Category: Consensus

Consensus and Costs

I’m in the middle of an online symposium at Eno about construction costs; I talked on Tuesday and I think there will be a recording made available later. The conference is good by a lot of standards, including the “do they tell me things I don’t know about costs” standard. But for now, I want to address one point made repeatedly in interviews re some low-cost cities: the argument from consensus. It’s wrong, and leads to very wrong conclusions.

What is the argument from consensus?

In Eno’s lowest-cost comparison cities, like Madrid, there’s political consensus in favor of building more subways. Repeated panels gave this example of how in the 1990s and 2000s, PP and PSOE both supported subway construction and promised to build more in their election campaigns for the Community of Madrid. PSOE in fact attacked PP saying its proposals were unrealistically ambitious, but then the Madrid Metro expansion opened as planned. In such a political environment, no wonder planners had leeway to build the system without much interference.

Why is this wrong?

Britain has bipartisan political consensus in favor of both Crossrail and High Speed 2, both of which are explicitly supported in both parties’ manifestos. Its construction costs are still Europe’s highest.

More to the point, the United States is not uniformly an environment where public transportation is a partisan flashpoint, because in most of the cities that build subways, the Republican Party does not exist. The closest thing to a Republican Party in New York is the Manhattan Institute, which criticizes unions incessantly but does not call for ending public support for the subway and refrains from making the anti-transit arguments made by national Republican outfits like Reason and Cato. The last Republican mayor, Rudy Giuliani [sic], tried to expand the subway to LaGuardia. I’ve met New Yorkers who view Giuliani as a savior and who are ant-immigration climate denialists and thy too think the city and state should make the subway better – if anything they treat its poor state as evidence that the Democrats can’t govern.

This consensus does not lead to low costs. Why would it? There is no respect for planners or engineers. The consensus in New York means every governor installs their political cronies at the head of the agencies involved. None of the mechanisms that make Madrid Metro work is present.

The consequences

Just having more political support for subway construction is not going to by itself make things better. American states where investment is safe from cancellation do not do better than ones where one election could spell doom for the investment program. Sea changes are required, not just more public support.

Rapid Transit as an Amenity

An urban rapid transit system needs to be understood as both a consumption amenity and a production amenity. As a consumption amenity, it lets people have access to more of the city, for work as well as recreational travel; people pay a premium to live close to the subway. As a production amenity, it makes it easier to build dense office clusters and expect that people can get to work without too much traffic; businesses pay a premium to locate in city center. This means that such infrastructure is generally good for the city’s economy and the well-being of the people in it, without prominent distributional impact.

City center and rapid transit

I wrote a thread two years ago about CBD job concentration. The thread looks at the total number of jobs in the central 100 km^2 of a metro area, which figure is used because it’s about the land area of Paris plus La Défense and INSEE data only exists at the level of the commune or arrondissement (see for example here). Pointing out that Dallas and Atlanta’s central 100 km^2 have only about as many jobs as Vancouver’s and half as many as San Francisco’s, I talked about the need to build bigger CBDs to entice higher transit ridership.

This looks weird to people who immediately associate European cities with short buildings and polycentricity and American ones with tall buildings and monocentricity. But at the scale of 100 km^2, European cities are far more centralized. Paris has 2.2 million jobs in the central 100 km^2, the Bay Area 850,000, Dallas and Atlanta 400,000 each.

And as I threaded about this, it was pointed out to me that Dallas does not have very strong demand for office space in city center. Parisian commercial rents in the 8th are very high, indicating demand for taller buildings than Europeans find acceptable; Texan commercial rents in city centers indicate no such pent-up demand, and the Dallas CBD has high vacancy rates. In Los Angeles, the center is weak as well – in a metro region 50% larger than Paris, the most gerrymandered central blob, not at all centered on Downtown Los Angeles but rather reaching from Downtown to Century City and UCLA, has around 800,000 jobs. The highest pent-up demand in Downtown LA is residential and not commercial.

I bring this up because this indicates rapid transit is a strong amenity for producers: they pay a premium to locate in city center, provided a large system exists to feed commuters to their offices. This is the case in New York, Paris, and other transit cities, but notably not in large auto-oriented cities like Los Angeles and Dallas.

…but it’s not just about work

Transit cities are not just places of production. The city is simultaneously a production amenity and a consumption amenity. Pure production amenities, like the quality of the harbor, the location relative to logistics facilities, and the tax rate on businesses, do not draw in people except insofar as they lead to higher wages. But transit cities do draw people in – residential rents are higher where job access is better and even where general access to non-work destinations is better.

This effect happens at several levels. The highest level is the regional one: a transit city is less polluted than an auto-oriented alternative of the same size, and clean air is a consumption amenity. The lowest level is the block: the construction of rapid transit raises property values near stations. In between, there are the benefits of access, which like the regionwide benefits are diffuse; it’s hard to point out an exact set of winners and losers.

This is not just a matter of job access. A transit city is good at access to special amenities, of the type that people do not go to very regularly. Ones that people do go to regularly do not require public transit: an auto-oriented medium-size metropolitan region can perfectly well provide high-quality retail choices with plenty of variety. I don’t recall missing anything at the shopping centers of the French Riviera, nor hearing complaints about same from Americans in similar-size regions.

But once the options get more specialized, size and transit accessibility become important. Los Angeles notably has amazing restaurants from just about every ethnic and regional tradition on the planet and also it takes two hours to drive to them because they’re strewn about five counties with no fast transit options. It’s nothing like New York and Paris, which have plentiful options as well but they’re within 30-60 minutes by train.

Specialized restaurants are a convenient example – they won’t cluster in city center because that’s expensive, but they’d like to be in near-center areas, perhaps in the central 100 or 200 or 500 km^2 but not the central 5 or 10 km^2. But the same issue occurs for everything else: museums, visits to friends throughout the region, etc.

The implication of dual amenities

Rapid transit is annoying to analyze in that it doesn’t break down neatly as for one group or another. It’s incredibly diffuse, and the only definitive interest group that benefits from its existence more than anyone else, the providers, is small and doesn’t always benefit from making it more efficient. There are no distributional impacts to mitigate or take advantage of; the environmental impacts are uniformly positive because of the competition with cars and auto-oriented development; the local benefits of access are real but require building an expansive system with hundreds of stations each generating local benefits in a small radius.

The result is that it bores people who enjoy conflict. There is not much there for the marketer to bite on – transit as a product is optimized when everyone uses it. The upshot of the fact that rapid transit is simultaneously a production amenity and a consumption amenity is that there is nothing there for people who enjoy dwelling on class conflict or on postmaterialist New Left notions of conflict, either. Socialist states have built great transit systems once things have settled down and it’s time to rebuild, but would-be socialist revolutionaries in non-socialist states find it boring. Likewise, New Left green politics is much more interested in pure consumption amenities like bike paths and street redesign than in dual amenities like rapid transit, which also benefits the staid corporations green voters define themselves against. From the other direction, people whose political identity is indifference to the needs of anyone who’s not a business don’t find transit interesting, even though it clearly benefits business, because it doesn’t offer opportunity to engage in right-populist or Thatcherite politicking: it’s possible to run the system like a business, but actually kicking out visibly poor people fragments the market and reduces frequency.

