Great Powers Invest in Infrastructure. The West Was the Prime Example.
This article is reprinted with permission from Stratfor Worldview.
- How the West responds to its eroding strategic lead in building, updating and replacing infrastructure will do much to shape the 21st century.
- As Western governments struggle to find ways to invest in infrastructure, China talks of spending up to $8 trillion in overseas projects through its Belt and Road Initiative.
- The associated infrastructure costs of new technologies are great, the investment risky. But the payoffs are greater and the failure to invest is riskier.
For the past 250 years, it has been easier to move people, goods, capital and ideas around the West than anywhere else on earth. Western Europe and North America have led the way not just in inventing new technologies of transport and communication, but also — and equally importantly — in building the infrastructure without which these technologies would be useless. The West has sunk astonishing amounts of energy and capital into updating and replacing its infrastructure, over and over again, as new technologies have emerged.
Having the best infrastructure has been a key to global dominance since the 18th century, but in the early 21st, there are alarming signs the West is losing its strategic lead. Everywhere, infrastructure is creaking and crumbling. Every part of the system seems to be getting old at the same time. How the West deals with this challenge — or, perhaps, opportunity — will do much to shape the geoeconomics and geopolitics of the 21st century.
The Frustrations of Aging Infrastructure
Almost everyone in the West has experienced the frustrations of aging infrastructure. As I began writing this column, in fact, I was getting my electricity from a gasoline-powered home generator. With meteorological models predicting that much of Northern California was about to see winds of 40-55 miles per hour (64-88 kilometers per hour) and gusts reaching 60-70 mph, Pacific Gas and Electric (PG&E), California's main electricity provider, turned off the power.
PG&E had good reasons for doing this. In November 2018, a poorly maintained steel hook holding up one of its high-voltage cables failed. When the cable fell to the tinder-dry forest floor, sparks ignited the Camp wildfire, killing at least 85 people and largely destroying the town of Paradise. The transmission line that started the fire was 98 years old (typically, such lines are expected to last about 50 years), and, according to internal PG&E documents dating to 2013, 49 of the steel towers supporting it required replacement. Nothing, however, was done. Lawsuits filed in the wake of the disaster have left PG&E — now caught up in acrimonious bankruptcy hearings — with more than $30 billion in liabilities.
PG&E is responsible for about 20,000 miles of power lines. So far as the company knows, its transmission towers are on average 68 years old (they were meant to last 65 years). The oldest tower dates to 1911, and the company simply has no idea of the age of roughly one-third of its towers. Hotter summers and declining winter rainfall are making California's fire seasons longer, and the state's drought from 2013 to 2017 left millions of dead trees surrounding many of PG&E's cables. So, there is a lot to worry about. Consequently, with high winds once again threatening to bring down cables, PG&E pulled the plug on Oct. 9. Unlike some smaller utilities, the company does not have the technology to localize shutoffs, so, despite living in one of the richest places on earth, some 700,000 separate accounts — representing perhaps as many as 2 million individuals — were affected. To make matters worse, PG&E's website crashed repeatedly as millions of people logged on trying to find out whether, or when, they would lose electricity (although I got a quick and accurate response by telephone on the third day of the cuts). The shutoff probably cost PG&E a further $2.6 billion.
On a talk show I heard driving to work one day during the shutoff, several angry callers accused California of having become part of the "Third World" — the kind of place where the electricity goes off if the wind blows. A confused political response only made things worse. Just 36 hours after telling Californians that this was "the new normal," Gov. Gavin Newsom, recognizing the level of public outrage, insisted that "this can't be the new normal."
Unfortunately, Newsom had it right the first time. This is indeed the new normal, and not just for California. Every four years, the American Society of Civil Engineers (ASCE) issues a report card on American infrastructure. ASCE awarded it an appalling D+ grade in both 2013 and 2017. The society estimates that the United States needs to spend $4.5 trillion — almost one-quarter of annual gross domestic product — by 2025 to get its roads, bridges, dams, ports, airports and power grid up to standard. Most American power lines and generators were built in the 1950s and 1960s, with 50-year lifespans. Almost one in three of the nation's bridges is over 50 years old; some railway lines in Amtrak's northeast corridor, from Washington to Boston, have been around for 111 years; and the U.S. Department of Transportation gives 32 percent of urban roads and 14 percent of rural ones failing grades. American airports are equally troubled. ASCE expects that 24 out of the 30 busiest airports will soon be exceeding their maximum passenger capacity on at least one day per week. Boarding a plane in an American airport and getting off in one of Beijing's glittering new terminals can be quite a study in contrasts: One flight I took recently was over an hour late leaving San Francisco because no one could get the door to the jetway open. Nothing like that happened at the other end.
