Monday, August 01, 2016

Infrastructure Insanity - Part II: Redux

How is this as an episode of serendipity? On the very day the following article was to be submitted for publication, the Sunday New York Times released an article with the following headline: “Democrats, Looking Past Obama, Feel Around For a Next Great Cause (Infrastructure?).” Do you think they read last month’s article here on that very subject and that gave them the idea? Nah! Nevertheless, you can read more about this at the end of the article below.

The ability to print an eight year old article (as was done in last month’s issue) as if the facts therein were still current (and they are), is a clear indication that very little progress has been made on the subject in question—Infrastructure. However, there is universal agreement that the country’s infrastructure status has been, and is currently, in a deplorable state. Verifying this thought is the unique, almost unbelievable fact that despite the vicious name-calling, both candidates for the presidency are in total agreement that not only must our infrastructure be reconstituted; our infrastructure expenditures must be increased.

What follows is a reprint of the second part of a four-part series on the subject of infrastructure that ran from August 2008––December 2008. However, in order to update the facts, and accentuate the dramatic increase in costs over a five-year period, the 2008, plus the most current (2013) numbers (from the American Society of Civil Engineers, the ASCE) will be compared.

Infrastructure Insanity — Part II

What’s insane about the country’s infrastructure? Think about it! Here we have our most valuable physical assets, our roads and transit systems, bridges and tunnels, drinking water and waste water facilities, levees, inland waterways, airports and ports, electric power generation and transmission systems, and we have allowed them to deteriorate and decay.

Last month’s article on the subject, alluded to the fact that the above headline could just as well been titled “Infrastructure Inanities.” While the two words, insanity and inanity are often equated, according to the New York Times wordsmith, William Safire [now deceased] there is a difference: “Insane is applied to the health of the mind, and means ‘unsound, unhealthy, mentally deranged, mad, though these words carry a stigma and are no longer used by medical professionals in describing mental states.”

Safire further explains: “inane is Latin for ‘empty’ and came to mean ‘empty headed, silly, vacuous.’ Synonyms today range from ‘foolish, absurd, daft’ to ‘senseless, harebrained, stupid,’ but stop well short of the menacing ‘insane.’”

To me these distinctions are artificial and it matters not whether you define our infrastructure policies as insane or inane, or for that matter term our infrastructure policy leaders as insane or inane, the state of our corporeal infrastructure resources is still in dire jeopardy.

The ASCE Wake-Up Call

In 2005 [and in 2013], the American Society of Civil Engineers (ASCE), released an elaborate study [conducted every four years, the next one in 2017] outlining the condition of various infrastructure sectors, using an A to F report card style grading system. The report concluded, “The state of infrastructure in the United States is continuing to deteriorate … the third and most recent of such report cards [indicate] the overall trend is a decline in the state of infrastructure … the cumulative grade for this latest report is a D, [now D+] whereas the 2001 report card received an overall grade of D+.”

The report also estimated that “The United States needed to invest $1.6 billion over the next five years to bring infrastructure up to an acceptable level [now $3.6 trillion].” To produce the report, a panel of 24 of the nation’s leading civil engineers was assembled and an extensive literature review was conducted involving the analysis for hundreds of studies and reports. It also surveyed 2,000 engineers to determine what is happening in their respective fields.

However as the saying goes, “That was then, and now is now.” In other words, without exception, every time the ASCE estimate is quoted, in newspapers, magazines, or web sites, that same number, $1.6 billion is mentioned, even today, three years [2008] later. Has no one heard of the word “inflation?” More importantly, the prices of basic construction materials such as steel, aluminum, copper, cement, petroleum based products such as asphalt, plastics, and other commodities have in some cases doubled over the past three years. As a result, it is quite probable that despite the recent subsiding price trend of commodities, the 2009 report will undoubtedly reflect a number over $2 trillion. (The actual number was $2.2 trillion)

That an expenditure of this magnitude is required may be better understood if the enormity of our current infrastructure inventory is comprehended. For example, the United States has 4 million miles of road, 600,000 bridges, 26,000 miles of navigable waterways, 11,000 miles of transit lines, 500 train stations, 300 ports, 19,000 airports — and that just covers the transportation section. The purpose of that report is to emphasize that many existing facilities are inadequate in numbers or size to fulfill the needs of the existing population, and others are aging, needing continuing repair maintenance or replacement. While not all of the existing infrastructure entities are inadequate or crumbling, that ASCE D- report (now D+) is troubling.