Cost- and Project-Centric Plans

I did a poll on Patreon about cost issues to write about. This is a close second, with 11 votes; other people’s money won with 12, whereas neighborhood empowerment got 8 and will not be on my docket.

There are infrastructure investment programs defined around the specific projects funded: Crossrail, Second Avenue Subway, Grand Paris Express, Nya Tunnelbanan, the Toronto RER, Marmaray. Then there are programs defined around costs, where one constantly hears the project defined by its budget rather than what it produces; these are all in the United States, and include the entire slates of Los Angeles and Seattle rail extensions, and to some extent also California High-Speed Rail and Gateway. The latter appears like bad practice for cost minimization.

What’s the problem?

In isolation, I’d have expected cost-centric plans to be more prudent with the budget – there’s less room for overruns. This is related to Swiss practice, which is project-centric but also requires projects to go to referendum on the precise amount, which has disciplined cost overruns in most cases and also kept absolute costs low. However, the fact of the matter is that the only places that use cost-centric plans have high costs, having recently risen from levels that were not so bad 20 years ago. So why?

My suspicion is leakage. This is getting to be less general and more specific to the situation of California and its sales tax measures, but the way it works is, there is an amount that proponents think they can go to ballot on, and then they work the slate of projects backward. In theory, this is supposed to discipline the planners into better behavior: the amount of money is truly fixed, and if costs go up, it delays the entire program. In practice, there is no prior discipline about what infrastructure should be included, and thus the slate is decided politically on a place-based plan.

Further leakage occurs when buying off additional interest groups. Soon enough, one useful if very expensive subway line, like the Purple Line Extension in Los Angeles or the Ballard-West Seattle LRT, is bundled into a huge program alongside bus operating subsidies, road money, and low-usage lines to lower-density areas.

I can’t prove that this is the result of budget-centric planning. The comparison examples I have – all high-cost, politicized North American projects – exhibit leakage as well, but less of it. The Green Line Extension in Boston had extensive local leakage in the first iteration of the project, like the Somerville Community Path, but it wasn’t paired with less useful infrastructure elsewhere. Second Avenue Subway Phase 1 was paired with East Side Access and the Broadway subway in Vancouver is paired with a SkyTrain extension deeper into Surrey toward Langley; in both cases, the less useful projects are nonetheless more useful on a likely cost per rider basis than any of the American West Coast leakage and compete with the more useful projects. ESA is probably going to end up $60,000/rider, not much worse than GLX and probably about the same as the Purple Line Extension depending on how much transit-oriented development Los Angeles permits.

Place-based extraction

Place-based politics is a scourge and should be eradicated whenever possible. What it does wherever it is not suppressed is create political identification among local and regional power brokers not with the piece of infrastructure but its cost. The reason is that evaluating transportation needs is too technocratic for the attention span of a local politician, whereas the budget is a straightforward measure of one’s importance.

Once local actors are empowered, they make further demands for irrelevant extras (“betterments”), or construction techniques that spend too much money to avoid real or imagined negative local impact. People with a local identity don’t care about public transit much – public transit takes riders to other localities, especially city center, whereas the locally-empowered minority of people who work locally has little use for it and drives everywhere.

Local empowerment is not unique to budget-based infrastructure. It was a major drag on GLX and at least a moderate one on SAS Phase 1, neither of which is budget-based. The Central Subway and BART to San Jose projects are both place-based vanity, for Chinatown and San Jose respectively, but even these projects are smaller in scope than the Los Angeles or Seattle ST3 leakage. There’s just more surface area for it when advocates lead with a budget, because then every local hack sees an opportunity to make a claim.

The place-based politics in the Northeast is much broader and more regional: SAS, a city project championed by then-Assembly speaker Sheldon Silver (D-Lower East Side), was balanced with ESA, a suburban project serving the base of Governor George Pataki (R-Peekskill, but the state Republicans were based on Long Island). Metro Vancouver’s place-based extraction follows the same schema: if Vancouver gets a useful SkyTrain extension, Surrey must get an extension too regardless of usefulness. Massachusetts is likely to be in a similar situation with the TransitMatters Regional Rail program: RR serves the entire east of the state, and must be balanced with a Western Massachusetts project, for which we propose the still-useful East-West Rail program connecting Boston and Springfield.

In contrast, the situation in California and metropolitan Seattle is much worse – useful lines in Los Angeles are paired with many layers of leakage, as different groups make claims on the pot of money. This way, Los Angeles doesn’t build as much useful transit as New York and Boston even though its construction costs are comparable to Boston’s and much lower than those of New York, and even though it makes large amounts of money available for transportation by referendum.

Are jobs a cost or benefit?

Like place-based extraction, the use of infrastructure as a jobs program is terrible everywhere in a modern developed country where construction is not a labor-intensive zero-skill job, and should be eradicated. And like place-based extraction, I think – and am less certain than on the other points – there is more surface area for this when the program is about a budget and not a piece of infrastructure.

The mechanism is the same as before: once money becomes available, local labor groups descend on it to make claims. Promises of job creation are thus always local, including beggar-thy-neighboring-state demands for local rolling stock construction. These occur for both budget-based plans (like the Los Angeles light rail fleet) and project-based ones (like the new Red and Orange Line cars for Boston, built in Springfield due to place-based extraction). However, it’s easier to make a claim when the political discussion is about how to spend $X and not how to optimally produce a desired piece of infrastructure.

The way forward

The American West Coast’s problem of budget-based planning is, thankfully, easy to solve, because it’s been solved in other parts of the same country. The Bay Area has less of it than Southern California and the Pacific Northwest (but it’s not free of it – many of the specifics of California High-Speed Rail’s failure come from Bay Area power brokers hoping to use it as a slush fund). The Northeast doesn’t have it at all. Los Angeles is likely to be forced in that direction anyway, because it’s running out of sales tax capacity – the already-approved measures are spoken for through the 2050s.

The impact is likely not a matter of straight construction costs in dollars per kilometer. Rather, it’s about leakage. Los Angeles and Seattle do not have unusually higher per-km costs by American standards; in the 2000s Los Angeles looked like the good part of America and in the 2010s Seattle did, but since both have converged to much higher figures. The problem is that a smaller share of the Los Angeles Measures R and M spending goes to useful expansion than the capital budget in places that have project-based planning. This is what needs to be fixed through transitioning to project-based planning, costs aside.

Good Practices for State Planning and Local Public Transportation

Earlier this week, I complained about the OPM (other people’s money) problem: federal funding of American public transportation, which is managed locally, leads to cost-raising behavior as local and state governments seek to maximize federal infusion of cash. This is a companion post about more positive and fruitful interactions of government at different levels on this side of the Pond. The examples here often look pointless or acrimonious by local standards, but at the end of the day, they produce cost-effective infrastructure and are positive examples to learn from.

