New Jersey’s Governor Chris Christie rekilled the Hudson River tunnel project. He had killed it before, a couple of weeks ago, but then promised to reconsider his decision at the request of Transportation Secretary Ray LaHood.
Christie did not want to burden New Jersey taxpayers with the cost overruns, now anticipated to be at least $4 billion. Canceling the project means New Jersey has to repay the federal government $350 million spent on planning the project, which seems a bargain by comparison.
Christie’s original decision led to cries of outrage from economist Paul Krugman, who compared the tunnel to “Erie Canal. Hoover Dam. [And] The Interstate Highway System.” Christie’s rejection of the tunnel, said Krugman, “was a destructive and incredibly foolish decision on multiple levels.”
Krugman seems to think that any infrastructure is automatically worth funding. This sounds like the old “build-it-and-they-will-come” philosophy. We could build a sewage system for 10 million people in Pittsburgh, but the Pittsburgh urban area has less than 2 million people and it’s not growing particularly fast, so most of that sewage system would be wasted.
Krugman doesn’t even have his facts straight. He calls the planned tunnel the “second rail tunnel under the Hudson River.” It is true that the North RIver Tunnel–actually, two tunnels–which is used by Amtrak and New Jersey Transit, is used to near capacity. But that is the second rail tunnel under the river. The first tunnel–also two tunnels–is the Uptown Hudson Tubes, used by Port Authority trains. Opened two years before the North RIver Tunnels, the Uptown Tubes are not used to capacity.
In any case, Krugman doesn’t seem to be able to distinguish between infrastructure that is worth having and infrastructure that is a waste. Was the Erie Canal worthwhile? Yes, it paid for itself. But the C&O Canal and almost every other American canal that followed proved to be financial disasters (mainly because steam railroads were already taking over by the time they were built).
Was Hoover Dam worthwhile? Probably, unless you hate Las Vegas. But dozens of other dams built by the Corps of Engineers and Bureau of Reclamation since that time were huge wastes of money.
Was the Interstate Highway System worthwhile? Overall, the answer is certainly “yes,” but that doesn’t mean that every single mile of the system was worth it or that building more miles is inevitably worthwhile.
How should policy makers decide whether a particular piece of infrastructure is worthwhile? The simple question to ask is: will it pay for itself out of user fees? If the answer is “yes,” then it is worthwhile. Of course, if the answer for the proposed Hudson River Tunnel was “yes,” then Governor Christie would not have had to cancel it.