In a recent account, the Pew Research Center estimated that “the population of the United States, currently at 305 million (now 324 million), will grow to 438 million by 2050.” While the ASCE’s $1.6 trillion (now$3.6 trillion) estimate is distressing, even more shocking is the fact that the ASCE report states very specifically, “It is important to remember, that the $1.6 trillion [now $3.6 trillion] does not account for future population growth.” The problem is that unless one looks for it, this critical detail has not only been overlooked, but has been totally ignored by those covering this subject. As a result, the $1.6 trillion (now $3.6 trillion) figure seems woefully underestimated—a fact once again ignored by the media.

Infrastructure: The Competitive Advantage

The Pew report continued, “The preeminent economic position attained by the United States in the 20th century was due in no small part to the massive infrastructure that had been created and nurtured over many years — the massive transportation system consisting of roads, bridges, airports, and railroads; the ports; electric generating system; water and waste water systems; and an educational system that was once the envy of the world (but no more).”

In those halcyon years, infrastructure was a major driving force, generating increased productivity that in time was a huge factor in inspiring dramatic economic growth. There is now worldwide recognition that without a modern and effectively functioning infrastructure, one that is well-funded, economic growth is not feasible. As result, the United States is in a competitive global race to not only repair and maintain, but to expand its infrastructure assets. As unimaginable as it may be, despite an initial huge head start, our global economic competitors are, to a great degree, out strategizing and out investing us in an attempt to gain a competitive advantage.

Those last two words are part of the title, Infrastructure 2008: A Competitive Advantage, co-published by the Urban Land Institute and Ernst & Young, the global accounting firm. The report presented an analysis of current and planned infrastructure positions across the globe. The report asserts, “The United States needs to overhaul its outdated regional infrastructure planning process and create a viable federal framework or faces compromising its ability to compete in a global marketplace.”

The report emphasizes that “2008 seemingly marks a critical juncture in a rapidly changing economic environment where new approaches to land use, infrastructure and energy efficiency will likely determine and possibly reorder the next generation of winners and losers—countries, companies, investors and people.”

U.S. In Sharp Decline

For several years, the United States has been in a state of infrastructure decline, reluctant to address the dire straits that exist. The report realistically cautions, “Political will may only emerge when people face imminent reward or immediate risk — a bridge collapse or a burst levee, and maybe not even then.” The report also warns, “America heads for a crisis in the next ten years if nothing is done.” In subsequent years since that 2008 report, the Urban Land Institute reiterated its concerns, reemphasizing the critical importance of initiating a “grand national infrastructure plan.”

This observation was recently affirmed at a recent meeting of Mayors in New York City who met to discuss the fact that the federal government has abdicated its responsibility to develop a grand national infrastructure plan. At a conference after the meeting, Mayor Michael Bloomberg of New York stated, “We’ve got to make infrastructure investment a national priority.” He then criticized the federal government for “walking away from its responsibility in this area.” A recent US News and World Report article stated: “While Republicans and Democrats agree that something should be done, there's little consensus on where funding should come from and which projects should receive priority.” [That was the end of Part 2 of the four-part article published in 2008].

The New York Times Article

It’s interesting to note that after all these years that politicians ignored the critical importance of maintaining and improving the country’s infrastructure, a wake up call seems to be echoing through the political structure. Here is what the NY Times wrote, “For now, many in the party whose presidents ushered in Social Security, the GI Bill and civil rights, seem most focused on infrastructure. It is hardly the stuff of the Great Society, a moonshot or even a “chicken in every pot.” But there is a view among Democrats that rebuilding the country’s roads, bridges, airports and railways represents an opportunity to use government in a way that can create jobs, appeal to both wings of their own party and win over some Republicans, who may have a difficult time saying no to an infusion of money for their states and districts.”

With Donald Trump already speaking favorably on infrastructure, it appears that we might actually see some progress by our elected officials, something somehow missing in recent years.

Next month’s article will review some of the ideas that might provide solutions to the infrastructure problem.