Where the things that government does makes sense and where things dont make sense. Physical infrastructure is a rather broad term and so we have a panel that is one part water and three parts transportation. Newsha ajami is Senior Research associate at the Stanford Woods Institute for the environment, director of urban water policy at water in the west. Matthew turner is professor of economics at brown who has written a bit about transportation. Dan wilson is at Federal Reserve bank in San Francisco and speaks only for himself and not for janet yellen or anybody else at the fed. And Cliff Winston is our colleague here at brookings. I have asked each to say pretend we had a president of the United States who has a short attention span. And pretend that he ran for office saying i want to spend a lot more money on infrastructure. Pretend for a moment that this tax credit thing was something thought up and will never resurface again, what would you tell him about how to wisely spend the money . And based on what evidence. I asked each to give us the seven or eightminute spiel that they would give in the oval office and then we will have interaction. It is putting a lot of pressure on time to ask them to keep to that thing but ill make you do it. Newsha, maybe i can start with you because we havent talked about water at all. There has been a bit of focus on water lately, both the supply of and also the pipes to which it is delivered. So our nation is social and economic well being depends on access to clean water but unfortunately water is a hidden infrastructure partly because people dont know where the water is coming from and where it goes. The connection is i open the tap and water comes out. I flush the toilet, water leaves. They dont have a good understanding of what it takes for water provider to bring water to you and what it takes to clean it up and put it back to the environment. This disconnect has led to lack of interest and enthusiasm to invest in the water section as a whole. So when it comes to water we talk about some interest in investing in new infrastructure or replacing the pipes but the numbers that are on the table are very insignificant compared to what we need to be done. A lot of the Water Infrastructure is 40 years or older. They are aging and they are reaching to the end of their lifetime. So we talk about investment. We talk about the money that is on the table which is insignificant compared to what they need. Then we need to be smart in the way we invest in this money. When it comes to Smart Investments i think one thing that had been being promoted a lot is doing Asset Management, trying to focus on the fact that the infrastructure that we have we have to be i think larry mentioned something very important. We generally are very reactive to fix water challenges, water problems, the pipe breaks everybody tries to fix it rather than being proactive and understanding what challenges are, where the infrastructure needs and try to invest in those challenges or red zones situations. Asset management is a great example for that. A lot of the cities can use this kind of system to evaluate their assets, to see how the systems are working, where is the smart investment within this set of assets that they have. I can give you a very good example because sanitation district in the bay area, they were having a lot of sanitary overflow issues. They were told that they have to fix this challenge. They went to the users and said we want to raise the rates to pay for the fix that we need to do to meet the environmental regulations. People did not vote for that rate increase. They went back and tried to rethink. They bought a company and worked with them and did evaluation of the system, Asset Management and then they identified what are the red zones . What are the break points that if they dont fix they will have a main break in the system and they ended up doing a better job of fixing some of those. They went back to the public afterwards and public was willing to pay for some of the investments that they have made because it was a smart investment. So that is a very good example of doing Asset Management. When you go beyond that i think one of the things we are a little bit behind is that the sector is shifting and having a paradigm shift. We are as a government not necessarily sort of reaching that point yet. Like 20 years ago Energy Sector was there. They had the crisis and dealt with it and tried to change the way they manage energy, change the way the policies have been set. We are sort of going through the same shift with water. Drought in california has been an issue, access to clean water and reliable Water Supplies have been a critical issue for some of these communities. When you go back to flint, michigan, the same situation. You have Water Quality challenge which is again bringing water off to the public interest. So there have been issues going on that people started getting more interested. What it takes to bring clean water to them. Taking advantage of the opportunity so we need to think about how we can be smarter and use data to manage our system more effectively. There are so many technologies out there. There are smart meters using the existing data, the amount of water they use, how they respond to price change and climates and how they respond to different messaging. Trying to understand if the demand for water is changing. Using this data to become