrew McAfee on Financial Times repeating all the usual American exceptionalist tropes of innovation. According to McAfee, the rise of the tech sector of Silicon Valley underscores how the US is going to keep winning the new global economy, giving Tesla as the prime example.
I have a simple bullshit detector for articles about innovation, especially in the tech sector: if they praise Israel’s entrepreneurial cultures, I know with a high degree of certainty that they’re familiar with too small a slice of the nation to be informed. The real Israel, even the upper middle-class slice that I grew up in, is a country at the bottom end of the first world, with Southern Italian average salaries (average household income per capita is about $14,000 a year in PPP terms, about half as high as in the US), with people who move to the US and are floored by the plenty they see at American supermarkets. It has a lot of tech workers, who function as a back office to Silicon Valley, and a handful of inventors who make exit and become rich; neither group is large enough to raise average salaries to proper first-world levels.
But McAfee’s wrongness goes well beyond the line about Israel. In a global economy with specialized regions, people tend to overvalue the sort of production that accords with their sense of identity, and this leads to either regional pride or nationalism. For a certain class of Anglo-American boosters, this is finance; New York and London are global financial centers, and this makes them worthier in this view than cities with different economic roles, such as Paris. McAfee belongs to the class that views the tech sector as the most important, and sees Silicon Valley’s wealth as superior. This is simply the modern equivalent of the 19th-century Manchester boosters’ denigration of Birmingham as a city that didn’t have Manchester’s culture of mass production of cotton, as described in The Economy of Cities; back then the boosters viewed the world as a giant factory, and today they view it as a giant smartphone app. The epitome of this is the overrating of Tesla, which is special only in that it’s made by someone with a background in online companies and not in the auto industry. Who needs the Tokyo rail system when there are luxury electric cars exciting the tech boosters?
As it happens, Europe has a lot of innovation in new fields – it’s not just Siemens making incremental industrial progress; it’s also the Human Brain Project. So do Japan and South Korea: McAfee brushes aside patent statistics, perhaps because Japan and South Korea have by far the highest numbers of patents per capita.
Now, to clarify, it’s possible to relate the US strength in online companies like Facebook to its business culture of superstars, which relates to individualism. In traditional manufacturing sectors, big businesses are built slowly, and require immense amounts of capital; in the tech sector, Mark Zuckerberg could start with a relatively low amount of capital, supplied by an angel investor like Peter Thiel on the strength of an already successful demonstration, and obtain a very large market share via network effects. However, this explanation still requires mediation via business culture. Quoting Marc Andreessen, McAfee lists four explanations, two of which do indeed involve business culture, but two of which play well into the European stereotype of American ignorance: great research universities, and rule of law and respect for contracts and property. Paris has some amazing research universities, judging by the intellectual achievements of their faculty, and as noted above, in some respects the Anglosphere actually has weaker property rights than Japan. But American tech boosters have learned that great universities lead to software and tech businesses, so if the Grandes Ecoles don’t have that then they can’t be that great, right? The national stereotype is stronger than the reality, just as with the insistence of many people in the transit infrastructure debate to talk about China and Northern Europe.
I’m reminded by a point that I made three months ago, in response to a proposal to move Silicon Valley to a growth-friendlier metro area like Houston. Facebook, Uber, and other hot Silicon Valley firms have a culture that works for their industry and that has led to useful inventions. This does not mean that the entire world has to operate like a Silicon Valley firm, nor does this mean that everything in the US operates like one. The same is true of other national stereotypes. The Spanish economy is weak, but happens to have a small segment, corresponding to infrastructure engineering and management, that works very well; other countries would be wise to copy this culture in the realm of infrastructure, and in nothing else, until it can be verified that the same principles work in other settings.
This sort of imitation, focusing on specific aspects of business culture in a particular industry, is harder than general handwaving about how to think like a German or Japanese business manager (a common trope in the 1980s and early 90s) or how to think like a Silicon Valley manager. It requires much more detailed knowledge of several different countries to make comparisons, and this is uncommon, since usually the sort of knowledge that leads to comparative analysis is broader and less specific. I certainly don’t have it – I only know the construction cost output, not the inputs that go into it. Even small mistakes are hazardous: it’s likely that the best performers’ cultures have many distinct features, of which some are crucial to their success but others are irrelevant, and it requires specialized knowledge to sort out which is which.
To add to my previous post about the MTA reinvention report, this is why I’m so disappointed in official efforts to improve American transit governance. The MTA and similar bodies have enough institutional clout and money to hire people who do understand the intricacies of various success stories abroad, and could make specific recommendations, which could appear small but could also be revolutionary. Commentators have to default to first-order information about costs, or to national stereotypes, but the MTA could have detailed knowledge about what’s needed. Instead, the MTA did nothing of the sort, and left the sweeping changes to mongers of stereotypes.