If we can align the incentives of the players involved, we can build infrastructure that is actually necessary and while doing it quicker and at lower prices than we do now.
One of Goldhill’s key devices is to place the language and values of the health care industry on a metaphorical island. He constantly talks about life “on the island” and “on the mainland.” For example, on the island, nobody ever talks about prices, they only talk about costs. This is not a subtle nuance. …
Does it really matter to you how much it costs the grocery store to provide that twelve pack of your favorite beverage? Of course not. It’s only matters to you — someone living on the mainland — what the price is to you. Price is how you determine your preferences among competing items. Profit is how the market receives feedback on those preferences. High prices invite substitution. High profits invite competitors. This is all basic and obvious to us on the mainland.
Which is why, on the healthcare island, the conversation is about costs. … Just like on Healthcare Island, on Infrastructure Island we have our own way of talking about things. And we never talk about prices, only about costs.
RE: The U.S. Has Forgotten How to Do Infrastructure – Bloomberg, by Noah Smith
That suggests that U.S. costs are high due to general inefficiency — inefficient project management, an inefficient government contracting process, and inefficient regulation. It suggests that construction, like health care or asset management or education, is an area where Americans have simply ponied up more and more cash over the years while ignoring the fact that they were getting less and less for their money.