smarter in the way we manage our water system and then using that information to see what kind of infrastructure do we really need in the future. Right now a lot of the Water Utilities think about big infrastructure and big dam, big pipeline and bring water from one location to the next. Maybe the next generation 21st Century Water system does not require another dam. Maybe we need to think more locally. Maybe we can replace some of our infrastructure with doing some projects such as recycling, reuse, Green Infrastructure, another great example. It sort of has this broad umbrella because when you think about west coast which has water scarcity issues, Green Infrastructure can help enhance water supply issues that we have. It captures storm water and rain water without getting polluted and uses it for future. When you think about east coast d. C. Is a great example of using Green Infrastructure to deal with Water Quality issues. There are solutions that are for both sides of the coast and in the middle and sort of addresses that issue. One last thing i would like for everyone to think about is the fact that when you think about water we have put it in different buckets. We have organizations that have water supply, bring water to you. We have organizations that do wastewater treatment. They collect the water. We have organizations that flood. These are all different silos that we have created. This fragmentation has caused a lot of inefficiencies in the system. This is all one water. The same water that we need to deal with floods we can actually be better in taking that water, storing it and reusing it so when it comes to going back to some of the local solutions that we can use is capturing rain and flood water and reusing it. And then you go back to recycling and demand for water and how that is going to impact the waste water stream and how we can use that waste water stream . It is in the second silo and how we can connect that to our water supply which is very important. If the president said sounds good but i have been hearing talk about user fees should we finance the pipes in flint, michigan, the flood recycling on the west coast by charging more for water at the place at which it is used or should i take advantage of the low Interest Rates that larry talked about and have a giant National Federal Water Infrastructure project like eisenhower . I think both user fees are very important. We are having this conversation in california on some of the user fees. The reality is when you talk about water we are not covering the cost of investment that we need to make for the future. This is a very important issue which is for every dollar of revenue we have to invest 4 for Capital Investment to uptake and future investment for Water Infrastructure. We are not necessarily paying the amount that we have to for the Water Infrastructure that we have. And goes back to the public knowledge. Public awareness is very important. There is a lot of resistance to our user fees. As you sort of raise public awareness, try to make them understand the reality is think about how much you are paying for your water bill. People are willing to pay 100 for their cell phones. Every Family Member in the household has a cell phone and every bill is about that much money. How much are you paying for your water . In my house Single Family home four Family Members about 100 for both water and wastewater. Thats nothing compared to what we what advantages the water brings to you which is about health, well being, daily needs. We dont think about it. The reality is if the water doesnt come out of the tap, you dont value it. I think the quick closing remark is in the Energy Sector we had the same thing. When you start in california we have blackouts and brownouts people realize i need this electricity to survive daily. People are much more willing to think about what are the next options that we need to have user fees. We did have user fees in california which that user fee actually user fees are good if you cant show transparency in the way you are using that. If you can say i take this user fee and invest it in x, y and z and collect data. And you can go back to the public and say what you invested on. And the same thing for water. We had this public goods chart. We had the user fees they were supposed to be invested in Energy Efficiency, Innovative Energy infrastructure such as Renewable Energy and low income communities which you can help them to pay for some of the high costs of their electricity rates. That really has a big impact in our Energy Efficiency efforts in california which has been significant in understanding where our demand is going to be in the future. Demand management is the cheapest and least expensive way of dealing with future needs that we have for infrastructure. And those fees actually went to some of these Energy Utilities to invest. Thank you very much. Matthew turner, lets turn to transportation. Thank you. I have a friend who is a fisheries biologist. He thinks fish are important. Im a transportation economist. I think transportation infrastructure is really important. But so before i start, let me try to give you perspective on this. Imagine taking all of the stuff that you buy in a year or that the government buys on your behalf and stacking it in a pile and then stacking the money that you use to pay for that next to it. The stack of money would be gdp. If you think of assigning