In this video, I'm going to talk about something that's both incredibly important, and massively
underappreciated: Infrastructure investment.
Our modern society is built upon massively complex supply chains, and underpinning much
of what makes that possible are equally massive, fundamental infrastructures.
And yet, despite the importance of these systems, whenever they're brought up, much of the population
balks at the price tag, deeming them too costly to be worth the effort.
But is that really the case?
There's lots of great examples to show that, despite their high initial investment cost,
the return from these infrastructure investments is often much higher than the cost itself.
For example, the Erie Canal.
Originally opening in 1825, at a cost of $7 million, the canal was one of the first massive
infrastructure projects in the United States, connecting the eastern seaboard to what was,
at the time, the "Western" United States.
The project received no shortage of push-back from both the public and politicians alike,
but nonetheless construction pushed forward, and eventually went on to generate over $121
million of economic activity.
Another great example of infrastructure paving the way for economic growth is the US Interstate
Highway System.
After the second World War, and upon observing the German Autobahn, US President Eisenhower
determined that an interconnected system of highways would create not only a strong defensive
network, but would also drive commercial traffic, and pushed for Congress to approve funding.
The initial investment of over $500 billion in 2016-value dollars was incredibly high,
but has in turn enabled over $3 trillion of commercial value.
Even looking back into more distant history, we can see infrastructure projects like the
aqueducts constructed before and during the Roman empire.
The project was funded through a mix of public and private investment, and while it's likely
impossible to put either a financial cost or return on investment for the project, the
benefits can be clearly seen in another way: social stability.
This is another often-overlooked benefit of strong infrastructure, that as people's basic
needs are fulfilled, they stop seeing their neighbors as competitors, or even enemies,
which translates to a stronger sense of community.
Economic growth and social advancement are not the only benefits of infrastructure investment
though; it can also act as a life-raft during challenging economic times.
The late-1970s to early-1980s were a time of both massive inflation and a recession.
The recovery is often credited, and rightfully-so, to sound monetary policies from Paul Volcker
at the Federal Reserve.
However the subsequent economic recovery and expansion likely couldn't have happened without
both the computer and Internet industries that exploded onto the market during this
period.
And like before, these industries existed due to public infrastructure investments that
happened decades earlier.
Public investment in computers can be traced all the way back to the census of 1890, which
the US government contracted with the predecessor of IBM to design and build a tabulating machine
to enable faster census accounting, and later invested in the more modern UNIVAC for the
same purpose.
Likewise, the Internet can trace its roots to the US military's funding of Arpanet, a
network of connected computers to provide communication redundancy in the event of a
nuclear war.
Both of these industries, which owe their existence to early public funding, would go
on to generate trillions of dollars, and would drive the US and other world economies for
multiple decades.
So, understanding that public infrastructure investment leads to massive economic returns,
where can we go from here?
Well, there's lots of good potential options, but I think there are three areas that really
have the potential to act as both drivers of the economy AND help provide social stability:
Green Energy, Medical Technology, and Space Exploration.
Green energy infrastructure has the potential to not only be an economic boon, AND a source
of social stability...it might also save life on our planet as we know it.
The transition of our energy infrastructure away from fossil fuels and onto renewables
such as solar, wind, hydro, and others, will have far-reaching knock-on effects for the
economy, creating hundreds of thousands of new jobs.
The costs associated with generating renewable energy will likely be lower as well, giving
those at the lowest socioeconomic levels more disposable income.
And finally, by working to stem global warming, we're literally saving the lives of people
not even born yet.
Next, medical technology is an area of innovation that is set to explode.
This is also an area that has seen some fundamental technology come online in the last few decades,
with genetic sequencing technology in the early 2000's, and the discovery of the CRISPR-CAS9
technique for genetic editing.
And while the global pandemic of 2020 was an absolute tragedy, one of the few positive
outcomes was the massive investments poured into vaccine research.
The knowledge gained from this is likely to not only help solve the terrible pandemic
humanity has faced, but will also drive innovation in eradicating other diseases.
This shows that investment in the medical technology field, especially with all of the
new technology that has become available, is likely going to create and drive entire
new areas of health care.
And finally, space exploration.
Beginning in the 1960s, space went from the realm of science fiction, to science fact.
The massive public investment that went into programs like Apollo generated tons of research
that leaked out into the broader economy into technologies like LEDs, smartphone cameras,
water filtration systems, and more.
And now, we're on the cusp of a new wave of economic productivity generated from space.
With companies like SpaceX working with NASA to drive down the cost of access to space,
while at the same time driving up reliability and speed, it has the potential to hyper-charge
areas like communication, precious resource acquisition, and more.
So that's why it's so important for us to understand the value of infrastructure investment.
Certainly, the up-front price-tag for many projects can be tough to swallow, but history
has shown that these investments generally come back to pay for themselves either through
direct economic activity, or indirectly by improving lives and maintaining social stability.
And with all the technology and data we have available now, there's never been a better
time to begin investing for the future!
Thanks for watching "Building the Future: What History Can Teach Us About Infrastructure
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