“Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
“…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
“…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
“There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
“Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
“…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
“…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
“Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
“…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
“…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
“…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
“…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
Coverage of infrastructure investment and delivery, from transportation and energy systems to construction costs, permitting, public capacity, and project productivity. The archive examines when public capital raises growth and why projects can become costly or slow.
AI Summary.Inflation-adjusted US public transit bus prices show almost no trend by bus type, with electric buses holding slightly above $1m, hybrids around $850,000, and diesels near $500,000 — the same level as in 1983.
Léa Bou Sleiman, Edward Glaeser, Julia Shephard, and Samantha SilverbergAmerican Enterprise Institute
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In the US, prices of private vehicles have dropped 40% (quality adjusted) since 1995, but costs of US-produced transit buses have remained flat, exceeding foreign prices. A duopoly in manufacturing, customization, and “Buy America” rules keep costs high.
Have inflation-adjusted public transit bus prices changed over time?
Core argument: The median inflation-adjusted price of a US electric transit bus has hovered slightly above $1 million across the period covered, showing almost no trend despite rapid improvements in electric vehicle technology.
Our data [shows] US buses are expensive. The prices are corrected for inflation to 2024 dollars. There is almost no trend in any of the median prices within bus type. The median price of an electric bus hovers slightly above $1 million through-out this period, which may be surprising given the rapid improvements in electric vehicle technology. (A counterargument is that the improvements in the technology led to rising prices, but the same does not hold for heavy-duty electric vehicles.) The cost of a hybrid bus rose until 2015 but has remained relatively constant since then at about $850,000. Diesel buses hover around $500,000, just as in 1983, when New York bought 325 buses from General Motors.
Takeaways by Macro Roundup® AI
The median inflation-adjusted price of a US electric transit bus has hovered slightly above $1 million across the period covered, showing almost no trend despite rapid improvements in electric vehicle technology.
Median US diesel bus prices, in 2024 dollars, sit around $500,000 — the same level as in 1983, when New York bought 325 buses from General Motors.
Median hybrid bus prices rose until 2015 and have remained relatively constant since then at about $850,000.
Related Articles:
The Stationary Bandits of New York City— New York City's construction costs exceed international benchmarks: Paris installs metro platform edge doors for about €3.7m per station while the Metropolitan Transportation Authority says it needs $55m per station. The author argues stringent crane operator licensing and sidewalk shed regulations protect a small number of unionized contractors from competition.
Transit Costs Project— Five of the world's six most expensive subway lines are in New York City, where subway construction averages $1.5bn per km, far above global norms. The costs are attributed to complex regulation, labor expenses, and logistical challenges in a dense urban setting.
Economic Perspectives on Infrastructure Investment— US infrastructure projects cost more than international counterparts, averaging $1,601m per mile versus a global average of $478m, with a median of $965m per mile compared with $299m outside the US. Contributing factors include complex project designs, regulatory delays, elevated labor costs, and procurement and project management inefficiencies, while land costs are a minor component.
AI Summary.The US cannot fill about a third of the more than 400,000 new engineering roles created each year, and the UK faces a shortfall of 1 million engineering jobs as 20% of its engineers retire. Shortages of skilled workers raise costs and lengthen timelines for building electricity grids and data centers.
Akshat Rathi, Olivia Rudgard and Josh SaulBloomberg
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Aging populations and anti-immigration rhetoric in rich countries are forcing companies building electricity infrastructure to find creative solutions to meet surging demand. The US is unable to fill a third of its 400k+ new annual engineering roles.
Are engineer shortages raising costs and delaying grid and data center construction?
Core argument: The US cannot fill about a third of the more than 400,000 new engineering roles created each year, while 20% of the UK's engineers will retire by 2030, leaving a shortfall of 1 million jobs.
How do you get more labor? “You either birth them or you import them,” says Zeke Hernandez, professor at the Wharton School of the University of Pennsylvania. “But in an environment of declining birth rates, increasing retirements and now a restrictive immigration regime, shortages become quite severe.” The US is already unable to fill about a third of its more than 400,000 new engineer roles created each year. The UK will see 20% of its engineers retire by 2030 — leaving a shortfall of 1 million jobs. Skilled worker shortages lead to higher costs and longer timelines to build much-needed infrastructure, such as electricity grids. This is a problem for the US and Europe, which are seeing a surge in demand for power thanks to electric cars, heat pumps and massive data centers. The severe shortage of skilled workers is slowing progress towards electrifying everything. Some data center builders in the US are delaying new work, while others are having to plan projects two years in advance instead of six months.
