Tuesday, January 30, 2018

UPDATED: Infrastructure Crisis

While I think it is widely known here that Canada has a massive infrastructure deficit to the tune of $123 billion, people are perhaps less aware of the dire situation in the United States, where over 54,000 bridges are literally crumbling.

Why is this newsworthy? Well, in addition to the very real daily risk of injury or death, the American problem also offers a massive opportunity for the notorious public-private partnerships that, while lining the pockets of investors, rarely accrues to the benefit of the tax-paying public.

First take a look at this news report:



A dire situation, no doubt, but one which the Trump administration apparently sees as rife with opportunity:
As President Donald Trump delivers his first State of the Union address Tuesday, pay close attention to his next big priority—an infrastructure plan—which, over time, could eclipse the trillion-dollar giveaway to the rich in the GOP’s just-passed tax plan.

“[The GOP-passed] tax cuts have slowly opened the door to Wall Street, construction giants, and global water companies, who see enormous potential for profits,” wrote Donald Cohen, president of In the Public Interest, an anti-privatization advocacy group. “Some states and local governments have turned to expensive private financing, a.k.a., ‘public-private partnerships,’ and learned the hard way. Private financing often means higher tolls, parking rates, or water fees, lower labor standards, and less public control over decision-making once a project is up and running.”
Informed sources suggest that the Trump will reduce infrastructure budgeting:
... the plan will all but force states and local governments to privatize or even sell off infrastructure. Tax cuts have slowly opened the door to Wall Street, construction giants, and global water companies, who see enormous potential for profits. Some states and local governments have turned to expensive private financing, a.k.a., “public-private partnerships,” and learned the hard way. Private financing often means higher tolls, parking rates, or water fees, lower labor standards, and less public control over decision-making once a project is up and running.
And of course there is no guarantee that any of the private money will be directed toward the crumbling bridges where, unless tolls are imposed, profits would be hard to come by. Schools, water infrastructure and roads offer much greater opportunity.

Lest Canadians feel smug, remember the study that has been commissioned by the Trudeau government into privatization of our major airports.

The virus of neoliberalism is resilient and continues to spread. Unfortunately, there appears no vaccine on the horizon to rid it from our political systems.

UPDATE: The Washington Post has a penetrating analysis of the scam about to be perpetrated by Trump. Here is a brief excerpt:
Let’s be clear on what this kind of public-private partnership isn’t. In normal circumstances, the government decides it needs a new bridge, so it hires Joe’s Construction to build it. But the bridge still belongs to the government; we just have to pay maintenance costs. In the kind of “partnership” the Trump administration wants more of, the government decides it needs a new bridge, so it gives PriveCo Equity Partners a gigantic tax incentive to build the bridge, which the company now owns — and which will charge tolls on in perpetuity. Taxpayers could shell out nearly as much in tax incentives to the private company as we would have spent to just build the bridge, and then on top of that you’ll have to pay tolls to cross it — forever.

3 comments:

  1. During the Calgary floods the World Council on Disaster Management met in Toronto for its annual conference. A Dr. Mizra, engineering professor emeritus at McGill, was asked to estimate the likely cost of upgrading Canadian infrastructure to meet the challenging conditions of the 21st century. He warned the tab could be upwards of a trillion dollars.

    While much infrastructure needs major repair, almost none of it was designed for 21st century conditions. Think of it as Holocene-grade engineering. Trudeau wants a Holocene-grade bandaid fix. Cheap and dirty even if the given price tag seems astronomical.

    Mizra advocates a direct levy on the private sector to recover at least part of their use of public infrastructure, about 15 per cent. That's not PPP but direct taxation, a proper alternative. Unfortunately the business community would wail on about creeping Bolshevism. It might lead to the larger issue of taxing the use of natural capital the private sector has come to expect will be provided for free.

    As for that trillion dollar cost, those who calculate those figures also warn it will be far more costly if we don't make that infrastructure investment. Sometimes you just gotta pay the piper.

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    1. It strikes me as deeply telling Mound, that while the corporate world is given virtually carte blanche in its depredations, the taxpaying public has to be satisfied with mere scraps from the table when it comes to the upkeep of our public infrastructure and other common assets. As for natural capital, well, David Suzuki seems to be one of the few who talks about it, and his voice seems to be losing its prominence.

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  2. Sorry, here's a link to the Mizra article:

    https://www.thestar.com/news/canada/2013/06/23/canadas_outdated_infrastructure_vulnerable_to_disasters_experts_warn.html

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