Tuesday, October 23, 2007

National Infrastructure Bank?

Here's a link to an interesting article on Sarah Goldhagen, an architectural historian, who proposes a national infrastructure bank to help fund and oversee the restoration of the nation's infrastructure.

Goldhagen's analysis of the infrastructure problems is as follows:

As Goldhagen points out, and as any traveler knows, countries in Asia and Europe often do a much better job than we do. In Vienna a couple of years ago - a city that experienced far more disruption in the 20th century than any American city - I was shocked by the superb public transportation system. Yet New York, despite decades of effort, still hasn't got its Second Avenue subway built. Boston can't put together its Urban Ring. Goldhagen contrasts our decline with the success of places that have renewed themselves, like Vancouver, in Canada, and Barcelona.

So what's the answer? Goldhagen has first a diagnosis, then a suggestion.
"The problem," she says, "is that our political world is organized into towns, cities, states, and the federal government, but the practical world is organized differently. We are now a nation of metropolitan regions. The way we govern doesn't fit the way we live."

Metro regions are chopped up into many municipalities, none of which can accomplish much by themselves. They may even bleed across state lines. No branch of government has either the funds or the power to deal with infrastructure - except for one: the federal government.

Her proposed solution is a national infrastructure bank that would function as follows:

It would have a capital budget, like any well-run private institution (and like many nations). It would allocate money over the long haul, pursuing goals that now get sacrificed for short-term advantages, like tax cuts. The agency's purpose - again, like that of a private institution - would be the care, maintenance, and renewal of our society's physical plant.

Is a national infrastructure bank the way out of the fragmentation of infrastructure investment decision making and infrastructure maintenance responsibilities or is it a recipe for Halliburton style public contracting hell?


Rick Powell said...

How is this bank any different from the "banks" we have now? Highway Trust Fund, Airport Trust Fund, Motor Fuel Tax Fund, Federal Transit Administration grants, etc.

Each have administrators that control the purse strings and authorize and/or deny funding on the basis of need and eligibility, and have auditors whose job it is to make sure the funding was appropriately used and projects constructed to the applicable standards.

One of my family's friends worked at the World Bank, and he flew all over Asia and Oceania auditing projects funded by the bank. Same principle, only international in scope.

It sounds like we're reinventing the wheel here, and at the end of the day, it's still a wheel, only bigger.

Alex B. said...


I think the difference is that an infrastructure bank would take a 'big tent' approach to infrastructure, looking at various needs and applying the best mode or funding scheme to that problem. In short, rather than funding too much money to highways and not enough to rail, or electric transmission lines, or so on, the bank would be a better entity to divy up the funds.

Anonymous said...

Alex, the problem is that the bank would be dependent on Congress for funding, and thus to the political whims of porksters like Byrd. We already have regional planning commissions and oversight agencies like the RTA, the latter of which exercises no oversight. In the meantime, we have politicians writing such projects as the Ogden Streetcar into transportation bills, for the purpose of letting local agencies hire consultants to write proposals to compete for limited funding. I don't see how a bank changes that.

Dave said...

Europe does a lot of things well, such as transportation, public media, health care, communications infrastructure, and sprawl control through regional, national, and infranational government activity. The US apparently lacks the ability to achieve such successes. It's hard to see an Infrastructure Bank making any difference in our basic inability to accomplish anything without sidetracking it with pork, politics, and massive corruption.

How would the money be allocated geographically and by mode, for example? It would have to be a political decision, which means it would be essentially corrupt and political.

I don't see how a bank would change the fact that despite being in an environmental and climate change catastrophic situation, the US has done nothing to move us away from the petroleum economy.

The first step is for politicians to recognize that our transportation status quo has to drastically change. The role of the federal government, perhaps, should be to allocate infrastructure funding to states/counties based on population and let them be responsible for how it is used and for matching the funds. They could also make a difference by providing clear reports on how much was released to each entity, what it could buy, and how it was, in fact spent.

Anonymous said...

Well, it would surely make some bank happy...just as happy as the organizations who get to sell the bonds now. The "banks" we're looking at now are orgs like "The Carslyle Group" and Macquarie, etc...public private partnerships who will buy private infrastructure for profit, or build it for profit. Sell the tollway, sell midway, sell the parking meters. That's what the feds are advocating -- getting the "public" out of the business of financing such things with taxes and privatizing public infrastructure.

Anonymous said...

6:40 may be ultimately correct, but that isn't what Goldhagen was advocating:

"Goldhagen admires examples where private initiative has produced public benefits, as in the creation of the new Millennium Park in Chicago. But she thinks privatizing can't be a solution. She cites the classic economist Adam Smith, who wrote that since public works aren't usually profitable, they have to be funded by "the sovereign or commonwealth" - that is to say, by central government. But federal spending on infrastructure has been dropping for years."