Editor’s Note: We hope you enjoy the video above. If you’d rather just listen to the podcast, click the button below to Apple Podcasts: The Common Bridge. It is also available on all other podcast platforms. We have included the transcript to this program below. We offer this program in it’s entirety to our paid subscribers, and welcome all to subscribe below.
You can also help the show by contributing in any of these methods:
• Shop. https://thecommonbridge.com/subscribe-shop/
• Zelle. rich@richardhelppie.com
• Buy Me a Coffee. buymeacoffee.com/RichHelppie
You can also send an email to Editor@TheCommonBridge.com
Thanks!
Richard Helppie
Hello. Welcome to The Common Bridge. I'm your host, Rich Helppie, and we have a very favorite returning guest. We have Professor Rick Geddes from Cornell. Rick's been on the show three times talking to us about infrastructure, about specific legislation around infrastructure, and also one of the greatest pieces of education I've ever had about the post office, now the Postal Service. Professor Geddes from Cornell is not in Ithaca today, he's in Palo Alto, California as part of his sabbatical, and I'm sure sharing his knowledge there and gaining new things. Professor Geddes, it's great to see you. How have you been?
Professor Rick Geddes
I've been great, Rich. Thanks for having me back on.
Richard Helppie
Well, you're so informative, and that's what The Common Bridge is all about, is to inform versus influence. One of the things that I took away from our prior conversations was a degree of confidence. I had asked, with all this infrastructure, do we have the people that can do this? You were very emphatic, you said, yeah, we've got the best material engineers and we do have the right civil engineers, and I'm like, oh, good. As I was getting ready for this I said, well, what's in the way? And I thought, oh yeah, we've got a government that controls a lot of this so maybe - as we're talking about all the types of infrastructure, from wastewater treatment to IT infrastructure to social infrastructure - if we look at that arc about what is infrastructure. We had some legislation passed and maybe some projects started, where are we today? If that would be a good starting point.
Professor Rick Geddes
Rich, it's useful to take a step back and just remind your listeners of the infrastructure landscape, because we're in a very important time, I think, for infrastructure. A couple years ago, within the span of about nine months, Congress passed three major acts which all relate to infrastructure in some way. The first one was the Infrastructure Investment and Jobs Act, the IIJA, which was also known as the BIL - the Bipartisan Infrastructure Law - was a nickname for that act. The second one was the CHIPS and Science Act, which dealt with support for things like semiconductor production being brought into the United States, among other things. And the third was the Inflation Reduction Act, which is just Congress's name for it, but really there was a lot of support for renewable power, like wind and solar, in that act. So if you look at what Congress did - two of the three were bipartisan bills - it was an enormous amount of spending and focus on infrastructure in a pretty short period of time for Congress. And so this, I would say, in my areas of focus, like transportation, it's probably the biggest action by Congress since President Eisenhower and the 1956 act that created the Interstate Highway System to some extent; depending on who you talk to, over a trillion dollars of spending on US infrastructure. Now we're a couple years later, and there's the roll-out of the funds from that and that is occurring. It is occurring at different rates across different sectors. I think you and I talked about it, Rich, the last time, that the US infrastructure delivery is notoriously siloed, and this may have something to do with the structure of congressional committees, maybe it has something to do with the history of infrastructure in the US, but there's a transportation silo, there's a water silo, an energy silo. There's some interaction between those but the monies are spent by different federal entities like EPA versus US Department of Transportation and Department of Energy, and so the spending coming out of those bills has been occurring at different rates. DOD transportation has been - the Brookings Institution is tracking this pretty closely - the transportation spending has been coming out, and that's probably moving faster than some of the other areas. But this really is a time when we're seeing new transportation projects, new energy projects, a lot of new activity, because it's a few years after those three landmark bills were passed by Congress that relate to infrastructure. It really is across sectors: wastewater treatment, drinking water treatment, US Army Corps of Engineers, harbor dredging and inland waterways, across a whole set of US infrastructure sectors.