Takeaways by Macro Roundup® AI
The US cannot fill about a third of the more than 400,000 new engineering roles created each year, while 20% of the UK's engineers will retire by 2030, leaving a shortfall of 1 million jobs.
Wharton professor Zeke Hernandez argues labor comes only from births or immigration, and that declining birth rates, rising retirements and a restrictive immigration regime make shortages quite severe.
Skilled worker shortages raise costs and lengthen timelines for infrastructure such as electricity grids, with some US data center builders delaying new work and others planning projects two years ahead instead of six months.
Related Articles:
Chip Industry Sees Labor Shortages Threatening US Expansion Plan— The Semiconductor Industry Association projects US chipmakers will add roughly 115,000 jobs by 2030, but estimates about 58% could go unfilled based on current degree completion rates. The group says too few Americans study science, engineering, math and technology, while many foreign-born engineering graduates leave the US.
Skilled Workers Are Scarce, Posing a Challenge for Bidens Infrastructure Plan— A shortage of skilled construction labor poses a challenge to large-scale U.S. infrastructure spending, with only 10% of infrastructure workers under 25 versus 13% of all U.S. workers and a median age of 53 for construction and building inspectors. The construction industry faces a projected shortfall of 2m workers, and 88% of contractors report difficulty finding skilled labor.
AI Summary.The authors estimate that country pairs whose maritime routes were shortened by the Suez Canal saw lower shipping costs and times and significantly faster trade growth than unaffected pairs, with the gains persistent and taking about five years to fully materialize. They argue the canal functioned as a global public good associated with pure trade creation rather than trade diversion.
David Jacks, Christopher Meissner, and Nikolaus WolfNational Bureau of Economic Research
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.@cmicmeissner et al find that the opening of the Suez Canal led to a 72% increase in bilateral trade for affected country pairs relative to unaffected pairs. The boost to steam shipping spilled over to reduced shipping costs on non-Suez routes as well.
How much do shorter shipping routes boost trade growth?
Core argument: Country pairs affected by the Suez Canal, such as British India and the United Kingdom, saw lower shipping costs and times and significantly faster trade growth from 1865 to 1900 than unaffected pairs like the United Kingdom and the United States.
Using multiple sources of data on bilateral trade, we find that country pairs that were affected by the Suez Canal (e.g., British India and the United Kingdom) experienced lowershipping costs/times and significantly faster growth in trade from 1865 to 1900 relative to pairs that were unaffected by the opening of the canal (e.g., the United Kingdom and the United States). We do so by running an event study on the canal’s opening in the context of a structural gravity equation [which relates the volume of trade to the inverse square of distance], ruling out the role of pre-trends and finding that the rise in trade for affected country pairs was persistent over time but took roughly five years to fully come into play. Across different sub-samples, time horizons, and sources of data, we find quantitatively similar results. We additionally document how the Suez Canal differentially affected trade on the basis of the proportional changes in maritime distances it induced and how the Suez Canal was effectively a global public good. [We argue that rather than trade diversion,] the canal was associated with pure trade creation .
Takeaways by Macro Roundup® AI
Country pairs affected by the Suez Canal, such as British India and the United Kingdom, saw lower shipping costs and times and significantly faster trade growth from 1865 to 1900 than unaffected pairs like the United Kingdom and the United States.
An event study of the canal's opening within a structural gravity equation rules out pre-trends and finds the trade increase for affected pairs was persistent, taking roughly five years to fully materialize.
The Suez Canal's effect on trade varied with the proportional changes in maritime distances it induced, and the authors argue it functioned as a global public good associated with pure trade creation rather than trade diversion.
Related Articles:
Economic Perspectives on Infrastructure Investment— US infrastructure projects cost more than international counterparts, averaging $1,601m per mile versus a global average of $478m, with a median of $965m per mile compared with $299m outside the US. Contributing factors include complex project designs, regulatory delays, elevated labor costs, and procurement and project management inefficiencies, while land costs are a minor component.
The Economics of Public Investment Crowding in Private Investment— Goods with strong positive externalities—such as lower carbon emissions, supply chain resilience, and national security—can be underprovided by markets because private producers do not capture all the social benefits. Government support that lowers firms' production costs can correct this shortfall, de-risk new technologies, and make domestic manufacturing cost-competitive.
Investment in Infrastructure and Trade: The Case of Ports— Modeling US ports with queueing theory and demand estimation, the authors estimate that port infrastructure investment yields substantial trade and welfare gains only if well targeted—net of costs, returns are positive at a minority of US ports. They also find sizable spillovers, as upgrading one port decongests others, and that macroeconomic volatility can substantially alter returns and their geography.
