Five Truths About Infrastructure

By:  Dr. John Brown Miller

Joel Moser’s August 4, 2017 column “Five myths about infrastructure” was an interesting read, and I finally have time to rebut it.  I know, respect, and like Mr. Moser.  As with all complicated subjects, there are competing, conflicting, views.

Mr. Moser’s “five myths” are actually “five truths”.  I’ve relabeled and fixed the wording of his five “Myths” below.  Here’s why he got all five wrong!

TRUTH NO. 1

New infrastructure projects will won’t increase employment.

Our public infrastructure portfolio is in trouble – from aging structures at or near the end of their design life and from decades of deferred maintenance that has reduced that design life and increased the cost of replacement.  Congress has enacted two major grant programs for states in our history – $40B for the states to build the Interstate Highway System and $70B for 3000+ local governments to build wastewater treatment plants through the EPA.  Whether Congress enacts a third major grant program in 2017 – or doesn’t – states and municipal governments need to keep moving on infrastructure repair and replacement – translating to more employment.  Full time construction industry positions are among the highest paying, and hardest working positions in the economy.  New work in infrastructure will add to the labor participation rate and increase employment.

TRUTH NO. 2

Regulations have been killing don’t kill infrastructure projects for decades.

For more than a decade, ASCE’s Report Cards on Infrastructure have documented insufficient funding for infrastructure – across the many sectors of infrastructure covered.  Levels of deferred maintenance are stunning, yet our procurement systems – implemented through regulations – pose a major obstruction to state and local governments across the country.  [I am a Life Member of ASCE and admire this work.]  Our procurement regulations obstruct local officials from taking the right maintenance and repair action, in the right place, at the right time, and at a cost that delivers value for money.  The effect of this monumental maintenance backlog is 30-40% in avoidable costs over the life cycle of core infrastructure assets.  The magnitude of avoidable costs – on a national basis – more than outstrips any proposed infrastructure bill.  State and local governments could complete many more infrastructure projects if avoidable costs were sitting in their pockets.

TRUTH NO. 3

Private investment has led doesn’t lead to infrastructure projects for 200+ years.

Edison invested in generating, distributing, and delivering electric power to homes and business.  Infrastructure investment followed.  Henry Ford invested in producing a low-cost, practical automobile, affordable to many Americans.  Americans have been investing in roads, bridges, and every little thing associated with the automobile ever since.  Steve Jobs and Bill Gates invested in Apple and Microsoft, respectively. Millions of individuals, along with competing computer companies have invested in products and devices that will continue to allow and encourage us to rebuild our infrastructure platform.  The list of private investments that led to infrastructure projects is endless.

Mr. Moser notes that municipal bonds are available at a lower cost than private debt.  But, this is not conclusive:  especially, if competition and different delivery methods eliminates even a small fraction of the 30-40% in avoidable costs across a facility’s life cycle.  Good procurement practices, coupled with competition, objectively proves whether direct private sector investment in a particular infrastructure project produces higher level of service with better value for money.  For example, Seattle’s Tolt Water Treatment Plant used a (then-new) membrane technology to dramatically cut projected energy use, with a 35+% life cycle cost savings.  The goal is higher level of service with better value for money.  America taught this logic to the world over the last two centuries.  We need only look to Canada, Australia, England, Scotland, Holland, to see just a few nations that use competition well.

TRUTH NO. 4

Wise infrastructure spending won’t spurs growth.

The goal of public infrastructure spending shouldn’t be to spend money.  The goal is to increase the effectiveness of the nation’s infrastructure platform for all of us.  Products we make need to move.  Products we receive need to move.  People and information need to move.  Water, wastewater, and storm water needs to move.  All of this movement costs money to Americans and to American business.  The effectiveness of our infrastructure platform is a real factor in the competitiveness of Americans in the world.  Better, Cheaper, Faster, More Reliable.  These are the goals Americans share and support.  The purpose of public involvement in this platform is to drive level of service up (quality, travel time, frequency, convenience, reliability), while driving life cycle cost down (construction and maintenance cost, tolls and fees on users, and taxes).  Improving the infrastructure platform has spurred growth for more than two centuries.

TRUTH NO. 5

The Federal government We doesn’t know what how to prioritize the infrastructure we need, nor determine what we will need in the future.

Mr. Moser and I define “we” differently.  American citizens do know what existing infrastructure needs to be repaired and/or rebuilt – but this knowledge is local, where the infrastructure sits.  Governor Cuomo’s leadership in the DBFOM agreements to rebuild LaGuardia is an example of such local knowledge.  The Denver City Council’s decision to use a DBFOM concession to rebuild its airport is another.

Mr. Moser is right that we don’t know what we will need.  But, that has been true for 230 years, because individuals in the private sector are always changing what the future looks like – no matter what Congress or pundits wish for.  Local government is better equipped to follow closely upon private sector technological innovation.  But, Congress will forever lag far behind.

Even with more than one proven technologies to subsidize, prioritizing has always been difficult for Congress.  Canals were preferred over railroads, until they weren’t.  Railroads were preferred over roads, until they weren’t.  Congressional support for the US Highway system could not have preceded Henry Ford.  The infrastructure we build follows what the private sector discovers how to build.  As the digital age continues to spread, federal guesses on what state and local governments will want to build years from now are fraught with risk.

To get American infrastructure going again, Congress and state legislatures need to open up procurement, unleash the full menu of competitive delivery mechanisms, clear our maintenance backlog, and use the private sector carefully and well to drive level of service up and life cycle costs down.

Postscript:  The Wrong Starting Point

The caption to the picture headlining Mr. Moser’s post reads:  “To know what infrastructure we need to build, we need to have an idea of what kind of world we want to live in.”  Now, there is a myth worth debunking.  The reality is exactly the opposite.  For more than two centuries, the extraordinary growth of America’s economy has occurred because government was not in charge of deciding “what kind of world [we] want to live in.”  Individual Americans are inventing and reinventing that every day.

Miller is a former professor of civil engineering at MIT and chair of the ABA Section of Public Contract Law, and an expert on infrastructure procurement.  He was a reporter on the ABA’s 2007 Model Code for Public Infrastructure Procurement project, providing best practices in procurement to state and local governments.  You can find him on LinkedIn and Twitter @JohnBrownMiller.