Analysis // Ben FrankelDebating how to shore up U.S. infrastructure

Readers of the HS Daily Wire would know that our unofficial motto is: “Where there is a security need, there is a business opportunity.” We note that a version of this guiding principle has come under criticism from the left-leaning OnTheCommons.org: One of its contributors, David Bollier, criticizes a recent New York Times’s news article by Jenny Anderson in which she discussed how the crumbling U.S. infrastructure offered opportunities for savvy investors. Here is Bollier’s somewhat sarcastic summary of what he took to be the gist of Anderson’s article: “The Times story amounts to a hot tip to the investor class: ‘Vulnerable public assets await your predatory attention. Big ROI is assured!’”

Anderson’s article did discuss the idea of privatizing the U.S. bridges, roads, and civil infrastructure. Bollier argues that Anderson “casts investors as thwarted social workers ready to do their part in helping to fix America’s crumbling infrastructure,” and notes that nearly everyone quoted in the story is an investment banker or investor. “Politicians are quoted only to bemoan the sad state of roads and bridges, cry about their budget deficits, and wring their hands over the lack of viable solutions,” Bollier writes.

Bollier faults Anderson for he takes to be her argument that the obvious solution to U.S. infrastructure problems is private investment. “Or at least, that’s the only solution that the Times explores,” he writes.

The other side of the argument — that government should do more to shore up infrastructure — has its own advocates. For example, Phineas Baxandall, a senior tax and budget analyst at U.S. PIRG, offered an extensive analysis of these issues in an essay on OntheCommons.org a few months ago. His piece was based on a report on the subject which he had previously written for U.S. PIRG. Baxandall makes two important points:

• Governments can borrow upfront sums at substantially lower cost than can private companies. A private entity will have higher capital borrowing costs and must divert some revenues to shareholder profits. So even at its most basic financial level, privatization is not advantageous to the public.
• Perhaps even more than these fiscal problems, long-term road contracts pose a variety of serious threats to the public interest. These include fragmentation and a loss of public control over transportation policy, and an inability to prescribe future needs in contracts signed decades earlier For example, some privatization contracts explicitly limit the state’s ability to improve or expand nearby roads. Private investors fearing that improved free roads would compete with their paying traffic, have obtained non-compete clauses in California and Colorado, and to a lesser extent, in Indiana.

The idea of bringing the private market to U.S. infrastructure has merit, and many of the individuals who were interviewed by Anderson explain why. Bollier, his 1960s-era shrill denounciations of private enterprise notwithstanding, does have a point: As the government allows private companies to own — and operate for profit — more and more slices of U.S. infrastructure, it should make sure that the public interest is protetced. Indiana offers a good example: Indiana granted a private company a 75-year lease on a state road for $3.8 billion. Road tolls were raised — which, together with higher gas prices, made trips for work and leisure much more expensive. Many irate drivers in Republican-leaning Indiana now sport bumper stickers which read, “Keep the toll road, lease [Governor] Mitch [Daniels].”

Football player and coach Mike Ditka used to say: “When you’re going to get, make sure you don’t get got.” It is the same here: As federal, state, and municipal governments justifiably look to the private sector to help rebuild the aging U.S. infrastrucutre, they must make sure that the public interest in affordable and accessible infrastructure does not take a back seat.