Richard Helppie
These are sometimes things that people take for granted, that all of it didn't come about other than as a result of some forward thinking and some investment. When I hear people express their dissatisfaction with our governments, particularly our federal government, it's like, well, what are we getting for this spend. But infrastructure, you could make a pretty good case that it's good spend. If we borrow money now to build a bridge that's going to last 60 years, that's probably a pretty good spend with the proviso that you get it engineered correctly, built correctly, and then operate it, and that leads to something else we talked about. I'm trying to remember the term of art about design, build, operate, maintain. Did I get that right?
Professor Rick Geddes
You did. It's a particular procurement contract called a DBOM - design, build, operate, maintain - and you can include a an F in there if you have private financing; it would be a DBFOM.
Richard Helppie
I'm glad that the F stands for financing. So has the world or our country pivoted more to the DBOM or the DBFOM versus the siloed procurement?
Professor Rick Geddes
Another great question, Rich, and again, it's useful to take a step back for the listeners. I always tell my students they should study infrastructure in their careers because it gives you an attitude of gratitude. If you think about what it takes to give the United States this extensive system of interstate highways, local streets, state routes, as well as the communication system we have, the energy system, the power that that we have, as well as clean water, waste water treatment, all the effort it took our parents, grandparents and great grandparents; we've had that for decades. We've had the services provided by that infrastructure for decades. The United States is really a fortunate country to have had this level of development. And to some degree, that's how I would define development by having these basic building blocks of society available to us for so many decades. But we have this issue in the United States: we're good at building shiny new bridges and tunnels and airports, but we're not that good at taking care of them. And as the American Society of Civil Engineers reminds us in their quadrennial report card of US infrastructure, we have this problem with deferred maintenance. So over time the easiest thing, if you're a county or a city manager or even a state, is to defer maintenance on your infrastructure for another year if you have a tight budgetary period. Well, if you do that for a while, your infrastructure degrades. What we had to address - I think there was bipartisan agreement - is that deferred maintenance. A lot of what we're seeing in terms of your point about is this a good spend, certainly there's new construction going on, but there's a whole lot of the spending that is just taking care of the things we already have and reducing that backlog of deferred maintenance. Now, your point about the DBOM and the DBFOM is a policy hobby horse that I get on whenever I can, which is the idea of combining - if you do, say, a new project where you have to do a design build - is wrapping the operation of maintenance into the contract when you do that. That would be design, build, operate, maintain. It might be a 20, 25, or 30 year contract that commits whoever the owner of that facility is. Could be a municipal airport, it could be a bridge, whatever it is, to a proper schedule of maintenance over several decades. That takes the deferred maintenance decision out of their hands and puts it into a contractual arrangement that makes it harder to defer. Rich, this gets to an issue we could talk a lot about, I've written a lot about, which is public-private partnerships, or a PPP, which some people define as a contract that brings the private sector in with the public sector in a more holistic way. And yes, the US is behind in the use of DBOM or DBFOMs, but the Infrastructure Investment and Jobs Act explicitly has encouraged the use of PPP and these innovative contracts through the financing arrangements and we could talk about what they did in that act. There's something called private activity - you may know and I think you and I may have talked about this - the US is the only country that I'm aware of that has this tax arrangement for municipal bonds, where the interest income - if you're a bond holder, you buy the bonds - is tax exempt at the federal level, so that lowers the interest cost to the issue of those bonds. But that same tax treatment is not available for privately issued bonds. The solution that the Treasury came up with a long time ago was something called PABs - or private activity bonds - that extends that tax treatment to privately issued infrastructure bonds. But the Treasury had a cap, because they lose money, they lose that tax revenue on that of 15 billion. The IIJA doubled that cap to 30 billion. Some of us, in the next round - which Congress is going to have to start thinking about this pretty soon - would like to lift the cap on private or just eliminate the cap on private activity bonds. Municipal bonds don't have a cap, and so just have the private activity bonds stand in competition with tax exempt municipal bonds. That explicitly encourages the use of PPP or DBOM contracts in the United States. There are other things that are happening and we could talk a lot about how other countries do infrastructure. In some ways, they do it better than we do. But that's one encouraging thing I'm seeing at the federal level.
