The Future of U.S. Infrastructure: Bridging the Entrepreneurial Divide Between the Public and Private Sectors

By David Baxter – Sr. Fellow. The debate about fixing decaying infrastructure in the U.S. is still a hot topic in Washington D.C. In a Washington Post article printed on November the 30th, under the heading, “Officials ponder where to get $1 trillion for infrastructure projects,” the following was written:

  • Many advocates of infrastructure improvement have embraced the president-elect’s promise to spend $1 trillion on infrastructure
  • There is lack of consensus on where the money is going to come from
  • The vital infrastructure pieces that support the U.S. lifestyle are near the end of their operational lifetimes
  • That there is hope that a bi-partisan plan to finance infrastructure improvements will emerge
  • The need to explore how tax credits can drive an infrastructure improvement plan
  • That skepticism that exists among many whether tax credits could generate $1 Trillion
  • Finding ways to unlock billions of dollars of private capital
  • The question of profit making by the private sector
  • The inability of Congress after years of “melodramatic hand-wringing” to provide enough money to meet infrastructure needs

The potential messy, complex, and lengthy tax reform process is that needed in the U.S.

Ed Mortimer, the infrastructure director at the U.S. Chamber of Commerce was quoted in the Washington Post as saying the following on where to find the missing $1 trillion:

“In certain parts of the country, those kinds of private financing work…..In other parts of the country we need to use general funding.” He then went on to say – “At the end of the day, whatever folks thought about this election, people are looking for law makers to actually get things done………And this is something where I think you could find common ground for Republicans and Democrats, so we are very optimistic that some things are going to move forward.”

Unfortunately, while the debate rages in Washington D.C. and politicians are setting conditions for collaboration and a bi-partisan strategy, political inertia continues to exacerbate the crises that is growing regarding critical infrastructure that has reached a critical breaking point.

In an eye-opening article that appeared in the Washington Post on November the 27th, serious concerns were raised about how the declining condition of inland waterway infrastructure could and will have serious economic impacts to the economy of middle America if it is not addressed now. The article titled “Choke Point Of a Nation,” pointed out how Lock and Dam No. 52 on the Ohio River is an example and emblematic of ailing infrastructure that promises to hobble American commerce.

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The report is almost “mind-boggling” in its assessment of how critical infrastructure has decayed, and that maybe we are not just running out of time to fix critical infrastructure, but that we have run out of time. I feel, that after reading the article, that that the situation as described in the article is even more critical than we are willing to admit – maybe we are even past having run out of time and that the prophets of doom have been proven correct. The lock that is described in the article was built in 1929 (87 years ago!!!) is located on the busiest spot on America’s inland waterways system. The article reported that more than 80 million tons of grain, coal, fuel, and other goods worth $22 billion annually move through the lock (which is a potential chokepoint), but yet that its decline has not been adequately addressed.   Problems with the operation of just this one lock have the potential to delay river traffic for days and if the most dire worst-case gridlock scenarios materialize, the outcome could shut down all river traffic indefinitely.

It seems ironic that just one piece of the infrastructure failure could have a $22 billion impact and that it has proven difficult to find a solution. This example is just a small part of a national malaise. In the article it is reported by the USACE that old locks and dams are costing $640 million in delays and closures annually. Wow!!!!

So what can be done? 

Greater cooperation between the public and private sectors is needed that embraces a new approach to infrastructure rehabilitation and critically needed new construction.

Over the past year I have been part of a Task Committee led by Major-General Merdith (Bo) Temple that is exploring alternative financing and delivery of waterways infrastructure. The working group is sponsored by the Technical Committee on Waterways of the Coasts, Ocean, Ports and Rivers Institute (COPRI) of the American Society of Civil Engineers (ASCE). One of the options that has been discussed is Public-Private Partnerships (PPPs) as a solution to finding the mission $ trillions that are needed to fix the U.S.A.’s ailing infrastructure. It has impressed me how consciences the working group has been on finding a solution and their recognition of how the current dire situation required immediate action.

I have some suggestions that are my own.

PPPs can bridge the entrepreneurial divide between the public and private sectors in finding a solution to our infrastructure needs. Sure – we do face challenges. This includes skepticism about the ability (both the public and private sector capacity) to carry out a comprehensive national infrastructure rehabilitation program. American political and business leaders have in the past stepped up to address national challenges  in the past (think of the massive mobilization of U.S. industry after Pearl Harbor).

So why not again?

A collaborative partnership between the public and private sector that can introduce innovation will bridge the $ trillion funding need if politicians allow business leaders a meaningful role in an infrastructure recovery plan.

Business is less political by nature and can focus on business solutions that by their very nature are bi-partisan. Business is driven by opportunity and there is more than enough to go around. Business in a less restrictive regulatory climate can be responsive to market reality and opportunity, unencumbered by political paradigms that create can bureaucratic barriers to innovation and market sensibility. It is important that business be given a role and that all acknowledge that we are facing the greatest challenge to American growth in the next decade. We need a partnership between the public and private sectors that is pragmatic and unencumbered by political agendas.

I would suggest the following closing comments –

  • Public Sector employees and politicians need to be encouraged to be more entrepreneurial in their thinking
  • Politicians need to embrace innovative solutions that transcend past biases.
  • National leadership needs to recognize that irrespective of our creeds, race, values, or political persuasions, we all need functioning infrastructure to lead meaningful lives

Maybe it is time that politicians become less suspicious of the intentions of business leaders and step back and let the private sector take the lead? The private sector has the $ billions that are needed – just give them the opportunity through PPPs or other mechanisms to be meaningful partners in a national infrastructure recovery plan.

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