All Aboard

I’m in Europe for a few days in part to examine how countries there are dealing with infrastructure solutions to keep them competitive in the future. New infrastructure can become a big loss leader. In the U.S. we can point to Boston’s “Big Dig” — its billions of dollars in cost overruns and leaking tunnels.  But the new road, tunnel and bridge system has transformed Boston’s financial district and arguably helps position the city for long-term growth.

The 32-mile long English Channel tunnel (the Chunnel) is another example of huge infrastructure expense overruns and operating deficits. Completed in 1994, the Chunnel cost $21 billion to construct in a titanic engineering feat to bore the world’s longest underwater tunnel.  Chunnel operators, meanwhile, continue to register large (though declining) annual deficits for freight and passenger service between England and the Continent.  Paying off debt is a huge anchor and high charges discourage some use.