President Obama is in New Orleans today to pivot attention to what he’ll call leveraging investment in infrastructure. From the ones and zeros of the Obamacare website failure to good old-fashioned bricks and mortar and pipes. Let’s be sure to say something, too, about a “double win” if Washington spends more money. Look here, not there!
Not so long ago, President Obama’s fiscal cliff proposals included the cronyism-susceptible infrastructure bank idea. His entire speech today is invalidated by the blockage of the Keystone XL pipeline alone, but that’s just the beginning.
One of the biggest barriers to growth is the weight of government regulation. The private sector is ready to move if D.C. backs off.
New infrastructure intervention proposals worsen the situation. A problem is that Republicans are often seduced by such calls for creatively packaged government spending as well as government research and development generally. Keep an eye on Louisiana Gov. Bobby Jindal today.
Putting the national government in the driver’s seat of so much of tomorrow’s economy should be resisted. It invites student loan and housing bubble style phenomena for our descendants. As much as possible, such asset-investment decisions belong to states and regions. There’s no particular reason for folks in Hodges, S.C., to pay for New Orleans projects.
Roads and bridges do need upgrading. Keystone should be one of numerous similar projects. Less appealing are subsidized mega-projects like high-speed rail; it’s cheaper for others if you take the bus.
A policy regime friendliest to tomorrow’s infrastructure wealth — and jobs and customer benefits besides — should rethink federal dominance, and public goods theory itself.
Here are only a couple ways to remove the impediments to robust private infrastructure:
- Freeze antitrust regulation such as that against AT&T, Google, and American Airlines, and whomever next shows up in the crosshairs. Antitrust is inherently anti-infrastructure since it makes large scale competitive reactions by rival firms unnecessary. It hobbles GDP expansion and is a form of protectionism.
- Avoid regulation of cybersecurity and critical infrastructure. We require new insurance and liability regimes for critical infrastructure protection, which government standard-setting, and funding, can undermine.
- Encourage states to remove exclusive monopoly franchises that make it illegal for firms to compete with incumbent firms. That should be step one on the boost-infrastructure list.
- Avoid wasting public resources on inferior renewable energy infrastructure and sourcing investments. For driving, no fuel is yet greener than petroleum-based gasoline, and we can acknowledge that an electric car is actually coal-powered. Ethanol, government moonshine, remains a boondoggle that harms human beings besides.
- Declare compulsory “network neutrality” off the table; clarify that for the sake of infrastructure growth and replacement, proprietary network investment decisions will not be over-ruled or regulated, that there will be no forced sharing or pricing regulation (and as noted, no antitrust interference with tomorrow’s large-scale voluntary agreements and alliances).
- Liberalize airwaves and secondary markets for spectrum sales such that wireless infrastructure wealth gets established apart from future regulator participation.
- Concentrate on liberalizing network and infrastructure industries generally. For generations, infrastructure sectors and firms have been artificially segregated into regulatory silos (telephone, electricity, water, sewer, cable, railroad, airline, air traffic control). They could collaborate on critical infrastructure standards and investment, new power lines, fiber to the home, roads, bridges, airports, satellite systems, toll roads and more.
It would take a huge, concerted campaign to truly liberalize and expand infrastructure, worthy of the speech today. For large scale economic and job advancement in the U.S., steps like these can elevate capitalism and infrastructure wealth creation to an unprecedented level.