Richard Helppie
That is very encouraging, because one of the things I wanted to touch on was what's really exciting that's working, and what maybe causes some concern. And as you were talking about this build up of deferred maintenance, I'm thinking, I'll give you two examples from my region here. Brand new bridge going over the Detroit River, the Gordie Howe International Bridge, very exciting project, going to open lots of trade, be very efficient on both sides of the border, and right there's a sense of excitement. It's brand new, the new shiny thing. Interstate 75, a little south of Detroit, there is a bridge in Monroe, Michigan over the Raisin River, and it's got to be replaced and people are going, oh no, the Interstate is going to be closed. So you've got two necessary bridges, one brand new, yay, it's exciting. The other one, hey, we don't want it to fall into the Raisin River, and all people can think about is the traffic congestion. That really resonates to help folks look at this. But as you look around at these three really landmark pieces of legislation, in your estimation, are there good examples of what's working, and are there other areas that you go, wow, we really, as a country, didn't get this right?
Professor Rick Geddes
I think there are good examples. I would say in terms of encouragement, Rich, I think all three bills, to some extent, represented a bipartisan awareness, which represents the public awareness, and it took a while, but the US recognizes that we have this infrastructure problem. It varies by state and region where a lot of the infrastructure is old and it hasn't been maintained and that we really had to do something about it. So in the last election cycle, there was really a bipartisan agreement that we needed to take action on this. The three acts, represented in different sectors of infrastructure, represent ambitious action I think, just that bipartisan nature of recognition of the problem. As you know, Rich, there are not many policy topics that are truly bipartisan at this point, but I think infrastructure is a rare exception where there is bipartisan recognition that we need to take care of this stuff that has been bequeathed to us, that the United States has benefited from for decades, that we haven't been taking good care of. The second thing I see reason for optimism, Rich - I always talk about - is this, people in infrastructure are sort of quiet, below the radar people. They're not often cheerleading and saying, look at the wonderful things; of course, we have bridge openings and so forth but I have observed over the past decade what I call a quiet technological revolution in infrastructure technology. It's almost every 48 hours there's some new technology that comes out that will improve the delivery of infrastructure. It could be new types of additives to concrete. One example is an additive that makes concrete more elastic. As you know, given where you live, Rich, it's the cold and the heat, the expansion and contraction of the concrete breaks it up over time. So if you can make the concrete a little more elastic through additives, it can expand and contract without the cracking. That's one example. Another is the use of rubble as an aggregate in concrete. There have been experiments that are actually done in Syria, the use of rubble added to concrete, where you can add up to 50% of rubble and the concrete will retain its engineering properties. Asphalts, new type of asphalts. There are sensors implanted in the asphalt - they're about the size of your thumbnail, pretty small, and they can be in concrete as well - that will read out 12 different chemical properties of the concrete or the asphalt, and that optimizes your maintenance. Maybe you don't have to tear out all the concrete, maybe only have to take out sections. There's the use of drones now for inspections of bridges, which it used to be guys with flashlights and hard hats and some on ropes, but now you can fly a drone around to look, to monitor cracks, to monitor rust, in a way that you couldn't before. There are whole new types of modular designs in infrastructure, where you prefabricate parts of, say, a bridge away from the site, and then you bring it in, and you can replace a bridge much more quickly than you did before. So I'm seeing a whole bunch of these, I would say, proven, patented technologies, coming to market. The challenge, Rich, is getting the public sector that owns - a lot of time the public sector owners are small entities, they're small towns, they're counties, they kind of want to do things the way they've always done them - getting them to adopt these new technologies. That's where I think the policy comes into play so much. That gives me reason for hope. I think also, there is a recognition that we have to innovate in the way we do procurement contracts. There's something... I'll just put this on the table for you Rich, a term that I've come to really like is called future proofing. Future proofing. It's kind of a strange term, because we can't proof things from the future, the future is going to happen no matter what. Some friends of mine want to call it future enabling. But what that means is guaranteeing that the procurement contract includes the latest technology. There are actually ways that you can write clauses in, say, a DBOM contract that puts the risk of not adopting a technology - which is a strange risk - but you can put that on the private partner, so that the private partner has a contractual obligation to know about and to be adopting the latest O and M technologies, or the latest materials in the renovation or whatever it is. So this gives me reason for hope. There's more awareness of this, and slow, I would say, adoption of these things. But the degree that this technological revolution has occurred is really astounding. Just so much is going on on a regular basis.