Of note, all the examples below are from unitary, not federal states. This is just an artifact of where I have talked to the most people about this – from what I know of Germany, Austria, Switzerland, and Belgium, they all fall within the spectrum spanned by Italy, Turkey, France, and Sweden when it comes to state-local funding allocation. Moreover, the extent of subnational fiscal autonomy in Germany is not greater than that of Sweden, where there are extensive county and municipal taxes funding subnational government, whereas in Germany nearly all taxes are federal and the Länder mostly rely on transfers.

This is a theme I’ve been investigating ever since I talked to a planner at DOTr. Philippine construction costs are high, although that’s mainly for subways, while elevated lines have fairly average costs. The planner explained to me how planning and procurement are done and specifically how it contrasts with the role of the federal government in the US. Manila Metro projects are planned and designed by DOTr, and ever since that conversation I’ve learned to interpret interviews with European experts in that light.

Sweden: state-local negotiation

The Nordic states practice consensus government. This means that decisions are done by majority vote without veto points, but also there’s no such thing as a majority. In practice, infrastructure involves negotiations between different stakeholders. Bigger projects, including the subway megaprojects we study, require funding from different sources, creating more stakeholders in the process.

In the case of Stockholm, it’s instructive to compare Citybanan and Nya Tunnelbanan. Citybanan is a regional rail tunnel, and therefore the lead agency was the state’s Trafikverket – but even then, Stockholm County had extensive input. Regions send wishlists to the state, and compete for a fixed pot of funding for grants, but there are further negotiations about project details. Nya Tunnelbanan is a subway project led by the county’s SL, but funding comes 25% from local sources, 25% from the county, and 50% from the state.

Crucially, Trafikverket builds rather than just nudges. It has a strong professional civil service capable of designing and supervising the construction of infrastructure megaprojects – and the same pool of civil servants move between agencies within the Swedish public sector, so that some of the people I’ve spoken to have moved between Trafikverket and SL. The example planners I have in mind are mid-level, not top management – this is not a case of a mobile executive suite lording over mid- and low-level career bureaucrats who can’t move between agencies easily.

There is also integration of transport and housing, in the sense that residential upzoning in Stockholm County focuses on areas that have or will soon have urban rail access. Construction rates in Stockholm County are some of the highest in Europe: per SCB, annual completions were around 6.5-7 per 1,000 people in the five years before corona. I’ve been told that it’s a consensual process, with no further elaboration; in Oslo, in contrast, the state has to compel wealthy NIMBY municipalities to upzone as a precondition of giving them subway expansion, but state-local coordination is as far as I can tell otherwise similar to the situation in Stockholm.

Turkey: state-local competition, but no OPM

Turkey has one of the world’s lowest construction cost levels; more details will be available in a report to appear soon, led by Elif Ensari. Wages in Turkey are low by European standards and social protections are weak, but the direct labor share of subway construction is small enough that it is a secondary contributor to the low costs; Turkey dos some things more efficiently than Sweden and others less efficiently.

The situation of state-local relations there is the exact opposite of Sweden’s. There is no collaboration – rather, there are metro tunnels in Istanbul funded and built by the state and others funded and built by the city.

The city is not quite local – the municipality covers the entire metropolitan area of 15.5 million people, and Istanbul politics has an ideological left (i.e. anti-Erdoğan) vs. right (i.e. pro-Erdoğan) characteristic rather than the hyperlocal ties of New York and other American cities. Moreover, now that AKP lost the municipal election and the mayor is CHP’s Ekrem İmamoğlu, who will likely challenge Erdoğan in the 2023 presidential election, there is friction between the state and the city, each trying to argue that it builds more and better infrastructure. There are arguments between pro- and anti-Erdoğan sources over who is to blame, but the city has much less access to state financing now than before İmamoğlu’s victory, which it has been able to replace with financing from the European Investment Bank and other sources of loans, like JICA and Deutsche Bank.

In this situation, there is no coordination, and this is a drag on efficiency – one of the ways Istanbul has been able to keep costs down is finding parks and state land to use for station footprint to keep station construction costs down. However, because there is direct responsibility for the state or the city for infrastructure, there is no OPM problem – İmamoğlu’s political career depends in part on his ability to build infrastructure, and Erdoğan’s ability to interfere is real but limited.

Housing construction is extremely rapid. Istanbul has a housing surplus thanks to the construction of around 160,000 annual housing units; neighborhood character is not a priority there. But I do not know whether it is integrated with subway construction as in Sweden.

France: the capital is the state

France has a convoluted set of local and regional governing mechanisms. However, in Paris, much of the power remains in state and state-appointed organs. The transport association Ile-de-France Mobilités, which would be called a Verkehrsverbund in Germany, is coordinated by the Ile-de-France region, but its two largest components, SNCF and RATP, are both state-owned (though SNCF-RATP agency turf battles remain). Public services that elsewhere in France might be devolved are in Paris often run by the state – for example, the Paris Police Prefecture is part of the National Police, and it’s smaller cities, for example in the Riviera, that have local police departments.

This is not unique to France. In infrastructure, Sweden too exhibits more state involvement in urban rail planning in the capital than in smaller cities – Västlänken in Gothenburg is a Trafikverket project but more of the planning and funding come from the county than was the case for Citybanan. London is a mix: TfL is run by the mayor, offering much more devolution than the Metropolitan Counties of England have, but conversely the construction of infrastructure megaprojects like Crossrail is really within the purview of UK-wide politics.

The issue here is one of scale. Grand Paris Express is a 200 km, 80% tunneled project, and France is a medium- rather than low-cost country. Even the state barely has enough planning capacity for it – the Cour des Comptes report on the cost overruns, not seen before for smaller Métro extensions, blamed the insufficient size of existing planning organs, but unfortunately, the solution arrived at, the special-purpose delivery vehicle (SPDV) GPE, is not good, and is either in imitation of or evolved toward convergence with Crossrail. Nothing below the level of the state could build such a project.

And because the project is so large, it’s been forced into a situation that rhymes with Sweden’s intergovernmental negotiation. It’s also been discussed as part of national politics, with some redesigns stemming from the Sarkozy-Hollande transition. In some cases, this has led to OPM – namely, M18 is unpopular among the region’s public transportation advocates and remains because of pressure by the high-income suburbs it would serve. However, there is no visible impact on unit costs; it’s notable that the OPM the state would dispense is additional infrastructure at per-rider costs that are high for France but common in the United States, rather than extras of little use like signature stations or more expensive construction methods.

Finally, housing construction in Ile-de-France is, as in Stockholm County, among the YIMBYest in Europe. Yonah Freemark’s paper on the subject is indispensable: stating around 2017, the annual construction rate rose to 80,000 units regionwide, around 6.5/1,000 people. Construction is largely in the Petite Couronne suburbs, and not the city, and focuses on regions with current or future urban rail extensions, as in Stockholm.

