Private and Public Sectors Have Role in Fixing Infrastructure
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In their Wall Street Journal op-ed historians Larry Schweikart and Burton Folsom use history to paint a broad brush against government infrastructure investments and assume that entrepreneurs are the only solution. Reality is more nuanced than that. It’s not either/or. Our modern economy (and the jobs supported by it) has infrastructure needs that require both private- and public-sector involvement.
There is much in the category of “infrastructure” that can and should be private sector owned and driven: energy, broadband and telecommunications, freight railroads. In these instances, the private sector is both infrastructure and service provider. The U.S. Chamber has argued—see our Water Is Your Business campaign in partnership with the National Association of Water Companies—that there are infrastructure sectors where there needs to be much more private sector investment and management. Drinking water, wastewater, highways, public transportation, airports, waterways and ports—these are all examples of public infrastructure that can benefit from private sector innovation, discipline, and capital by encouraging expansion of public-private partnerships.
Schweikart and Folsom are correct in noting that infrastructure investment should follow the lead of entrepreneurs and other businesses and their customers. Investments must support a changing and growing economy and shifting demographics. But that doesn’t mean that privatization (distinct from public-private partnerships) of public infrastructure is a silver bullet for addressing infrastructure deficiencies.
There are serious challenges at the federal level when it comes to finding the resources to maintain—much less grow to address more needs—the levels of federal investment in surface, air and water transportation systems. The Highway Trust Fund (HTF) is so cash poor that federal investment in highways and public transportation will drop by 90% (that isn’t a typo… 90%) in 2015 so that the HTF doesn’t run a deficit. The Inland Waterways Trust Fund is headed in the same direction, and our navigable waterways are the heart of American bulk commodity exports.
Should opportunities for more direct private investment and management of the design and construction of water resources be introduced in order to assist the barge operators and exporters, and communities behind flood walls, in getting the kind of reliable, efficient locks, dams and levees needed before a disaster strikes? We think the answer is yes. The "how" is still a question, and that’s an important and necessary debate going on within the context of a Water Resources Development Act reauthorization this year.
Is more revenue needed at all levels to pay for maintaining, modernizing and expanding infrastructure? Yes. No one seems to doubt the chasm between available resources and needs.
If we relied on the past as our guide for everything, then we wouldn’t be using smartphones or seeing the world through the eyes of Google Glass or contemplating the driverless car. The vision for the future is one where there is greater private investment and involvement in public infrastructure, but not one that gives elected leaders an easy out from the hard questions about revenues to support public infrastructure.