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Engineers and economics

ANALYSIS; The M25 totally changed the travelling dynamics of Londoners and everybody else within half an hour's travelling distance of it.

On July 15th, The Times ran a leader by the economist Anatole Kaletsy that seriously questioned the value of new infrastructure projects over and above the management and improvement of existing infrastructure.

He suggested the Jubilee Line extension was 'insanely expensive' and that investment in new signalling on the Northern and Central Lines was 'unnecessary and unreliable'. Furthermore, he added that knocking 30 minutes off the travel time to Paris by constructing the Channel Tunnel Rail Link could have been better achieved at no cost by rationalising Eurostar's 'absurdly time-consuming ticketing, check-in and passport control'.

While as a traveller on London transport I can appreciate Kaletsy's point about the need to invest wisely in maintenance, I was surprised that, as an economist, he should make such piecemeal criticisms of new infrastructure. Imagine the damage to his credibility if he had criticised the value of the M25, or other recently completed infrastructure projects such as the Channel Tunnel or Heathrow Express link, each insanely expensive at the time.

I would have expected Kaletsky the economist to have a more sympathetic view of the engineer's role in society, for though we may be so tongue tied by the detail of our daily existence that we can't see the wood for the trees, he is equipped to see the bigger picture. As an economist, he can appreciate the long term contribution that such quantum changes in the infrastructure have on an economy, and how historically these have regenerated flagging economies.

From the point of view of London, all the projects mentioned collectively underpin and sustain the city as the business capital of Europe, just as collectively the total infrastructure supports the economy as a whole. But they do more than simply support the economy, the new projects stimulate change.

The M25 totally changed the travelling dynamics of Londoners and everybody else within half an hour's travelling distance of it. It put Gatwick and Heathrow within easy and reliable reach and, more to the point, put millions of people in contact with one another, thus creating a whole series of new business locations.

Its immediate effect was to dramatically change the value of property in the area, fuelling an overheated housing market in the 80s. In the long term it also created a new business dynamic which has played a small but not insignificant part in the recovery of the economy in the mid 90s.

Economists have long understood these effects, and in the past recognised the role of improving transportation in leading economies out of recessions. In 1992 The Spectator ran an article by Murray Sayle which noted how, in 1925, the Soviet economist Kondratiev had found peaks in 1817, 1870 and 1914 and troughs around 1790, 1844 and 1890. Extrapolation suggested that other troughs were due in the 1930s and 1990s.

There were two important theories in Sayle's article. One was that the conditions for peaks required a level of optimism that could not exist where a reasonable number of survivors of the previous recession were still in business. Hence the period of 20-30 years from peak to trough.

The other, more relevant to engineering, was the theory that Kondratiev's upswings since the early industrial revolution had been led by breakthroughs in cheaper transportation: rivers in the 1730s, canals in the 1800s, railways in the 1850s, steam ships and automobiles in the 1900s, container ships and expressways in the 1960s, the jet airliner and the supporting infrastructure today.

So it seems Kaletsky is short-changing engineers in criticising these new infrastructure projects. But we should beware. In a more recent Times leader, (26 August) he highlights the effect of the Internet and its impact on the booming American economy.

Clearly the Internet could change business dynamics as significantly as a new motorway network, and possibly Kaletsky is instinctively right in suggesting that as far as transport is concerned, we should concentrate on fixing what we've got. Alternatively we had better recognise the need to sell our collective contribution to society. There were no letters printed refuting his arguments.

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