Italy: state planning and austerity

A full report on Italy will appear soon, on a similar timeline as Turkey, written by Marco Chitti. In Italy, there has been a transition from municipal funding and planning of metros to state funding; in Rome, there was always more state involvement as I understand it.

The situation leading up to the Financial Crisis had similarities with the United States: state funding, municipal or regional responsibility for construction. However, the state always exercised far more oversight. The Italian state builds rather than just nudging. State regulation is done through administrative rather than judicial mechanisms, and thus questions of environmental and historical protection are decided by civil servants trained in engineering, archeology, history, and ecology; there are clear rules, providing similar final outcomes to the Nordic process of negotiation and superior ones to the American process of lawsuit.

More recently, the state has devolved some of the funding to regional, provincial, and municipal governance. This was an artifact of post-Crisis austerity, so the state would fund the majority (I believe 70%) of each project’s budget but not all of it. The result has not been positive – subnational governments have no money, not even wealthy ones like Milan, and to fill in for missing state funding they’ve resorted to PPP financing, which has not impacted construction costs but in effect required hidden loans at high interest bonded to future revenue.

Quick Note: Waste and Missed Projects

If the state spends money on a bad infrastructure project, or too much money beyond what was necessary for the project, then this is waste of money, and should be avoided. But the opposite situation can occur too: some worthwhile projects are not pursued, and that too is a waste, because society forgoes the benefits coming from such projects. This situation should be avoided equally. Moreover, there is no priority between those two types of error. Planning should treat them symmetrically and aim on balance to avoid both equally.

The reason is that just as infrastructure projects are generally not critical, the money that is spent on them is not critical. The US is spending around $1.5 trillion over the lifetime of the program on the F-35 plane, and the money is buried deep in a defense budget that by the standards I grew up with isn’t even that large – and that program consists of documented waste and suffers from poor planning, including serious cost overruns and delays. None of this is an existential threat; the problems the F-35 is intended to solve are not existential but neither are its costs, and likewise, neither infrastructure problems such as delays, capacity limitations, and congestion nor the costs of the projects that intend to fix them are existential.

And if none of this is existential, then the decision of whether to build is about comparing two finite, bounded quantities: costs and benefits. This is why one does a benefit-cost analysis and respect its conclusions, without spiking. But this is also why the state should not systematically aim to err in one direction. If a project with a BCR of less than 1 is built then there is waste, but if a project with a high BCR is not built then there is waste as well.

Note that this principle of not biasing one’s error in one direction (typically the bias is toward inaction) is separate from the question of what the best estimates for costs and benefits are. There is a real tendency to underestimate costs, which is why the minimum BCR that should be funded is not 1 but slightly more, the typical range in Europe being 1.2-1.4. But subject to that limit, decisions should still be symmetric, i.e. if the limit is 1.4, then building 0.7 is symmetrically bad with failing to build 2.8. Alternatively, some projects, like high-speed rail, have upfront costs and long-term benefits, and so it’s better to think of them in terms of financial and social returns on investment, as is done in France (source, pp. 11-12), rather than a BCR in which the discount rate is hidden in a box. But ROI analysis should still be symmetric around one’s chosen limit.

This becomes relevant especially for projects that can expect benefits to rise over time due to economic growth. It is tempting to have a bias toward inaction and only build something once its benefits are unimpeachable, a large multiple of the cost. But this means that in the interim, society has forgone the smaller-but-still-real benefits. Worse, when the BCR grows too large, surplus extraction might pull it back down through an increase in costs, and thus building later can be very risky.

In essence, what this means is that if there’s infrastructure out there with a very high BCR or ROI – and if you ask me, preliminarily, Northeast Corridor high-speed rail done right has a purely financial ROI of maybe 13% – then something is deeply wrong. There shouldn’t be 13% returns out of anything. If there is one, the first question to ask is “why was this not built 50 years ago?”.

In the opposite direction, what looks like building infrastructure prematurely is in fact the prudent decision. South Korea and Taiwan both opened high-speed rail in the 2000s, both underperforming initial expectations. But both have seen steady growth in ridership; at this point, Taiwan HSR returns 4% without social benefits, which is decently healthy, and KTX has somewhat higher ridership than THSR on only slightly higher total construction costs. In the mid-2000s the projects looked like white elephants, that is they were doing just better than minimum. But the 15 years of benefits since then have been considerable. The 20% of society least interested in paying for things should not have veto power; economics exists on the margin and politics on the median.

The Leakage Problem

I’ve spent more than ten years talking about the cost of construction of physical infrastructure, starting with subways and then branching on to other things, most.

And yet there’s a problem of comparable size when discussing infrastructure waste, which, lacking any better term for it, I am going to call leakage. The definition of leakage is any project that is bundled into an infrastructure package that is not useful to the project under discussion and is not costed together with it. A package, in turn, is any program that considers multiple projects together, such as a stimulus bill, a regular transport investment budget, or a referendum. The motivation for the term leakage is that money deeded to megaprojects leaks to unrelated or semi-related priorities. This often occurs for political reasons but apolitical examples exist as well.

Before going over some examples, I want to clarify that the distinction between leakage and high costs is not ironclad. Sometimes, high costs come from bundled projects that are costed together with the project at hand; in the US they’re called betterments, for example the $100 million 3 km bike lane called the Somerville Community Path for the first, aborted iteration of the Green Line Extension in Boston. This blur is endemic to general improvement projects, such as rail electrification, and also to Northeast Corridor high-speed rail plans, but elsewhere, the distinction is clearer.

Finally, while normally I focus on construction costs for public transport, leakage is a big problem in the United States for highway investment, for political reasons. As I will explain below, I believe that nearly all highway investment in the US is waste thanks to leakage, even ignoring the elevated costs of urban road tunnels.

State of good repair

A month ago, I uploaded a video about the state of good repair grift in the United States. The grift is that SOGR is maintenance spending funded out of other people’s money – namely, a multiyear capital budget – and therefore the agency can spend it with little public oversight. The construction of an expansion may be overly expensive, but at the end of the day, the line opens and the public can verify that it works, even for a legendarily delayed project like Second Avenue Subway, the Berlin-Brandenburg Airport, or the soon-to-open Tel Aviv Subway. It’s a crude mechanism, since the public can’t verify safety or efficiency, but it’s impossible to fake: if nothing opens, it embarrasses all involved publicly, as is the case for California High-Speed Rail. No such mechanism exists for maintenance, and therefore, incompetent agencies have free reins to spend money with nothing to show for it. I recently gave an example of unusually high track renewal costs in Connecticut.

The connection with leakage is that capital plans include renewal and long-term repairs and not just expansion. Thus, SOGR is leakage, and when its costs go out of control, they displace funding that could be used for expansion. The NEC Commission proposal for high-speed rail on the Northeast Corridor calls for a budget of $117 billion in 2020 dollars, but there is extensive leakage to SOGR in the New York area, especially the aforementioned Connecticut plan, and thus for such a high budget the target average speed is about 140 km/h, in line with the upgraded legacy trains that high-speed lines in Europe replace.