Richard Helppie
I am encouraged, as I have been every time you and I get a chance to talk. Obviously, living up here in the pothole capital of North America, concrete that can expand with our extreme freeze and thaw cycles; we have more than anybody. I think it's ironic that Syria is using rubble at the rate that we're manufacturing it, which is, I guess, another government policy. Then, as you're talking about, basically, the Internet of Things with the sensors in the paving surface, and then making use of the technology like drones, I'm really encouraged that people are thinking ahead, saying, we're not aiming at a fixed target. Something's going to happen in the future, and we need to make sure that we're ready for it. In your work, I do want you to talk about your Cornell Program In Infrastructure Policy. Why isn't this exciting, comforting, information that's factually based, why don't most people know about this? You don't get calls from the Wall Street Journal or New York Times or Newsweek or any big outlets. Why is it that your average person doesn't seem to understand what's going on with infrastructure?
Professor Rick Geddes
It's an interesting question, Rich and it's almost psychological in nature. I've come to the conclusion people really interact with infrastructure. You drive on a road maybe multiple times a day in your commute, or take the kids to school, whatever it is. You drink clean water from a water system, people don't have to think about whether they're going to get sick. I mean, you know that water born diseases are some of the worst types of diseases for humanity. You don't have to think about wastewater treatment, it just sort of happens. I think it's a psychological thing where people, they take it for granted and they want to think about other things until there's a disaster. The big one is not far from you, the I-35 bridge out in Minnesota collapses, there are school buses in the bottom of the river, and then everybody focuses on infrastructure. Well, one of my points is that that's not the time to worry about infrastructure, operation and maintenance, and design and spending; it's before that, right? It's taking care of what we have before the bridge collapses. That's why I, to some degree, formed the program at Cornell, the CPIP program. I invite everybody to look at our website: Cornell Program In Infrastructure Policy. I formed it over 12 years ago because I realized Cornell University is a large STEM kind of place. There are a lot of people doing research and teaching around campus that related to infrastructure, not only in civil engineering, but also in materials and in the business school and some other places, but that we needed an umbrella on campus to basically bring those people together and have a concerted effort at Cornell. And it really has grown over time, Rich, so that it is, I think, the premier program, not to study necessarily the engineering, we work with a lot of civil engineers, but all the policies. Where does the money come from, the funding? That's separate from financing. I always make that point to my students, funding and financing are related, but they're different. Permitting, we could probably have an hour just where we talk about the environmental permitting process at the federal level. It's called NEPA. There's an essay about it in The Wall Street Journal today. The National Environmental Policy Act of 1970 has become a large and cumbersome process for any major project to get through before permitted. It can take an average of five years to get through that process. Some projects can take ten years. So that's the reason why I formed the program and I think we're only growing, and we're trying to have more of an impact, but it's to get the word out that people should be thinking about infrastructure. You should be grateful for the services that it provides, but we should take care of it before the bridge collapses or the the water main breaks, or the natural gas pipeline leaks and blows, all those things we're seeing.
Richard Helppie
When someone says, hey, we're going to jump on the interstate and bring up our GPS to figure out where we're going. Where did all that infrastructure come from? People need to think about that. Maybe there are some students that are listening, or parents or grandparents of students, listening. What about that student going to Cornell to study infrastructure? If there are any journalists, reporters, if you're going to a college campus on your way to cover the Palestinian protest, maybe stop over in one of the academic halls and find out what people are doing for STEM and infrastructure. And those reporters that are going to Washington, to Professor Geddes point about this being bipartisan, we've got all of this fake controversy about who gets to use what bathroom, but it's unanimous where people want stuff to go when the toilets are flushed. You could spend some time reporting on that a little bit.