AI Summary.A survey of state transportation department procurement matched to project-level cost data finds infrastructure costs are associated with agency capacity and limited competition for government construction contracts. The authors estimate that a one standard deviation increase in transportation department employment per capita correlates with 16% lower costs.
Zachary Liscow, Will Nober, and Cailin SlatteryBrookings Institution
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A 50-state survey finds that inadequate capacity of state DoT staff has been a key driver of higher US infrastructure costs; states that are more reliant on consultants vs. DoT staff spend $70,000 higher cost per lane-mile. @ZLiscow @cailin_slattery
Do agency staffing and contractor competition lower infrastructure costs?
Core argument: States whose department of transportation employees are rated average in quality have almost 30% higher infrastructure costs per mile than states rating their DOT employees as "moderately high quality," according to the authors' survey-linked cost data.
We conduct a survey of infrastructure procurement practices across the 50 states, [interviewing] both employees at each state department of transportation (DOT) and the road builders that win contracts to build and maintain roads. We correlate the survey with a new, detailed dataset of project-level infrastructure costs. We find that two important inputs in the procurement process appear to particularly drive costs: (1) the capacity of the DOT procuring the project and (2) the lack of competition in the market for government construction contracts. A state with [average] employees has almost 30% higher costs per mile than one that rates the DOT employees as “moderately high quality.” When we measure capacity using external data we show that states with higher DOT employment per capita have lower infrastructure costs. A one standard deviation increase in DOT employment per capita is correlated with 16% lower costs.
Takeaways by Macro Roundup® AI
States whose department of transportation employees are rated average in quality have almost 30% higher infrastructure costs per mile than states rating their DOT employees as "moderately high quality," according to the authors' survey-linked cost data.
A one standard deviation increase in state DOT employment per capita is correlated with 16% lower infrastructure costs, measured using external employment data.
The authors find that two inputs in the procurement process appear to particularly drive infrastructure costs: the procuring DOT's capacity and the lack of competition in the market for government construction contracts.
The Death of NYC Congestion Pricing— New York's Metropolitan Transportation Authority has a $19bn operating budget and roughly $11bn in annual capital spending yet builds relatively little, and 4 of the 5 most expensive projects tracked by the NYU-Marron Institute Transit Costs Project are in New York City. High transit construction costs are an America-wide problem, but the author argues they are worst in the city.
The Nimby Tax On Britain and America— New motorway bridges in the UK cost more than 3x as much per lane mile as in France, Denmark, or Norway, and adding lanes to existing British roads costs twice as much as in Germany. In both comparisons, only the US has higher costs.
AI Summary.New York's Metropolitan Transportation Authority has a $19bn operating budget and roughly $11bn in annual capital spending yet builds relatively little, and 4 of the 5 most expensive projects tracked by the NYU-Marron Institute Transit Costs Project are in New York City. High transit construction costs are an America-wide problem, but the author argues they are worst in the city.
Apricitas EconomicsJoseph Politano
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New York City’s transit construction costs are significantly higher than other advanced economies; in fact 4 of the 5 of the most expensive projects tracked by the NYU-Marron Institute Transit Costs Project are in New York City. @JosephPolitano
Does New York spend heavily on transit while building relatively little?
Core argument: The MTA runs a $19 billion operating budget—larger than many states—plus roughly $11 billion a year in capital investment, yet builds relatively little with it.
A lot of congestion-pricing criticism posits that the MTA already has “enough money” and just needs to spend it better. In many ways, they have a great point—the MTA has a total operating budget of $19B, an amount larger than many states, plus a capital investment budget of roughly $11B a year, and they build relatively little with it. High costs for new public transportation infrastructure is an America-wide problem but is at its absolute worst within the city—of the 5 most expensive projects tracked by the NYU-Marron Institute Transit Costs Project, 4 are in New York City. It would be great if New York could build transit infrastructure at something approaching the cost-per-mile of other dense urban areas in much of Asia, continental Europe, or South America, but even reaching the still-boondoggle levels of the Bay Area Rapid Transit extension to San Jose would be a massive improvement. Even as billions are spent, construction takes much longer to complete in NYC—in the 15 years it took to complete the East Side Access project, the Delhi Metro in India added 7 new lines and increased ridership by more than 1B trips per year.
Takeaways by Macro Roundup® AI
The MTA runs a $19 billion operating budget—larger than many states—plus roughly $11 billion a year in capital investment, yet builds relatively little with it.
Four of the five most expensive projects tracked by the NYU-Marron Institute Transit Costs Project are in New York City, where America-wide high transit construction costs are at their worst.
During the 15 years New York took to complete East Side Access, the Delhi Metro added 7 new lines and increased ridership by more than 1 billion trips per year.