Regionally, too, the monetary bonfire that is SOGR sucks the oxygen out of the room. The vast majority of the funds for MTA capital plans in New York is either normal replacement or SOGR, a neverending program whose backlog never shrinks despite billions of dollars in annual funding. The MTA wants to spend $50 billion in the next 5 years on capital improvements; visible expansion, such as Second Avenue Subway phase 2, moving block signaling on more lines, and wheelchair accessibility upgrades at a few stations, consists of only a few billion dollars of this package.

This is not purely an American issue. Germany’s federal plan for transport investment calls for 269.6 billion euros in project capital funding from 2016 to 2030, including a small proportion for projects planned now to be completed after 2031; as detailed on page 14, about half of the funds for both road and rail are to go to maintenance and renewal and only 40% to expansion. But 40% for expansion is still substantially less leakage than seen in American plans like that for New York.

Betterments and other irrelevant projects

Betterments straddle the boundary between high costs and leakage. They can be bundled with the cost of a project, as is the case for the Somerville Community Path for original GLX (but not the current version, from which it was dropped). Or they can be costed separately. The ideal project breakdown will have an explicit itemization letting us tell how much money leaked to betterments; for example, for the first Nice tramway line, the answer is about 30%, going to streetscaping and other such improvements.

Betterments fall into several categories. Some are pure NIMBYism – a selfish community demands something as a precondition of not publicly opposing the project, and the state caves instead of fighting back. In Israel, Haifa demanded that the state pay for trenching portions of the railroad through the southern part of the city as part of the national rail electrification project, making specious claims about the at-grade railway separating the city from the beach and even saying that high-voltage electrification causes cancer. In Toronto, the electrification project for the RER ran into a similar problem: while rail electrification reduces noise emissions, some suburbs still demanded noise walls, and the province caved to the tune of $1 billion.

Such extortion is surplus extraction – Israel and Toronto are both late to electrification, and thus those projects have very high benefit ratios over base costs, encouraging squeaky wheel behavior, raising costs to match benefits. Keeping the surplus with the state is crucial for enabling further expansion, and requires a combination of the political courage to say no and mechanisms to defer commitment until design is more advanced, in order to disempower local communities and empower planners.

Other betterments have a logical reason to be there, such as the streetscape and drainage improvements for the Nice tramway, or to some extent the Somerville Community Path. The problem with them is that chaining them to a megaproject funded by other people’s money means that they have no sense of cost control. A municipality that has to build a bike path out of its own money will never spend $100 million on 3 km; and yet that was the projected cost in Somerville, where the budget was treated as acceptable because it was second-order by broader GLX standards.

Bad expansion projects

Sometimes, infrastructure packages include bad with good projects. The bad projects are then leakage. This is usually the politically hardest nut to crack, because usually this happens in an environment of explicit political negotiation between actors each wanting something for their own narrow interest.

For example, this can be a regional negotiation between urban and non-urban interests. The urban interests want a high-value urban rail line; the rest want a low-value investment, which could be some low-ridership regional rail or a road project. Germany’s underinvestment in high-speed rail essentially comes from this kind of leakage: people who have a non-urban identity or who feel that people with such identity are inherently more morally deserving of subsidy than Berlin or Munich oppose an intercity high-speed rail network, feeling that trains averaging 120-150 km/h are good enough on specious polycentricity grounds. Such negotiation can even turn violent – the Gilets Jaunes riots were mostly white supremacist, but they were white supremacists with a strong anti-urban identity who felt like the diesel taxes were too urban-focused.

In some cases, like that of a riot, there is an easy solution, but when it goes to referendum, it is harder. Southern California in particular has an extreme problem of leakage in referendums, with no short- or medium-term solution but to fund some bad with the good. California’s New Right passed Prop 13, which among other things requires a 2/3 supermajority for tax hikes. To get around it, the state has to promise somthing explicit to every interest group. This is especially acute in Southern California, where “we’re liberal Democrats, we’re doing this” messaging can get 50-60% but not 67% as in the more left-wing San Francisco area and therefore regional ballot measures for increasing sales taxes for transit have to make explicit promises.

The explicit promises for weak projects, which can be low-ridership suburban light rail extensions, bond money for bus operations, road expansion, or road maintenance, damage the system twice. First, they’re weak on a pure benefit-cost ratio. And second, they commit the county too early to specific projects. Early commitment leads to cost overruns, as the ability of nefarious actors (not just communities but also contractors, political power brokers, planners, etc.) to demand extra scope is high, and the prior political commitment makes it too embarrassing to walk away from an overly bloated project. For an example of early commitment (though not of leakage), witness California High-Speed Rail: even now the state pretends it is not canceling the project, and is trying to pitch it as Bakersfield-Merced high-speed rail instead, to avoid the embarrassment.

The issue of roads

I focus on what I am interested in, which is public transport, but the leakage problem is also extensive for roads. In the United States, road money is disbursed to the tune of several tens of billions of dollars per year in the regular process, even without any stimulus funding. It’s such an important part of the mythos of public works that it has to be spread evenly across the states, so that politicians from a bygone era of non-ideological pork money can say they’ve brought in spending to their local districts. I believe there’s even a rule requiring at least 92% of the fuel tax money generated in each state to be spent within the state.

The result is that road money is wasted on low-growth regions. From my perspective, all road money is bad. But let’s put ourselves for a moment in the mindset of a Texan or Bavarian booster: roads are good, climate change is exaggerated, deficits are immoral (German version) or taxes are (Texan version), the measure of a nation’s wealth is how big its SUVs are. In this mindset, road money should be spent prudently in high-growth regions, like the metropolitan areas of the American Sunbelt or the biggest German cities. It definitely should not be spent in declining regions like the Rust Belt, where due to continued road investment and population decline, there is no longer traffic congestion.

And yet, road money is spent in those no-congestion regions. Politicians get to brag about saving a few seconds’ worth of congestion with three-figure million dollar interchanges and bypasses in small Rust Belt towns, complete with political rhetoric about the moral superiority of regions whose best days lay a hundred years ago to regions whose best days lie ahead.

Leakage and consensus

It is easy to get trapped in a consensus in which every region and every interest group gets something. This makes leakage easier: an infrastructure package will then have something for everyone, regardless of any benefit-cost analysis. Once the budget rather than the outcome becomes the main selling point, black holes like SOGR are easy to include.

It’s critical to resist this trend and fight to oppose leakage. Expansion should go to expansion, where investment is needed, and not where it isn’t. Failure to do so leads to hundreds of billions in investment money most of which is wasted independently for the construction cost problem.