Professor Rick Geddes
You know, Rich, the saying is, there are no Democratic roads or Republican roads, there are just roads.
Richard Helppie
Yeah, exactly. Take care of them, right? We want to clear that wastewater for everybody, and we do want clean drinking water. That intersection of environmental permitting and clean water has got to be real interesting, given that chemicals that we didn't know perhaps or didn't know how to dispose of, are leaching into our water supply. And what are some of the packaging materials doing? Now, I'm not a scientist, so I'm just going to tee this up out of complete ignorance, but supposedly we're carrying plastic around in our bodies because of packaging materials and things that are in the air and water. I don't know if that's something that you talk about in the infrastructure study, or I don't know how true, but...
Professor Rick Geddes
I think the term is micro-plastics that I'm hearing, where some of the - and I guess there are different chemical types of plastic, there's not just one type - that degrades over time and gets into the environment. There's actually, again, a lot of work being done in certain units at Cornell. Cornell is very real leader in clean water. There's a lot done on the Hudson River estuary. There's a Hudson River Estuary Program for the Hudson but also the source of the Chesapeake Bay is actually not far from Cornell in upstate New York, going down the Susquehanna. There's a whole lot of work being done. I think those micro-plastics have been picked up in turtles that are in Cayuga Lake, which is right next to Cornell. It is a real problem. I think there are interesting questions about how we deal with that. Again, I don't have the chemistry background to really comment on how to clean that up, but I can say some things about policies. And I want to get back to technologies, we could do a lot better in terms of the recycling that we do in the disposal of our waste because, let's be honest, Rich, this is a problem, not being careful about waste disposal. One of the things, again, I'm optimistic about. I'm very concerned about micro-plastics in fish and turtles, in our bodies. What are the long term effects of that? The best answer is probably no one knows. It's because we don't have the time frame to study it. But I do like some of the things I've seen in terms of improving the efficiency and the cost effectiveness of recycling that would reduce - I hope, fingers crossed - the amount of plastic in the environment. One is a robotic arm technology, because humans, people, are not that good at sorting out our recycling but the robotic arm can recognize plastic, metal, cardboard, and pull it out and separate that it from people's recycling waste so that you get a more pure result at the end; you keep the plastic out of the environment, hopefully, as a result of that improved efficiency and it makes the recycling proposition more cost effective. I think that's been part of the problem, a lot of times municipalities have people recycle but there's not a market for it so they take it to the landfill. It ends up not being recycled the way you and I might think that it's being recycled. But even in that area of infrastructure - waste collection, municipal waste collection and disposal - new technologies are emerging, and the robotic arm is just one example that I think will improve the situation. What I think about are the policies that would encourage those municipalities to more quickly adopt those types of technologies.
Richard Helppie
I'm familiar with some places that you single stream recycle, they've got a way to sort that out. I know that plastic, depending on what type of it is, can be chopped up and then extruded as plastic resins. That's been around for a long time. And then recently, as I was up in Colorado, many of the communities there have community-wide composting. When you send your trash out, you have your trash, you have your recyclables, and then you have compost; they're composting. The organic material is going back into the dirt, which I thought seemed like a pretty good idea. And when I look at the landfills too, I'm always looking at them and saying, I wonder what's in there? Where, ultimately, is it going to go? Because it's going to end up in the soil, it's going to end up in the groundwater, so...
