Gresham's law states that bad money drives out good. This can be seen in local infrastructure spending decisions. Too often, cities that have more infrastructure than they have tax base to sustain are induced into moving money from maintenance and into new construction as a local match for federal infrastructure programs. The good money -- maintenance -- is chased out by the bad money -- new construction -- accelerating the critical declines in existing systems while perversely adding even more infrastructure to maintain.

It would be really easy to say that politicians love ribbon cuttings and, since there are no good photo opportunities for filling potholes and replacing leaky pipes, politicians prefer new construction to maintenance. There is some truth to this, but what we actually are seeing is the inertia of an economy that doesn't quite have the incentives to pivot from the old, failing model.

Our economy is based on growth. All our pension promises, public debt payments and entitlement spending rely on aggressive levels of future growth. We used to be able to create this growth through infrastructure investments; build an interchange and a frontage road and get the big box stores, strip malls and housing subdivisions that result. Our entire economy -- from local zoning codes to bank financing programs to insurance underwriting to auto sales and on and on -- is oriented around repeating this simple formula, despite the diminishing returns.

What we have not figured out -- and what we won't figure out with another flood of federal infrastructure spending -- is how to translate maintenance into growth. How do we go out and fill potholes and fix leaking pipes and have that result in additional wealth in our neighborhoods? This is a daunting challenge that requires us to rethink -- from bottom to top -- how we develop our places. We need to modernize our zoning codes, building standards, housing incentives, insurance programs, etc. There are a lot of people trying to do this, but they get cast aside every time the federal gravy train rolls into town.

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4. Federal infrastructure spending induces local governments to take on unproductive debt.