Streaming the Biden Infrastructure Plan

I streamed my thoughts about the Biden infrastructure plan, and unlike previous streams, I uploaded this to YouTube. I go into more details (and more tangents) on video, but, some key points:

  • Out of the nearly $600 billion in the current proposal that is to be spent on transportation, public transportation is only $190 billion: $80 billion for intercity rail, $85 billion for (other) public transit, $25 billion for zero-emissions buses. This 2:1 split between cars and transit is a change from the typical American 4:1, but in Germany it’s 55:42 and that’s with right-wing ministers of transport.
  • Some of the spending on the car bucket is about electric vehicles, including $100 billion in consumer subsidies, but that’s still car spending. People who don’t drive don’t qualify for these subsidies. It’s an attempt to create political consensus by still spending on roads and not just public transit while saying that it’s green, but encouraging people to buy more cars is not particularly green, and there’s no alternative to sticks like fuel taxes in addition to carrots.
  • The $25 billion for zero-emissions buses is likely to go to battery-electric buses, which are still in growing pains and don’t function well in winter. In California, in fact, trolleybuses are funded from the fixed infrastructure bucket alongside light rail and subways and are ineligible for the bucket of funding for zero-emissions buses. It is unknown whether in-motion charging qualifies for this bucket; it should, as superior technology that functions well even in places with harsh winters.
  • The $85 billion for public transit splits as $55 billion for state of good repair (SOGR) and only $30 billion for expansion (including $5 billion for accessibility). This is a terrible idea: SOGR is carte blanche for agencies that aim to avoid public embarrassment rather than provide useful service to spend money without having to promise anything to show for it, and Amtrak in particular cycles between deferring maintenance and then crying poverty when money becomes available. Federal money should go to expansion alone; a state or local agency that doesn’t set aside money for maintenance now isn’t going to do so in the future, and periodic infusions of SOGR money create moral hazard by encouraging maintenance deferral in good times.
  • The Amtrak money is a total waste; in particular, Amtrak wants $39 billion for the Northeast Corridor while having very little to show for it, preferring SOGR, climate resilience, and agency turf battles over the Gateway project over noticeable improvements in trip times, reliability, or capacity.
  • The expansion money is not by itself bad, and in fact should grow by $55 billion at the expense of SOGR, but I worry about cost control. I’m just not sure how to express it in Washington policy language, as opposed to agency-level language regarding in-house design, more flexible procurement, civil service independence, adoption of foreign best practice and not just domestic practices, keeping station footprints small, using cut-and-cover more, and so on.

You should go watch the whole thing, which has some on-screen links to the breakdowns above, but it’s a 1:45 video.

Austerity is Inefficient

Working on an emergency timetable for regional rail has made it clear how an environment of austerity requires tradeoffs that reduce efficiency. I already talked about how the Swiss electronics before concrete slogan is not about not spending money but about spending a fixed amount of money intelligently; but now I have a concrete example for how optimizing organization runs into difficulties when there is no investment in either electronics or concrete. It’s still possible to create value out of such a system, but there will be seams, and fixing the seams requires some money.

Boston regional rail

The background to the Boston regional rail schedule is that corona destroyed ridership. In December of 2020, the counts showed ridership was down by about an order of magnitude over pre-crisis levels. American commuter rail is largely a vehicle for suburban white-collar commuters who work in city center 9 to 5; the busiest line in the Boston area, the Providence Line, ran 4 trains per hour at rush hour in the peak direction but had 2- and 2.5-hour service gaps in the reverse-peak and in midday and on weekends. Right now, the system is on a reduced emergency timetable, generally with 2-hour intervals, and the trains are empty.

But as Americans get vaccinated there are plans to restore some service. How much service is to run is up in the air, as is how it’s to be structured. Those plans may include flattening the peak and going to a clockface schedule, aiming to start moving the system away from traditional peak-focused timetables toward all-day service, albeit not at amazing frequency due to budget limits.

The plan I’ve been involved with is to figure out how to give most lines hourly service; a few low-ridership lines may be pruned, and the innermost lines, like Fairmount, get extra service, getting more frequency than they had before. The reasoning is that the frequency that counts as freedom is inversely proportional to trip length – shorter trips need more frequency and shorter headways, so even in an environment of austerity, the Fairmount Line should get a train every 15 or 20 minutes.

Optimization

In an environment of austerity, every resource counts. We were discussing individual trains, trying to figure out what the best use for the 30th, the 35th, the 40th trainset to run in regular service is. In all cases, the point is to maximize the time a train spends moving and minimize the time it spends collecting dust at a terminal. However, this leads to conflict among the following competing constraints:

  • At outer terminals like Worcester and Lowell, it is desirable that the train should have a timed transfer with the local buses.
  • At the inner terminals, that is South and North Stations, it is desirable that all trains arrive and depart around the same time (“pulse“), to facilitate diagonal transfers, such as from Fitchburg to Salem or from Worcester to Brockton.
  • Some lines have long single-track segments; the most frustrating is the Worcester Line, which is in theory double-track the entire way but in practice single-track through Newton, where only the nominally-westbound track has platforms.
  • The lines should run hourly, so ideally the one-way trip time should be 50 minutes or possibly 80 minutes, with a 10-minute turnaround.

Unfortunately, it is not possible to satisfy all constraints at once. In an environment with some avenues for investment, it’s possible to double-track single-track bottlenecks, as the MBTA is already planning to do for Newton in the medium run. It’s also possible to speed up lines on the “run as fast as necessary” principle to ensure the trips between knots take an integer or half-integer multiple of the headway; in our higher-investment regional rail plan for Worcester, this is the case, and all transfers and overtakes are tight. However, in a no-investment environment, something has to give. The Worcester Line is 90 minutes end-to-end all-local, and the single-track section is between around 15 and 30 minutes out of South Station, which means it is not possible to conveniently pulse either at South Station with the other commuter lines or at Worcester with the buses. But thankfully, the length of the single-track segment between the crossovers is just barely enough to allow bidirectional local service every 30 minutes.

Discussion

No-investment and low-investment plans are great for highlighting what the most pressing investment needs are. In general Boston needs electrification and high platforms everywhere, as do all other North American commuter lines; it is unfortunate that not a single system has both everywhere, as SEPTA is the only all-electric system and the LIRR (and sort of Metro-North) is the only all-high-platform system. However, more specifically, there are valuable targets for early investment, based on where the seams in the system are.

In the case of integrated timetabling, it’s really useful to be able to make strategic investments, including sometimes in concrete. They should always be based on a publicly-communicated target timetable, in which all the operational constraints are optimized and resolved for the maximum benefit of passengers. For example, in the TransitMatters Regional Rail plan, the timed transfers at the Boston end are dealt with by increasing frequency on the trunk lines to every 15 minutes, at which point the average untimed transfer is about as good as a timed hourly transfer in a 10-minute turnaround; this is based on expected ridership growth as higher frequency and the increase in speed from electrification and high platforms both reduce door-to-door trip times.

The upshot is that austerity is not good for efficiency. Cutting to grow is difficult, because there are always little seams that require money to fix, even at agencies where overall spending is too high rather than too low. Sometimes the timetables are such that a speedup really is needed: Switzerland’s maxim on speed is to run as fast as necessary, not as fast as trains ran 50 years ago with no further improvement. This in turn requires investment – investment that regularly happens when public transportation is run well enough to command public trust.

