What an infrastructure bonanza could mean for America’s economy

JOE BIDEN’S plan to lavish spending on infrastructure is a crucial part of his bid for a transformative presidency. Much of the first tranche of around $2.7trn, now entering the meatgrinder of congressional politics, will be spent on greening the American economy and tackling inequalities. About a quarter will be directed towards overhauling transport, water and other basic infrastructure—a vast sum, by recent standards. Bridges to nowhere and white elephants are not the stuff of which proud legacies are made, and history’s view of the bill will depend on its specifics, which are still to be determined. Yet economic research suggests that, in the right circumstances, basic infrastructure spending has significant, positive effects in the long run.A clear understanding of infrastructure’s contribution to growth has been a long time coming. In 1944 Leland Jenks, an economic historian, extolled America’s railways as a transformative force, noting that “the conviction that the railroad would run anywhere at a profit put fresh spurs to American ingenuity and opened closed paddocks of potential enterprise.” Yet Robert Fogel, a Nobel-prizewinning economist, argued in 1964 that the “social savings” generated by railways—the contribution to economic growth relative to alternatives, like canals—was in fact rather modest: worth perhaps at most 3% of annual output in 1890.