Will Private Firms Pave Bridge to Infrastructure Future?

The collapse of the I35 bridge in Minnesota seems to have gotten Americans' paying attention to the country's infrastructure needs. But, according to this article on CNN money, tapped-out federal, state, and local governments face $495-billion price tage just to fix the country's bridges. To repair rail lines and ports, the same article suggests, may cost $1.6-trillion!

Given the need and the cash-strapped status of government agencies, some are suggesting contracting with private firms to do the repair work and run our highways:

America, the land of the free, has been more hostile to free-market infrastructure than the rest of the world. In Europe, Australia, Canada and emerging markets such as Brazil, the private sector has jumped in to build new roads, bridges, tunnels and airports.

Private groups usually make an upfront payment, manage the assets and get toll revenue under leases that span 75 years or more.

In the U.S., the federal government provides much funding for repairs and new projects. When Uncle Sam is tapped out, state and local governments turn to the bond market.

With government debt soaring, though, public interest groups have pushed another option -- gas-tax hikes. Critics charge privately run toll roads could gouge consumers.

Political battles lay ahead, but supporters of private funding say more deals will be struck.

Intriguing.

Back in the 1800s, Henry Clay's Whig Party advocated "internal improvements," by which they meant the construction of roads, canals, and railroad, what we call infrastructure. While Clay never became President and the Whigs died, only to morph into the Republican Party, the development and maintenance of infrastructure has been seen as a function of the government for the past two-plus centuries. (The young Illinois Whig politician, Abraham Lincoln, later the first Republican President, always ran on a platform that included "internal improvements" as a key plank.)

While Republicans, the party most closely associated with the market-driven economy, have sometimes resisted "big government" programs such as those initiated by Democratic Presidents like Franklin Roosevelt and Lyndon Johnson, they have seldom objected to government outlays for infrastructure. It was a Republican President, Dwight Eisenhower, for example, who initiated the Interstate Highway System.

There's an argument to be made that in the initation of new services or technologies--from postal delivery to space exploration and infrastructure, the government has a unique responsibility. But, this argument continues, after establishing the feasibility of such projects, the government may be ill-suited to bring vast improvements or cost effectiveness to them.

Some form of private-public partnership may be the wave of the future when it comes to America's infrastructure. It is ironic that Europe, far more comfortable with big government policies, has gotten free enterprise so extensively involved in the construction and operation of highways, bridges, airports, and ports, while America's infrastructure is almost exclusively the purview of government entities.

As long as the memory of the I-35 tragedy remains in people's minds, the discussion of infrastructure needs and how to meet them will likely increase in the future. (So too will some of the widely-questioned strategies and decisions of the Army Corps of Engineers when it comes to New Orleans, the Gulf Coast, and the Mississippi River.)

Before the Lights Go Out

The Financial Times reports:

Much of America’s ageing infrastructure needs replacing. One vital industry in need of sprucing up is electricity. Cambridge Energy Research Associates reckons the sector needs $900bn of investment over the next 15 years – in effect, more than replacing the net $750bn worth of plant already in place. The only thing worse than having to spend that amount would be not spending it. Overall, spare generation capacity could drop below 15 per cent of peak demand – the minimum usually required to avoid blackouts – by 2009. Two-year electricity futures have risen by two-thirds since 2004.

This Will Be Getting Lots of Attention

See here. Federal law requires bridges to be inspected every other year. But Ohio does so annually.

Also, see here and here.