The Hidden Cost of America’s Infrastructure Spending Habits
Astrophysicists, when faced with the overwhelming vastness of the universe, focus their search for understanding on anomalies — those edge occurrences that seemingly defy the rules. Anomalies challenge assumptions and reveal underlying truths about the systems we observe. The extremes are an insight into the ordinary.
Today, I want to look at a utility investment near my hometown of Brainerd, Minnesota. At first glance, it seems like an extreme case, one outside the normal operations of a utility. It’s also the kind of thing that pretty much everyone will cheer for. I’m not even against it, per se, but looking at it with a touch of scrutiny reveals a lot of insight into why America’s basic infrastructure systems are failing and will not be maintained.
CTC, a central Minnesota utility company, is expanding broadband service to a rural area near Brainerd through a federally funded $5.5 million grant, supplemented by a loan and local investments. On the surface, this looks like a triumph: Over 1,500 residents and businesses will gain access to high-speed internet. Local officials are celebrating it as a leap forward for economic development and quality of life.
Yet, a different story emerges when you examine the basic financials of the project. According to the local paper, the project’s total cost is $11 million, with 592 connections gaining access. That’s an investment of nearly $18,500 per service connection. Even if everyone being served signs up for broadband, generating, say, $100 monthly in revenue, the system would yield just over $700,000 annually — barely enough to cover operating costs, let alone future maintenance, upgrades or replacements. As an investment, this is nonsensical. The math isn’t close.
This is fairly typical for rural areas. Without the federal subsidy, this investment wouldn’t — and couldn’t — happen. And even with it, there’s no plan for the long-term viability of this infrastructure. In economic terms, this is consumption spending. We’re building something we know won’t be around two decades from now.
Based on the federal involvement, one might assume that this part of my area is critically important for our broader economy, that it houses farms, mines or other essential rural industries critical to driving our national prosperity. That assumption would be silly.
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<p>The people living here are not farmers or miners who are supporting the economy; they are, for the most part, individuals who have chosen to live in a rural setting for lifestyle reasons. They reside on lakes, hobby farms or quiet properties not out of economic necessity, but by preference. <a target=)
Check out the area in Google Maps for yourself.
This distinction is important because it highlights a fundamental issue: This broadband investment is not serving an economic engine but rather subsidizing a lifestyle choice. While it may enhance the quality of life for a few people, it does not stimulate growth, attract new business or contribute to a thriving tax base that can sustain it long-term. It is, as I said, consumption spending. Federally-backed consumption spending.
So, what’s the big deal? The federal government wastes money all the time. At least this is being done in the service of a technology economy. Maybe there is some kid living on a lake or hobby farm who will now be connected to an opportunity they otherwise wouldn’t have. It’s just $11 million, nothing that will break the bank.
Just as astrophysicists look to anomalies to better understand the vast universe, we can look at extreme cases like this rural broadband investment to gain deeper insights into how infrastructure systems work. What we see here — while extreme — is essentially what your city is doing, as well.
First, it’s clear that grants like this, which are very common for cities of all sizes, create a distorted financial reality. CTC, while a private, member-owned cooperative, operates with financial clarity that surpasses local governments. Their leadership understands better than most the long-term implications of this project, recognizing that it adds liabilities to their balance sheet without sustainable revenue streams to support it — yet, they proceed anyway.
Local governments lack the accounting practices of a private sector cooperative — they literally don’t track their infrastructure liabilities — so the financial distortions are even more pronounced. When the money comes in the form of a government grant or loan, the assumption is that it is all good. That’s an uninformed assumption.
Second, this type of spending is not viable long-term; it’s a one-time investment that isn’t meant to endure. In the case of broadband, the rapid pace of technological advancement might render it obsolete before replacing it even becomes a concern. But, when it comes to municipal utilities like sewer, water, streets and roads, abandonment isn’t an option. We may be forced to walk away from these investments, but we don’t intend to. These are long-term obligations that require careful stewardship — something that no city is seriously planning for. Even though it is a massive claim on our future wealth, we don’t even bother to track it.
Finally, this shift of resources drains energy from urgent efforts to improve the city. You know, the place where thousands of people already live, hundreds of businesses are already operating, and hundreds of millions of dollars have already been spent on public infrastructure. Instead of focusing our efforts on improving downtown Brainerd and the surrounding neighborhoods — where we already have the most financially productive part of the region, albeit deeply neglected — public funds are directed toward providing new services to the hinterlands surrounding the city, places with little to no economic potential.
Essentially, we are supporting professionals like doctors and lawyers who want to relocate outside the city to enjoy a rural lifestyle. Instead, we should be investing that money in making the city an even better place to live. In the 2000 census, Brainerd’s median household income was $26,901, while Oak Lawn Township — where much of this grant is targeted — stood at This article was originally published by Charles Marohn at Strong Towns.
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