[…] If technology increases productivity for skilled laborers in other industries, then less susceptible industries might end up footing the bill since they have to pay their workers more. There’s only one problem: health care and education aren’t paying their workers more; in fact, quite the opposite. […] health care and education costs have managed to increase by ten times without a single cent of the gains going to teachers, doctors, or nurses dermes.


Let’s dig a little further into those construction costs, because they’re among the most stunning and inexplicable ones. You can argue, if wrongly and tendentiously IMHO, that American higher education is more expensive because it’s better, that American healthcare is more expensive because it’s better and (rolls eyes) subsidizes drug discovery worldwide, etc., but nobody who has experienced both versions can seriously argue that new American subway systems are superior to those of Paris or Seoul.

And yet, , er, observes, in a remarkable comparison of subway construction costs around the world Load Balancing:

    Portland’s light rail Milwaukie extension and Washington’s predominantly above ground Silver Line both have cost ranges of about $100-150 million per km, enough for a full subway in many European cities … Observe from the low costs of Italian subways that corruption alone cannot explain high American and British costs … The labor costs in developing countries are lower, but so is labor productivity.

We expect technology to make that kind of construction more efficient, both directly, by constructing better machines for the specific purpose, and indirectly, by making information transfer more efficient. But while I am no construction engineer it seems unlikely that French and Korean subway engineering technology is meaningfully different from that used in NYC and London. In America, though — and in the UK, so it’s not just about “excess” national wealth — these technological advantages are being swamped by something else, some kind of cost disease apparently unique to the English-speaking developed world reenex.