The Nimby Tax On Britain and America— New motorway bridges in the UK cost more than 3x as much per lane mile as in France, Denmark, or Norway, and adding lanes to existing British roads costs twice as much as in Germany. In both comparisons, only the US has higher costs.
AI Summary.New motorway bridges in the UK cost more than 3x as much per lane mile as in France, Denmark, or Norway, and adding lanes to existing British roads costs twice as much as in Germany. In both comparisons, only the US has higher costs.
John Burn-MurdochFinancial Times
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.@jburnmurdoch notes that American and British infrastructure costs are far higher than other advanced economies. He cites research that attributes this to “Nimbyism” such as environmental reviews.
Do Britain and America pay far more to build roads?
Core argument: New motorway bridges in the UK cost more than three times as much per lane mile as in France, Denmark, or Norway.
New motorway bridges in the UK cost more than three times as much per lane mile than in France, Denmark, or Norway, and additional lanes on existing British roads are twice as expensive as in Germany. In both cases, only the US faces even higher costs.
Takeaways by Macro Roundup® AI
New motorway bridges in the UK cost more than three times as much per lane mile as in France, Denmark, or Norway.
Adding lanes to existing British roads costs twice as much as in Germany, with the United States the only country facing higher costs than the UK on both bridges and road widening.
AI Summary.State audits and independent evaluations of corporate tax incentive programs have found poor targeting, weak oversight, and excessive costs that harmed rather than benefited local governments. Examples include $5.5bn in New York tax credits for a Micron facility and up to $1.75bn in Michigan incentives for a Ford electric vehicle plant.
Nathan Jensen and Steven PedigoNew York Times
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.@iamstevenpedigo and @NateMJensen write that the CHIPS Act, which requires state and local subsidies to access federal dollars, has thus far been gamed by corporations to the detriment of state and local governments.
Do corporate tax incentives harm the local governments that offer them?
Core argument: New York offered Micron $5.5 billion in tax credits over the life of the project, costing local and state governments upward of $95 million annually, far more than they are likely to gain from hosting the new facilities.
Offering tax breaks and other incentives to corporations has been proved to be one of the least effective ways for localities and states to grow their economies. State audits and independent evaluations of these programs found poor targeting of incentives, weak oversight and excessive costs that harmed rather than benefited local governments. The CHIPS Act and the Inflation Reduction Act are threatening to give [unproductive tax incentives] an enormous infusion of steroids. Micron chose to build in upstate New York [after] the state offered a staggering $5.5 billion in tax credits over the life of the project … costing local and state governments upward of $95 million annually, far more than they are likely to gain from hosting the new facilities. In February, Ford agreed to build its new electric vehicle plant in Michigan, but only after extracting a promise of as much $1.75 billion in state and local incentives...enough money to pay all the new workers’ salaries for around 15 years.
Takeaways by Macro Roundup® AI
New York offered Micron $5.5 billion in tax credits over the life of the project, costing local and state governments upward of $95 million annually, far more than they are likely to gain from hosting the new facilities.
Ford agreed to build its new electric vehicle plant in Michigan only after extracting a promise of as much as $1.75 billion in state and local incentives, enough to pay all the new workers' salaries for around 15 years.
State audits and independent evaluations of corporate tax-break programs found poor targeting of incentives, weak oversight and excessive costs that harmed rather than benefited local governments, with the CHIPS Act and the Inflation Reduction Act threatening to expand such incentives.
AI Summary.India is spending 1.7% of GDP on transport infrastructure this year, roughly twice the level in the United States and most European countries. The stated aim is to cut domestic logistics costs from about 14% of GDP to 8% by 2030.
Economist StaffThe Economist
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In an effort to improve India’s growth trajectory, India’s government is making significant investments in railroad and highway infrastructure.
Is India outspending Western countries on transport infrastructure?
Core argument: India will spend 1.7% of GDP on transport infrastructure this year, roughly twice the level in America and most European countries.
India will spend 1.7% of GDP on transport infrastructure this year, around twice the level in America and most European countries. If such infrastructure were a central-government department, it would have the third-biggest budget after the finance and defence ministries. The stated aim of the splurge is to cut the cost of logistics within India from around 14% of GDP today to 8% by 2030.
Takeaways by Macro Roundup® AI
India will spend 1.7% of GDP on transport infrastructure this year, roughly twice the level in America and most European countries.
India's stated aim for the transport spending is to cut domestic logistics costs from around 14% of GDP today to 8% by 2030.
India's transport infrastructure spending, were it a central-government department, would carry the third-biggest budget after the finance and defence ministries.
