President Trump is wise in many things, but he has two economic beliefs that are irredeemably foolish: low interest rates and infrastructure. To the joy of die-hard Hillary-lovers, I now propose to criticize one of those two beliefs: that in infrastructure. By and large, it is thoroughly overpriced currently, and very often yields far more costs than benefits, as examples around the world can show.

The infrastructure question has come up most recently in relation to China’s “Belt and Road” initiative, whose principal purpose appears to be to tie Third World countries to China through massive debt obligations. China’s upgrade of Kenya’s Nairobi/Mombasa railway, for example, is said to have cost twice what it should have, burdening the Kenyan economy and not yielding any significant return in Kenyan economic development. This is not simply a matter of Chinese foreign policy; from all accounts the country’s domestic infrastructure is equally ill-chosen, and in many cases superfluous. Among the many weaknesses in the Chinese economy, which I discussed a few weeks ago, an excess of pointless infrastructure and the debt associated thereto is among the most glaring.

There are many examples outside China of money being wasted on infrastructure, however. One study a few years ago calculated that the entire Channel Tunnel project across the English Channel had merely been a subsidy from infrastructure providers to consumers, and that its net effect on the economies of the countries concerned had been negative. Much of the Japanese infrastructure spending on rural roads has been wasted also, providing beautiful new highways for areas of the country where the population is declining.

Getting the population projections wrong in either direction is another way to mess up infrastructure investment. Underestimate and you must replace the facility long before its useful life is ended. Overestimate and you may end up like Cleveland; beautifully free from traffic jams because of its 1960s freeway system designed for three times today’s population but having to watch carefully for potholes because today’s shrunken population can’t afford proper maintenance.

Proponents regard infrastructure as essential, the industrial equivalent of brushing your teeth. Without it, we are supposed to believe that economic development would never happen, and countries would remain mired in poverty. To suggest this is nonsense, I propose a thought experiment: what would the British 19th and 20th Centuries have looked like if there had been no railways in Britain? The Industrial Revolution can be supposed to have started as scheduled, with steam engines to power the factories (these after all appeared nearly half a century before the railways) but, for whatever reason, it never occurred to anyone to lay tracks across the countryside and run trains on them.

Technologically, this would have slowed development in the medium term. Turnpike roads would have been developed further, and coach services, which had already grown greatly in the century to 1830, would have expanded further. Thus, capital in those services would not have been lost, as it was in our timeline, while the capital needed to build a network of railways would have been available for other purposes. We can suppose a certain amount of technological substitution, as fast steamships ran services up the major rivers and along the already developed canal network. If other countries such as the United States had used railways, Britain would have been at a modest technological and cost disadvantage, but not an insurmountable one, given the river, road and canal network that already existed.

Nevertheless, the Britain of 1890 would have looked very different. The working classes would not have acquired such mobility, goods would have remained more expensive in cities that were not close to major rivers or coasts, and the pattern of factory development would have been quite different, with heavy industry entirely concentrated along the coasts, where ocean transport was available.

Around 1890, the internal combustion engine would have appeared, as it did in our timeline, and its development would have been much faster, since the economic value added of automobiles and especially trucks and buses would have been much greater if there were no trains. A network of fast motorways would have appeared around 1910, and development would then have converged towards the world we now live in, with a denser road network and probably fewer private automobiles and far more use of buses, some of them perhaps articulated for long distance travel and high passenger loads. Naturally, short-haul aviation would also have benefited, although its disadvantages of cost and safety would in the relatively small Britain have prevented it developing much further than it is today (though air travel would be near-universal for long-haul routes like London-Glasgow.)

So far, we have seen only disadvantages from Britain not having railways, although we cannot be sure that the capital liberated from railways development would not have gone into something more useful (as is always the case with infrastructure investment; you don’t know what wonders it may be replacing.) However, there is one other factor to consider: if there had been no railways, then on September 15, 1830, the former Cabinet minister William Huskisson would not have been killed by Stephenson’s Rocket while attending the opening of the Liverpool and Manchester Railway.

Huskisson himself, though a good man, would not have achieved great things after 1830; he was already 60, and probably had only another 5-10 years to live. However, when killed he was negotiating with the Duke of Wellington for a return to Wellington’s Tory government, which had just lost most of its majority in an unexpected General Election caused by the death of George IV. If Huskisson and his associates had rejoined Wellington, Wellington would have had a secure majority, would not have lost the vote of November 15, 1830, and would have continued in power, gaining the gradual return of the Ultra-Tory right-wingers who had deserted him the year before over Catholic Emancipation. There would have been no Whig government and no gerrymandering Reform Act of 1832.

We can then postulate a 19th Century that maintained the previous mixed constitution, with parliamentary seats with a variety of different franchises, albeit probably adding some manufacturing towns over time, and a mix of governments that were mostly Liverpool-Tory rather than Disraelian-Tory or Whig/Liberal (Lord Salisbury, for one would have been much happier under such a dispensation, while Disraeli himself would probably have died in obscurity.) Ireland would have had a very restricted franchise but would probably still have had a strong Radical representation led by Daniel O’Connell that during the 1830s and 1840s would have allied with English Radicals elected from the modest number of manufacturing towns that were enfranchised.

The Irish Potato Famine would have happened on schedule but would have been marginally better handled by Tory governments more administratively efficient and not committed to extreme free trade doctrines. Thereafter it is most likely that an 1850s Tory government would have given Ireland a generous measure of Home Rule, removing the Irish Radicals from the Commons (in our timeline the Whigs/Liberals were reluctant to do this, because the Irish members supported them.) The Home Rule deal would have kept Ireland under the benefit of the Corn Laws (which would not have been repealed), so that over time Ireland would have become a granary for Britain’s growing population, as Liverpool had intended when designing the Corn Laws in 1815. The losers would have been Anglo-Irish absentee landowners, who would have been dispossessed of their families’ ill-gotten 17th Century gains by a quasi-independent Irish government.

Without unilateral free trade, Britain would have continued to develop its manufacturing capability based on an Imperial Preference scheme, that 1930s system being introduced around the 1880s, as Canada gained Dominion status (later than in our world) and U.S. grain and meat became seriously competitive in British markets. As a result, Britain would very probably have maintained the industrial superiority that in our timeline it lost to the United States and Germany.

In foreign policy, Britain would naturally have remained friendlier to the Continental monarchies of Austria, Russia and Germany than to the aggressively republican post-1871 France. That would have eliminated World Wars I and II from the timeline. Without World Wars I and II certain technologies (notably aircraft, radar and atomic weaponry) would have been delayed somewhat, but today would surely see a richer world, as well as a much richer and more powerful Britain.

It is a fantasy, of course – we cannot know how a railway-less Britain would have turned out, although the above exposition shows that purely technological and infrastructure developments might well have been less important than other consequential changes.

The important factor to remember is that infrastructure, especially state-financed infrastructure, is not as essential as it appears, and may very well have a negative overall economic effect. If there is a true need for a bridge, a road or a railway, the private sector will work out a way to build it. The state has much better things to do with its taxpayers’ money.

Sorry, Mr. President, but I call them as I see them!

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(The Bear’s Lair is a weekly column that is intended to appear each Monday, an appropriately gloomy day of the week. Its rationale is that the proportion of “sell” recommendations put out by Wall Street houses remains far below that of “buy” recommendations. Accordingly, investors have an excess of positive information and very little negative information. The column thus takes the ursine view of life and the market, in the hope that it may be usefully different from what investors see elsewhere.)
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