Professor Rick Geddes
Rich, to that point, I do want to introduce to your listeners content [when] you asked me about what I see that I like that's happening in infrastructure, and again, reasons for optimism. It's another concept that your listeners may want to be familiar with, called value capture, and it's an increasingly big deal. Again, how we deal with infrastructure in the United States, depending on the state, is old, and the landfills that you brought up provide an example of value capture. As you probably know, when landfills degrade, they produce natural gas; there's a degradation process. Sometimes, back in the day, you'd drive by a landfill and see the landfill operator flaring off the natural gas with a flame; well, that goes into the environment. Increasingly, there are technologies that capture the natural gas and then that can be used to offset the burning of other types of more dirty fuel to make electricity. So you can use the natural gas to make electricity. I think the better example, Rich, are wastewater treatment plants. The plant in Ithaca, where I am most of the time, is a century old, I think, and most listeners are familiar with the big, circular holding ponds that settle the waste water. There's a skimmer that goes around to skim things off the top and the solids fall to the bottom and so forth. All of that releases methane. In Ithaca, there was a partnership with Johnson Controls, where they installed a digester. It's a giant sphere, a giant white sphere, that the solid waste would go in there. It has a plunger and a valve on the top, and that captures that methane gas that would normally go into the atmosphere. They use that gas to turn turbines at about 100,000 RPMs, with very high turbines, to use the gas to make electricity. So the plant no longer buys electricity off the grid. They sell that power to the grid that would otherwise go into the atmosphere and the plant is much more efficient. It's a win, win, win. It's a win in the sense that the environment wins, the city wins, and the rate payers win because they don't have to pay as much because the plant is now more efficient. The key thing that I love about value capture, the city didn't have to pay much in cash for this. Johnson Controls was willing to install the technology in return for a part of the lower electric bill. They knew the electric bill was going to be lower for the city, and as long as they were able to capture part of that, they said, well, we'll borrow against that to install the upfront cost of the digesters and the turbines. It ended up being a really interesting value capture deal. More of that is what I would like to see the US do, and that just runs everything better.
Richard Helppie
I really like that model of life cycle, capturing everything, reusing it. That leads me back to a question, you mentioned that one of the bills that went through had a lot in there for wind and solar power. Are there any provisions in that that says here's how we're going to recycle and reuse the materials that go into solar panels and windmills and the like?
Professor Rick Geddes
Richard, these bills are enormous, so I don't want to say that there is no provision, because you'd have to go through thousands of pages of legislation, but I have not heard anything to that effect. I have heard that disposal is actually an issue; that they're difficult to dispose of. There are some elements in the solar panels and so forth that you need to be careful of when you're trying to dispose of those. There may well be, I'm just not aware of it. But since you bring up - and that's in the somewhat misnamed Inflation Reduction Act, really a lot of those tax credits and so forth for renewable power - there's an issue you and I should probably discuss, which is we could go out and we could build all the solar farms we want, all of the the wind farms we want, but you've got to connect it to the grid. In other words, it is producing power and you don't just plug it in any time you want. You have to get permission from the grid operators. There are five grids, I think, in the US, plus Texas, which, of course, is its own grid, we learned a few years ago about that. These grids are huge. The people who operate those grids are very careful about new sources of power coming onto the grid and about how they add capacity to the grid, because the electrical engineering says the demand and supply on a giant grid have to balance in real time. The process, I've heard, can take four or five years. You could have a new solar farm up, ready to go generating power but not get permission to connect it to the grid for a number of years. These processes that involve a lot of policies and litigation so forth, really, I think have to be thought through. Now,again, there are technical engineering issues at stake here, but there's probably scope for streamlining some of those processes. So keep in mind, when you think about renewable power, people say, I'm in favor of it; it's clean power yes, but it doesn't help unless it's connected to the grid.
Richard Helppie
And that's, I think, a grand example of that life cycle planning. It'd be great if we discovered that inside of the Inflation Reduction Act - aka jet fuel for inflation - had some good things in it, that for the all the incentives to go solar in your home, for example, also came with it provisions for refurbishing and recycling the solar panels when they reach the end of their life. There's got to be a way to do that other than burying it. And of course, we hear the anecdotal things about the blades on the windmills having to get buried because they're no good after a while. There's got to be an answer other than let's use something that we used a hundred years ago and throw it in a hole in the ground. I think you're going to be very busy with this for the remainder of your career. I hope you have some good proteges coming up behind you when that time comes. Any star students that might be influencing our government someplace?
