It increasingly looks like the cause of high construction costs in the English-speaking world is the trend of the privatization of the state since the 1980s. Instead of public planning departments, there is growing use of consultants. This trend is intensifying, for example with increasing use of design-build contracts, introduced into Canada just before costs exploded.
Q. Does this mean neoliberalism is to blame?
A. Not really.
Nearly every political and economic trend in the last 40 years in a developed country can be connected with neoliberalism. The transition in South Korea from military government to something like social democracy has been reasonably compatible with the Washington Consensus principles.
In fact, two opposite trends have both been criticized as neoliberal: the move from income support to workfare in the Clinton administration in the 1990s, but also calls from some liberals, greens, and social democrats today for basic income.
Even things that are mostly about things that are what people on the left criticize as neoliberalism are not necessarily about the privatization of the state. Any of the following agenda items can be plausibly called neoliberal:
- Privatization of state-owned enterprises like the mail, the national airline, the national railway, road maintenance, and health care.
- Reduction in top income tax rates from historic levels that were sometimes higher than 90% to something closer to today’s 50% in various rich Western countries.
- Liberalization of foreign exchange and foreign investment.
- Voucher systems for public services like schools.
- Fiscal and monetary austerity.
The key here is that none of these items is exactly privatization of planning. Germany had welfare reform in the Schröder era, Hartz IV, that SPD and the Greens don’t even like anymore. It’s had austerity budgets under Angela Merkel, and inflation has been below the 2% target. The Netherlands privatized health care. Sweden has contracted out operations of rail and many other infrastructure services.
However, the privatization of the state itself is mostly a British and American program, which has spread to other English-speaking countries through their cultural cringe. Under Macron, the most neoliberal of French leaders, Grand Paris Express staffed up as a public planning agency, rather than contracting everything out to consultants.
Even when France engages in design-build, it’s not the same as in the Anglosphere. Design-build in France means that the three teams that are typically kept separate – public planning, private design, private construction – talk to one another more regularly, still with public oversight. There is still strong civil service, and no impetus so far to privatize it or discount its advice on the American and increasingly British model.
There is neoliberalism in Japan, and in Germany, and in France, and in Scandinavia. And in none of these do we see Anglo construction costs. This matters.