The United States is hardly the only Western nation that has failed to maintain its infrastructure. Many of the United Kingdom's facilities are even older and have been underfunded even longer. I well remember the rail network grinding almost to a halt in 2000 after yet another deadly crash had revealed how many of the country's tracks were unsafe — only for would-be train travelers to take to their cars, creating record-beating traffic jams on England's inadequate roads.
But despite widespread agreement on the need for infrastructure investment, few Western governments have found ways to fund it. In the United States, President Donald Trump's 2018 proposal to use $200 billion of federal money to attract a further $1.3 trillion in investment from other sources seems to have gone nowhere. China, on the other hand, spent $328 billion on infrastructure in the first nine months of 2019 alone, and talks of investing a staggering $4 trillion to $8 trillion in overseas infrastructure through its Belt and Road Initiative. Anyone wondering how Sino-American competition will play out could do worse than to watch the infrastructure.
Great Costs, Greater Payoffs
Great powers have always invested in infrastructure. The earliest governments, formed 4,000-5,000 years ago along the Tigris, Euphrates, Nile, Indus and Yellow rivers, all paid close attention to irrigation. Around 500 B.C., the Persians built a royal road from Susa in southwest Iran to Sardis near the Aegean coast and tried to dig a canal at Suez. Rome, of course, built its famous roads and aqueducts, and in the seventh century, China's Tang Dynasty rulers linked the Yellow and Yangtze rivers with the Grand Canal. Only great states, with great revenues, could fund and maintain such projects, and the crumbling of roads and silting-up of canals was always a sign of state failure.
Modern infrastructure differs from ancient, though, in its constant need for updating. As late as 1700, Roman roads, rutted and patched as they were, were still the best in Europe, but two generations later, Thomas Telford and John Macadam found new ways to surface and grade roads so that bigger coaches could go faster. English engineers furiously straightened and dredged rivers and dug canals. By 1800 they had reduced travel times from London to Manchester by two-thirds and those to Edinburgh by three-quarters.
What really changed the game, though, was the invention of the steam engine, which converts heat into motion by burning coal to boil water and using the steam to power pistons. James Watt and Matthew Boulton built the first cost-effective version in 1776, and in 1804, Richard Trevithick used a miniaturized, high-pressure engine to send a wheeled cart along steel tracks. The first commercial railway opened in 1825, and in the 1840s, half of all British private investment went into railroads. Travel times between the furthest corners of the United Kingdom fell from days to hours.
Because of North America's greater size, creating comparable infrastructure had greater costs, but the payoffs were greater too. Continuous tracks linked New York to San Francisco in 1869 and a Montreal-to-Vancouver line connected Canada in 1885. As well as opening the Midwest and Prairies' fertile fields to urban markets, these railroads also accelerated the United States and Canada's coherence as continentwide, bicoastal nations, unlike anything known in Europe. Further technological advances and massive infrastructure investments effectively drew North America closer to Europe and shifted the world's wealth and power westward. The first steamship crossed the Atlantic in 1827, and by 1840, there were enough steamships (and berths to receive them) for the Cunard Line to begin regular services. Just four years later, Samuel Morse sent the first telegraph message ("What hath God wrought") from Washington, D.C., to Baltimore, Maryland; the first transatlantic telegraph cable was laid in 1866.
As the necessary infrastructure got built, steamships, canals, railroads and telegraphs shrank the rest of the planet too, to the geostrategic benefit of the most technologically advanced powers in North America and Europe. Britain slashed travel times to its all-important Indian colony by helping fund the Suez Canal, which opened in 1869. The next year, trains were running across India on a Bombay-Calcutta (Mumbai-Kolkata) railway, and in the 1870s, underwater telegraph cables linked London to India and Australia.
