Home > Uncategorized > President’s Plan for Funding Infrastructure Through Profit-Driven Public-Private Partnerships Erodes Democracy, Exacerbates Economic Divide

President’s Plan for Funding Infrastructure Through Profit-Driven Public-Private Partnerships Erodes Democracy, Exacerbates Economic Divide

Today’s NYTimes features a lengthy article by Julie Hirshfield Davis and Kate Kelly that provides a lot of detailed background on how President Trump plans to fund his proposed $1,000,000,000 infrastructure projects and some political rationale for why it is taking so long to roll out.  But the article fails to point out the deep flaws in the plan, flaws that will erode democracy, contribute to the division between rich and poor, and further limit the ability of those born into poverty to earn enough to move into the middle class.

Mr. Trump’s silver bullet is to transfer the responsibility for funding infrastructure projects to the states and to encourage the use of public-private partnerships to raise the funds. The problems with this approach are already playing out in the telecomm industry and in health care where these kinds of alliances are in place.

Here’s what happened in the telecomm world: cities and states with forward thinking officials and solid tax bases are able to provide high speed fiber internet to all of their customers while rural areas and backward states are left with dial-up or DSL. The “competition” that was supposed to drive the prices down devolved into a de facto monopoly on services as single providers emerged.

And the same thing happened in health care, where the vaunted competition that would drive down prices dissolved immediately to a single insurer in some states and is rapidly devolving in that direction in others as the uncertainty of guidelines at the federal level is making providers abandon the marketplace.

In both cases the wealthy and affluent areas and individuals benefit while those in poverty stricken areas suffer. And in both cases where elected government officials should be accountable, faceless shareholders are off the hook because their consequences are the result of the “natural consequences” of the marketplace.

How will this play out in the infrastructure? States and/or communities who are willing to pay for infrastructure with taxes will get roads, airports, and bridges… but in reality those will be few and far between. Instead, investors will determine where to place new roads, where to replace new bridges, and where to upgrade airports. The result will be to do so in a way that they can get a return on investments, which means that the beneficiaries will likely be those who can afford to pay tolls on roadways and those airports that get sufficient traffic to warrant a payback. The government’s role in the partnership will likely be limited to declaring eminent domain when a new road or new bridge requires more space and to get out of the way by limiting “paperwork” required by pesky environmental regulations and impact statements.

Government funding and oversight are clearly imperfect and democratic institutions can often create be slow and laborious proceedings for businesses eager to make a profit. But the decisions surrounding private financing are not subject to sunshine laws and neither are decisions about where private funding flows. The redlining practices in post-War America and the seemingly endless charter school scandals are the result of this kind of secretive decision making and the loosening of regulatory oversight.

Mr. Trump’s basic “plan” was described in this paragraph:

Mr. Trump is “trying to figure out, How do I get the most infrastructure improvements for the American citizens in the quickest fashion I can with the best return on investment for the U.S. taxpayers,” said Mr. Cohn, a former Goldman Sachs executive. “It’s sort of a businessman’s model.” 

The unfortunate reality is that the businessman’s model gave us the economically and racially stratified neighborhoods and communities we have today and the widening divide between rich and poor… because in the businessman’s world, equity of outcomes and equity of opportunity don’t matter… and democracy and regulations are a hinderance. In a businessman’s world only one thing matters: profit.

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