Professor Rick Geddes
Absolutely, we only produce star students at Cornell, Rich, they're all stars. But to put all joking aside, a lot of the students, both undergrad and graduate students think that you have to be a civil engineer to play in the infrastructure sandbox. One of my messages on day one is, it's great to be an engineer, I love all types of engineers, but you can participate in this whole world; whether it's transportation or energy or drinking water, waste water... and you and I haven't talked about social infrastructure like a school, a prison, a courthouse, hospital, a stadium, right? All of those things are considered stand-alone facilities, but their infrastructure is an enormous world. So you can have a great career. You might be a lawyer who deals with a lot of the contracts and the property rights, right of way issues, or you could be a consultant, or you could be a banker or in some other element of the finance. And, of course, lots of Cornell graduates go to Wall Street; there's this whole world of infrastructure finance or public finance where they use particular financing structures to pay for the giant upfront costs of an airport or a sea port or a new drinking water system, whatever it is. And so one of my points that I try to make is that you can have a great career without [being an engineer], you can work with the engineers all the time, but really, there are tremendous contributions to be made in other areas of infrastructure.
Richard Helppie
I'm really encouraged to hear all of that. The high school students that I am involved with in the mentoring program, I want to tell them there's a way to contribute. That's what they should be looking for; where can I contribute and do something meaningful that I can make a living at? So many good options there. Rick, you're very bullish and uplifting. Is there a bear case, like we're going to get this wrong? I can't think of one. I mean, potentially contracts steered one way or the other. Anytime money is flowing, there are going to be some bad hands, at some percentage. Anything on the bear case? It sounds to me like we're on pretty good track right now for infrastructure in the country.
Professor Rick Geddes
Rich, I'm inherently an optimist, but there's absolutely a bear case. The United States is a democracy, and so what happens in some infrastructure - this could be at the federal level or the state level or the city level, and I think it's a bipartisan issue - there will be a project championed by a particular elected representative. A new subway line, a new transit system... a governor will champion that when he or she is in office, then the next governor - maybe from the other party or person they had a conflict with - will come in, and that first project will be in process and the new person will cancel the project. You wouldn't have that in other systems, I think it was in the nature of a democratic system. I don't have a good solution, but the issue is you can see a project that's actually... it was called ARC, Access to the Region's Core at the time - it's the Gateway Tunnel project now under the Hudson River between New York and New Jersey. They are actually tunnels that are owned by Amtrak. It was in process and Governor Christie had the money but canceled the project and distributed the money for that elsewhere in the state. That's just one example, but we see that in other cases. So there is this problem, right? I could give you some other examples; the California High Speed Rail line, you're probably familiar with that. The vision was to be all the way from Los Angeles up into San Francisco but you have to get the right of way to do that. They're doing it in the lower cost part of the state, in the Central Valley, but that doesn't connect the population centers. So issues like major project delivery that get caught up in politics, just the nature of the beast. I don't have a good way of addressing that problem, given our political system, but that's a reason why I think the US is weak on infrastructure in some cases.
Richard Helppie
Yes, it seems like we've got a lot of good mechanisms in place for good infrastructure, and that's very exciting, and gives us good reason to be confident about the future, and along with it, we've got some bad ones, like the high speed rail in California going from no place to no place; they could turn into a bike trail. I think that might be cheaper and probably used more, but overall, I think we need to be encouraged. Professor Geddes, as we move to the end of our time today together what didn't we talk about that might be important for the listeners, readers and viewers of The Common Bridge?
Professor Rick Geddes
Rich, there are a lot of things we didn't talk about, but one is - as you and I have talked before - public-private partnerships and private investment in US infrastructure. Around the world, in almost every other country that I'm aware of, the private sector is much more involved in owning and operating infrastructure. The airports in Italy, for example, I think, are almost all privately owned. The US, 95% of our airports are municipal. Around the world I could give other examples of toll roads and drinking water systems [where] the public and the private sector work together. What that provides is investment opportunities for the private sector. And who are the investors? This is not Gordon Gekko, of Wall Street fame. These are very large, patient, institutional investors, they're public pension funds, private pension funds, in some cases they're university endowments. They could also be insurance companies that have large pools of capital. They want stable, reliable, but appealing investment returns to match... if you're a pension fund, you have to think about your retirees 25 or 30 years from now; are you able to meet their needs? Turns out that infrastructure, whether it's investing in a water system or an airport or a toll road, is actually a very appealing investment for a lot of those funds. I think that the thing we didn't talk about that is growing in the United States as an asset class - we know that commercial real estate is going through a rough patch (Richard Helppie: Yes.) but an alternative that is a real asset - you're not investing in a complicated financial derivative - a real asset is investing in an infrastructure facility. What we're seeing is growth in that asset class, it doesn't solve the problem of... as you know, some city pension funds have unfunded liabilities. It doesn't solve the problem, but it helps. It's a step in the right direction. That's something you and I could probably talk about, that whole world is a fascinating world that we could probably talk about in detail.