By then, though, more transformations had begun. London's Gas Light and Coke Company had opened the world's first gasworks in 1812, burning coal to produce gas for streetlights. By 1820, almost every town in England had gas lighting, requiring the construction of scores of gasworks, hundreds of miles of gas mains and hundreds of thousands of lamps. Over the next 30 years, gaslight spread across Europe and North America — but American cities had barely finished building their first gasworks when an entirely new technology, electric lighting, was demonstrated in Paris and London. The electric lights of the 1840s were dim and unreliable, but in 1879, Thomas Edison produced commercially viable light bulbs that were 10 times brighter than the strongest gas mantles and 100 times brighter than candles. Just three years later, he opened electricity-generating plants in London and New York. Across the next half-century, countries had to design and build a vast and entirely new infrastructure of generators, turbines, transmission lines and domestic and industrial wiring. Some of it, as PG&E bears witness, is still in service today.
In 1883, just one year after Edison began generating electricity, the German engineers Gottlieb Daimler and Wilhelm Maybach built an internal combustion engine able to burn gasoline, a byproduct of the crude oil being pumped out of the ground for distillation into kerosene (used in portable oil lamps). Gasoline had such a high energy density that engines could be made small enough to mount in family cars, creating yet another vast new market — and demand for more entirely new infrastructure. Rigs and pipelines were required to reach more deeply buried oil, refineries to separate gasoline from the heavier fractions, factories to make cars, roads for them to run on and, of course, huge networks of refueling stations and mechanics to keep the machines going. Even more powerful engines made aircraft possible, calling forth still more kinds of infrastructure.
And on it has gone, with telephones, radios, televisions, the internet, container ships and communication satellites each requiring new infrastructure, sometimes complementing and sometimes replacing what had gone before. Many of the inventors of these new technologies were American, but what really made the United States the world's greatest power was the efforts of companies like PG&E in building the infrastructures that made the technologies work, pushing roads, cables, pipelines, transmitters and receivers out across the continent's mountains, forests, swamps and deserts. The nonstop infrastructural revolutions of the 19th and 20th centuries have consumed staggering amounts of capital, but without them, the West would never have attained global dominance.
Risky to Embrace, Riskier to Ignore
One lesson we might draw from the history of infrastructure is that unless the United States spends $4.5 trillion on roads, power lines and the like across the next five years (and Western Europe spends even more) the West can expect to see its geostrategic dominance erode; and that the closer China gets to investing $4 trillion to $8 trillion in its Belt and Road Initiative (and perhaps a comparable amount in internal construction), the faster it will catch up. In my book Why the West Rules — For Now, I made slightly tongue-in-cheek calculations that Eastern social development will catch up with Western in 2103; but if current trends in infrastructure spending continue, the West might be passing off the baton well before then.
However, that is not the only possible interpretation. It would not have made much sense to have spent a fortune on building better gasworks in the age of electrification, or on perfecting the coal-fired boiler once oil-fired versions were available. The 2020s and 2030s are likely to see even greater inventiveness, and even greater demands for entirely new infrastructure than between the 1840s and 1890s. Will it really be wise for the West to spend a trillion dollars replacing huge, centralized power plants that burn coal, oil, natural gas and nuclear energy and install thousands of miles of new cables to carry their electricity to consumers? The next few decades are likely to bring much more cost-effective solar- and wind-powered generation, producing power locally and needing an entirely different infrastructure of transmission networks that might only be a few miles across.
Changes in transport promise to be even greater. Electric cars will require a new infrastructure of recharging stations, replacing the 20th century's gas stations. But even as money is being poured into this, telecommuting and Uberfication are already making a great number of cars less necessary. The arrival of driverless vehicles, called up at the tap of an app, will only accelerate this trend. We will need fewer trucks, goods trains, container ships and cargo planes to move materials around as 3-D printing takes off, and "vertical farming" in factories might have similar consequences, by moving food production closer to consumers. We should expect to need fewer roads, ports and train lines — and far fewer of the parking spaces that consume as much as 20 percent of the surface of some cities. Perhaps these can be reclaimed, like so many 19th century canals, and turned into parks and outdoor cafes.
Leaping to embrace new technologies and pay the associated infrastructure costs is a risky business, as it has been since the 18th century. But not making the leap might be riskier still.