Poor Rich Countries and Isomorphic Mimicry

A curious pattern can be found in subway construction costs around the world, based on GDP per capita. On the one hand, poor countries that have severe cultural cringe, such as former colonies, have high construction costs, and often the worst projects are the ones that most try to imitate richer countries, outsourcing design to Japan or perhaps China. On the other hand, poor-rich countries, by which I mean countries on the periphery of the developed world, have similar cultural cringe and self-hate for their institutions, and yet their imitation of richer countries has been a success; for example, Spain copied a lot of rail development ideas from Germany and France. This can be explained using the development economic theory of isomorphic mimicry; the rub here is that a poor country like India or Ethiopia is profoundly different from the richer countries it tries to imitate, whereas a poor-rich country like Spain is actually pretty similar to Germany by global standards.

What is isomorphic mimicry?

In the economic development literature, the expression isomorphic mimicry refers to when a poor country sets up institutions that aim to imitate those of richer countries in hope that through such institutions the country will become rich too, but the imitation is too shallow to be useful. A common set of examples is well-meaning regulations on safety, labor, environmental protection, and anti-corruption that are not enforced due to insufficient state capacity. Here is a review of the concept by Andrews, Pritchett, and Woolcock, with examples from Mozambique, Uganda, and India, as well as some history from the American private sector. More examples using the theory can be found in Turczynowicz, Gautam, Rénique, Yeap, and Sagues concerning Peru’s one laptop per child program, in Evans’ interpretation of Bangladesh’s domestic violence laws, and in Rajagopalan and Tabarrok on India’s poor state of public services.

While the theory regarding institutions is new, analogs of it for tangible goods are older. Postwar developmental states engaged in extensive isomorphic mimicry, building dams, steel plants, and coal plants hoping that it would transform them into wealthy states like the United States, Western Europe, and Japan; for the most part, they had lower economic growth than did the developed world until the 1980s. The shift within international development away from tangible infrastructure and toward trying to fix institutions came about because big projects like the Aswan Dam failed to create enduring economic growth and often had ill side effects on agriculture, the environment, or human rights.

How does isomorphic mimicry affect public transportation?

The best example of isomorphic mimicry leading to bad transit that I know of is the Addis Ababa light rail system. This is funded by China, whose ideas of global development are similar to those of the postwar first and second worlds, that is providing tangible physical things, like railroads. Unfortunately, usage is low, because of problems that do not exist in middle-income or rich countries but are endemic to Ethiopia. Christina Goldbaum, the New York Times’ transit reporter, who lived in East Africa and reported from Addis Ababa, mentioned four problems:

  1. Electricity is unreliable, so the trains sometimes do not work. In early-20th century America, electric railroads and streetcar companies built their own power supply and were sometimes integrated concerns providing both streetcar and power service; but in more modern countries, there is reliable power for urban rail to tap.
  2. Not many people work in city center rather than in the neighborhood they live in. This, again, has historical analogs – there were turn-of-the-century Brooklynites who never visited Manhattan. Thus, a downtown-centric light rail system won’t get as much ridership as in a more developed city.
  3. The train is expensive relative to local incomes, so many people stick with buses or ride without paying.
  4. The railroad cuts through streets at-grade, to save money, and blocks off pedestrian paths that people use.

The Addis Ababa light rail system at least had reasonable costs. A more typical case for countries that poor is to build urban rail at premium cost, and the poorer the country, the higher the cost. The reason is most likely that such countries tend to build with Chinese or Japanese technical assistance, depending on geopolitics, and therefore import expensive capital for which they pay with weak currencies.

In India, the most functional and richest of the countries in question, there is much internal and external criticism that its economic growth is not labor-intensive, that is the most productive firms are not the ones employing the most people, and this stymies social development and urban growth. I suspect that this also means there is reluctance to use labor-intensive construction methods, that is cut-and-cover with headcounts that would be typical in New York, Paris, and Berlin in the early 20th century, or perhaps mid-20th century Milan and Tokyo. International consultancies are centered on the rich world and recommend capital-intensive methods to avoid hiring too many sandhogs at a fully laden employment cost of perhaps 8,000€ a month; in India, that is the PPP-adjusted gross salary of an experienced construction worker per year, and if capital is imported then multiply its cost by 3 to account for the rupee’s exchange rate value.

Poor-rich countries

Poor-rich countries are those on the margin of the developed world, such as the countries of Eastern and Southern Europe, Turkey, Israel, to a lesser extent South Korea, and the richer countries of Latin America such as Chile. These are clearly poorer than the United States or Germany. Their residents, everywhere I’ve asked, believe that they are poorer and institutionally inferior; convincing a Spaniard or an Italian that their country can do engineering better than Germany is a difficult task. Thus, these countries tend to engage in mimicry of those countries that they consider the economic center, which could be Germany in Southern Europe, Japan in South Korea, or the US or Spain in Spanish America.

However, being a poor-rich country is not the same as being a poor country. Italy is, by American or German standards, poor. Wages there are noticeably lower and living standards are visibly poorer, and not just in the South either. But those wages remain in the same sphere as American and German wages. The labor-capital cost ratios in Southern Europe are sufficiently similar to those of Northern Europe that it’s not difficult to imitate. Spain even mixed and matched, using French TGV technology for early high-speed rail but preferring the more advanced German intercity rail signaling system, LZB, to the French one.

Such imitation leads to learning. Spain imported German and French engineering ideas but not French tolerance for casual rioting or German litigiousness, and therefore can build infrastructure with less NIMBYism. Turkey invited Italian consultants to help design the early lines of the Istanbul Metro, but subsequently refined their ideas domestically in order to build more efficiently, for example shrinking station footprint and tunnel diameter to reduce costs. Seoul has a subway system that looks like Tokyo’s in many ways, but has a cleaner network shape, with far fewer missed connections between lines. As a result, all three countries – Spain, Turkey, Korea – now have innovative domestic programs of rail construction and can even export their expertise elsewhere, as Spain is in Ecuador.

Openness to novelty

Andrews-Pritchett-Woolcock stress the importance of openness to novelty in the public sector, and cite examples of failure in which bureaucrats at various levels refused to implement any change, even one that was proven to be positive, because their goal was not to rock the boat.

Cultural cringe is in a way a check on that. Isomorphic mimicry is an attempt to combine agenda conformity and closeness to novelty with a desire to have what the richest countries have. But in poor-rich countries, isomorphic mimicry is real imitation – there is ample state penetration in a country like Spain or Turkey rather than outsourcing of state capacity to traditional heads of remote villages, and education levels are high enough that many people know how Germany works and interact with Germany regularly. A worker who earns 2,000€ a month net and a worker who earns 3,000€ a month can exchange tips about how to apply for jobs, how to prepare food, what brands of consumer goods to buy, and where to go on vacation. They cannot have this conversation with a worker who earns 10,000€ a month net.