Richard Helppie
I will ask my producer, Brian Kruger, to get us a another session. We'll talk about public-private investment. Frankly, I'm a big fan of revenue bonds versus general obligation bonds. (Rick Geddes: Me too.) I think a really great example right now, at the airport security you can go CLEAR, which is a private company or TSA, pre-check, for those of you that travel frequently. I think one helps the other get better at getting us safely into this area of an airport. Rick, as we are going to get together again - because I just love talking to you and I wish I were 50 years younger so I could go to college and sit up in Cornell - as we bring this session to a close today, what closing comments do you have for our audience?
Professor Rick Geddes
Again, I'm going to have a message of optimism, and it's also a common message for a lot of people who are passionate about what they do, is to pay attention and get involved. Don't wait for the bridge to collapse, don't wait for the water... Flint, Michigan, where you have contamination in the water. First of all, be aware of this. Again, I tell my students that part of the reason that you benefit, you have a richer life by studying this, you're aware of the infrastructure around you and what it took to give you that infrastructure and those services and to be grateful for that. But for people to really pay attention and learn about it. It doesn't happen by magic. This takes a whole lot of effort to give us those things that we take for granted. And you and I haven't even talked about communications technology today, which is allowing us to have this call, but to think about that and get involved and to help with better policies that reduce deferred maintenance, increase technological adoption, create more opportunities for institutional investors to get involved in and benefit retirees from investing in US infrastructure. Those are the messages I would leave your audience with, Rich.
Richard Helppie
That's an area I'm very passionate about, making sure everybody can get there. In years past, decades past, we had universal telephone service, because it was essential. We had rural electrification because it was important. Well, we need broadband and we need people to have the ability to use apps. There are more and more things where you've got to be on the app.
Professor Rick Geddes
That's another whole discussion we could have, is the history. I think that's a very good thing about the United States, but also about infrastructure, is there was this notion that no community should be without these basic services. 200 years ago it was delivery of mail, to our bold discussion on it, it was the horse post, everybody, every town, should get mail delivery. That was newspapers, actually 200 years ago, where your town should have a newspaper. And then it was power, it was clean water, it was landline telephone service. And there actually was a movement to pave roads. It was called the farms to markets movement, where the rural communities couldn't get their produce to the market because the roads were dirt and if it rained it would just be rutted. And so there was this move, this idea that all communities should have access to paved roads. I think there's this tremendous notion of universal service, almost like a moral concept, that is built into infrastructure delivery in the United States that I think is a very good thing.
Richard Helppie
I am in strong agreement with you. It is a moral issue...
Professor Rick Geddes
It is a moral thing. Economists are not good at that, but [laughter]
Richard Helppie
Well, on the other hand, no economist jokes today but this is, I think, important and why we do this program is that there are good people out there doing good things, people like yourself, that are preparing the future generations to keep doing good things. We've got to turn off the noise in what used to be news and focus in on facts and learn from people like you. We've been visiting today with Professor Rick Geddes of Cornell University, the Cornell Program In Infrastructure Policy. Currently, he is on sabbatical at Stanford University in Palo Alto, California. Please tune into the past episodes from Professor Geddes, they're fascinating. I love the one about the Postal Service, among the other ones. We're going to invite Professor Geddes to come back and talk more about infrastructure. And so with our guest Professor Rick Geddes, this is your host, Rich Helppie, signing off on The Common Bridge.
Share this post