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Promoted from the diaries by streiff. Promotion does not imply endorsement.
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By Alexander G. Markovsky

If the President read this article, he would say that the only bad thing about this idea, he did not think about it himself. But maybe he did, it’s not the point. The point is that with many projects standing stagnant for over 30 years, it is time to change the way we approach infrastructure project funding.

The solution lies with the greatest wealth generation machine ever invented — capitalism. Corporations and private investment funds have amassed trillions of dollars over the course of the Trump economy, and they’re looking to invest in infrastructure that offers low-risk and decent long-term returns on investment. Hence, there is no imperative for the government — federal, state or local — to finance and maintain revenue-producing infrastructure projects when private capital is available.

The concept is known as BOO (build, own, and operate), and it does not rely on government funding. There’s no need to persuade a truculently hostile Congress to pass the infrastructure bill and no need for Congress’s consent to facilitate private ownership of new projects — conceptually, there is no difference between private ownership of a hotel, a power plant, or a bridge. Privatization of infrastructure could include any revenue-generating assets; roads, bridges, tunnels, treatment plants, and airports, etc. Tolls and user fees will be collected to defray operating costs and retire debts.

The proposed system is centered on pragmatism and flexibility. Pragmatism, primarily because the federal government is broke while state and local governments grapple with deficits. Given the magnitude of the problem and public sentiment about raising taxes, other options are either impractical or incommensurable with the President’s stated objective.
Flexibility, because the new private infrastructure would, in many instances, supplement the existing public infrastructure, not replace it. Therefore, the public would enjoy double the benefits such as reduced congestion on public roads and the availability of private infrastructure. Further, federal and state funds could be directed to the projects that are necessary but do not offer acceptable returns.

Privatization would open a new page in collaboration between the public and private sectors. The states would provide a right of way, sovereign immunity, and the permits as their contribution to the projects scopes while the private sector known for its efficiency and innovation would offer financing and project management. The effect of privatization could be massive. It has the potential to create a long-term economic expansion that will dwarf the scale of the Pacific Railroad and the National Interstate and Defense Highways acts combined.
The chief obstacle to privatizing is an ingrained quasi-socialist mentality, making state and local governments the principal owners of the nation’s infrastructure. Beginning in the 1980s, these owners started treating the assets as a revenue stream. As a result, nationwide, tolling has become a familiar feature of the American landscape. The fundamental flaw of this policy is that the government, as law enforcer and protector of consumers from inherent warts and blemishes of the capitalist system, has become part of the system — it owns and operates for-profit enterprises. In those mutually exclusive capacities, the government is in a position to abuse its power with impunity. It is, therefore, not surprising that the owners have embraced monopolistic behavior — manipulating supply and demand to justify constantly raising taxes, user fees and tolls, ostensibly for building and maintaining roads while neglecting the assets’ maintenance and repair.

Whereas the product is being sold regardless of quality and costs, governments have no incentive to keep projects on schedule and within budget. Paradoxically, lenders love it: since there is a low risk of borrowers going bankrupt, whatever is spent will, eventually, be covered by the taxpayers, with interest.

There are a number of fully permitted and “shovel-ready” but stranded infrastructure projects. The interstate I-73 in South Carolina could be a poster child for the government ineptitude and reluctance to undertake a new approach. Singled out by the President during the 2016 campaign, despite numerous proposals from my company that possesses the expertise and financial backing, the state government would rather have the project remain stranded for another 30 years than yield their ownership to a private entity.

The opponents of privatization may recite the dreams of government-financed infrastructure but they need to cope with prose of reality. Given the lack of funds and sources of revenue, and the government’s inherent corruption and incompetence, we may conclude, with a reasonable degree of certainty, that privatization of the nation’s infrastructure is a product of the evolution of our economic system and historical inevitability.

The necessity of rebuilding the nation’s infrastructure has been embraced by administrations of both parties. The current militant political environment, however, has turned great aspirations into paralysis. Neglecting this reality risks economic stagnation. Therefore, it’s time for the President, who is extraordinarily well prepared for it himself, to influence the tempo of history — to usher in a new era of mass prosperity.

The government does not have to build more infrastructure; the government must let capitalism build more infrastructure.

Alexander G. Markovsky is a senior fellow at the London Center for Policy Research, a conservative think tank that examines national security, energy, risk-analysis, and other public policy issues. He is the author of Anatomy of a Bolshevik and Liberal Bolshevism: America Did Not Defeat Communism, She Adopted It He is the owner and CEO of Litwin Management Services, LLC. He can be reached at [email protected]