Within the rich world, what matters then is the realization that something is wrong and the solution is to look abroad. It doesn’t matter if it’s a generally poor-rich region like Southern Europe or a region with a poor-rich public sector like the United States – there’s enough private knowledge about how successful places work, but what’s needed is a public acknowledgement and social organization encouraging imitation and lifting voices that are most expert in implementing it.

And for all the jokes about how the United States or Britain is like a third-world country, they really aren’t. Their public-sector dysfunctions are real, but are still firmly within the poor-rich basket; remember, for example, that despite its antediluvian signaling capacity, the New York City Subway manages to run 24 trains per hour per track at the peak, which is better than Shanghai’s 21. Health and education outcomes in the United States are generally better than those of middle-income and poor countries on every measure. This is a public sector that compares poorly with innovation centers in Continental Europe and democratic East Asia, but it still compares; to try to do the same comparison in a country like Nigeria would be nonsensical.

The upshot then is that implementing best practices in developed countries that happen to be bad at one thing, in this case public transportation in the United States, can work smoothly, much like Southern Europe’s successful assimilation of and improvements on Northern European engineering, and unlike the failures in former colonies in Africa and Asia. But people need to understand that they need to do it – that the centers of innovation are abroad and are in particular in countries that speak English non-natively.

Streets Before Trust

There’s an emerging mentality among left-wing urban planners in the US called “trust before streets.” It’s a terrible idea that should disappear, a culmination of about 50 or 60 years of learned helplessness in the American public sector. Too many people who I otherwise respect adhere to this idea, so I’m dedicating a post to meme-weeding it. The correct way forward is to think in terms of state capacity first, and in particular about using the state to enact tangible change, which includes providing better public transportation and remaking streets to be safer to people who are not driving. Trust follows – in fact, among low-trust people, seeing the state provide meaningful tangible change is what can create trust, and not endless public meetings in which an untrusted state professes its commitment to social justice.

What is trust before streets?

The trust before streets mentality, as currently used, means that the state has to first of all establish buy-in before doing anything. Concretely, if the goal is to make the streets safer for pedestrians, the state must not just build a pop-up bike lane or a pedestrian plaza overnight, the way Janette Sadik-Khan did in New York, because that is insensitive to area residents. Instead, it must conduct extensive public outreach to meet people where they’re at, which involves selling the idea to intermediaries first.

This is always sold as a racial justice or social justice measure, and thus the idea of trust centers low-income areas and majority-minority neighborhoods (and in big American cities they’re usually the same – usually). Thus, the idea of trust before streets is that it is racist to just build a pedestrian plaza or bus lanes – it may not be an improvement, and if it is, it may induce gentrification. I’ve seen people in Boston say trust before streets to caution against the electrification of the Fairmount Line just because of one article asserting there are complaints about gentrification in Dorchester, the low-income diverse neighborhood the line passes through (in reality, the white population share of Dorchester is flat, which is not the case in genuinely gentrifying American neighborhoods like Bushwick).

I’ve equally seen people use the expression generational trauma. In this way, the trust before streets mentality is oppositional to investments in state capacity. The state in a white-majority nation is itself white-majority, and people who think in terms of neighborhood autonomy find it unsettling.

Low trust and tangible results

The reality of low-trust politics is about the opposite of what educated Americans think it is. It is incredibly concrete. Abstract ideas like social justice, rights, democracy, and free speech do not exist in that reality, to the point that authoritarian populists have exploited low-trust societies like those of Eastern Europe to produce democratic backsliding. A Swede or a German may care about the value of their institutions and punish parties that run against them, but an Israeli or a Hungarian or a Pole does not.

In Israel, this is visible in the corona crisis: Netanyahu’s popularity, as expressed in election polls, has recently risen and fallen based on how Israel compares with the Western world when it comes to handling corona. In March, there was a rally-around-the-flag effect in Israel as elsewhere, giving Netanyahu cover to refuse to concede even though parties that pledged to replace him as prime minister with Benny Gantz got 62 out of 120 seats, and giving Gantz cover not to respond to hardball with hardball and instead join as a minister in Netanyahu’s government. Then in April and May, as Israel suppressed the first wave and had far better outcomes than nearly every European country, let alone the US, Netanyahu’s popularity surged while that of Gantz and the opposition cratered. The means did not matter – the entire package including voluntary quarantine hotels, Shin Bet surveillance for contact tracing, and a tight lockdown that Netanyahu, President Rivlin, and several ministers violated nonchalantly, was seen to produce results.

In the summer, this went in reverse. The second wave hit Israel earlier than elsewhere, and by late summer, its infection rate per capita was in the global top ten, and Israel had the largest population among those top ten countries. In late September it reached around 6,000 cases a day, around 650 per million people. The popularity of Netanyahu’s coalition was accordingly shot; Gantz himself is being nearly wiped out in the polls, but the opposition was holding steady, and Yamina, a party to the right of Likud led by Naftali Bennett that is not currently in the coalition and is perceived as more competent, Bennett himself having done a lot to moderate the party’s line, surged from its tradition 5-6 seats to 16.

Today the situation is unclear – Israelis have seen the state fight the second wave but it was not nearly as successful as in the spring, and right now there is a lot of chaos with vaccination. On the other hand, Israel is also the world’s vaccination capital, and eventually people will notice that by March Israel is (most likely) fully vaccinated while Germany is less than 10% vaccinated. Low-trust people notice results. If they’re disaffected with Netanyahu’s conduct, which most people are, they can then vote for a right-wing-light satellite party like New Hope, just as many voted Kulanu in 2015, which advertised itself as center, became kingmaker after the results were announced, and immediately joined under Netanyahu without trying to seriously negotiate.

Streets lead to trust

The story of corona in Israel does not exist in isolation. Low trust in many cases exists because people perceive the state to be hostile to their interests, which happens when it does not provide tangible goods. Many years ago, talking about his own history immigrating from the Soviet Union in the 1970s, Shalom Boguslavsky credited the welfare state for his integration, saying that if he’d immigrated in the 1990s he’d probably have ended up in a housing project in Ashdod and voted for Avigdor Lieberman, who at the time was running on Russian resentment more than anything.

In Northern Europe, perhaps trust is high precisely because the state provides things. My total mistrust of the German state in general and Berlin in particular is tempered by the fact that, at queer meetups, people remind me that Berlin’s center-left coalition has passed universal daycare, on a sliding scale ranging from 0 for poor parents to about €100/month for wealthy ones. This more than anything reminds me and others that the state is good for things other than dithering on corona and negatively stereotyping immigrant neighborhoods.

Such provisions of tangible goods cannot happen in a trust before streets environment. This works when the state takes action, and endless public meetings in which every objection must be taken seriously are the death of the state. It says a lot that in contrast with Northern Europe, in the United States even in wealthy left-wing cities it is unthinkable that the municipality can just raise taxes to pay teachers and social workers better. Low trust is downstream of low state capacity. Build the streets and trust will follow.