those dollars to the factors that made your pile of stuff, about half of the pile would go to labor. About half of it would be wages. You think about assigning a fraction of the pile that goes to trucks and boats and trains it would be about 5 . You could bring that 5 up to 10 or 15 if you start thinking about commuting costs and time people spend in their cars. It is sort of like the self help books say. The important thing is people, not things. With that said, how do we think about how important transportation is . The problem with thinking about transportation as being a small sector is that we wonder as larry said if we reduce the cost of things can we somehow match up jobs and people and tools and buildings so we can make more from less so the world works better and we are all richer . That process is hard to observe and we should think about examples. I think eds point that we want to be very careful about thinking which projects we fund is right because not every transportation project will have the magic effect. So examples, the detroit example is classic. St. Louis, the example of the Public Transit in detroit is the classic example of this. In st. Louis they turn the stop lights off at 6 00 on week days because nobody is using those roads. The problem in those places is that they have more infrastructure than we need. If we put more there it will not let people do things better. Its just going to be more of something that is not used. Another example, this is something you see in the paper. Lets build infrastructure to create Economic Growth. How might that work . Consider, i want to think about another example. Lets consider improving the i95 corridor. Which connects providence, where i live, to new york. We will add a lane and it will mean you can drive from providence to new york ten minutes faster. Probably cost 10 billion, maybe 20. Lets think about how that might create Economic Growth. How could that create Economic Growth . Suppose there is some company which as a consequence of that reduction in time to new york chooses to locate in providence instead of somewhere else . What that tells us is that company doesnt care where it locates. If that company is viable only because it can get to new york in two hours and 50 minutes instead of three hours that means they had some other thing they can do that was almost exactly as good. Spending that to get to new york in ten minutes instead in 2 hours 50 minutes instead of 3 hours doesnt give us a lot of that magic where we can combine people and tasks a lot better. Now, if you look at the data on these kinds of things it is really easy to find examples where that improvement in road connections from new york to providence will cause some business that would otherwise have located in North Carolina to locate in providence. Thats not creating Economic Growth. Thats just changing where production happens. When you look at transportation projects the first effect that you should think of is not that it is creating Economic Growth but shifting it around. Now, if we think of transportation projects that way and we want to apply careful cost benefit analysis what should we do . So first everything that has been said about maintenance is absolutely right. Maintenance is really good because it means you are fixing stuff that gets used. Right away youre devoting resources to things that are valuable. We have this reveal preference test. Lots of people want to use this stuff so it is wearing out. What else can we do . The other thing we can do, if adding transportation infrastructure to a place shifts people and Economic Activity to that place where do we want people . We want people in the places that they want to go or where they are rich. Instead of building roads in places that are empty where no one wants to be or places where they are poor, build them in seattle and San Francisco. If you live in seattle statistically identical workers make almost as much money as that same worker in southern texas. This is a heavy lift politically. This is the opposite. The stated intention of the stimulus infrastructure package was to build things in depressed places. Dont do that. Build in places that are booming. Because you expand capacity of those places to house people and people will go there. And we are not banking on the magic of this thing that is very hard to see and that im convinced is small that infrastructure lets us combine things better and make more from less. We are banking on the fact that we know some places are better at making stuff than others. Thats easy to measure. Lets get People Living in places that are good at giving people nice lives. Little things besides that. Dont build light rail if it needs a subsidy. Build buses. Every time i think of providence it is a little town and it is out of the way and not very important. They wanted to spend 100 million to build a small light rail system. If you do the math on that on the basis of the projected ridership by the people who want to get paid to build the thing the taxpayer was paying between 7 and 10 per rider after they collected the fares for every Single Person who got on the train. There is just no way to make that make sense. Buses are the way to go. So train bad, bus good. Congestion pricing is also something that we all like that. Last thing is the seas are rising. We have 40 or 50 years before it gets to be a crisis. But if we fight that most of the time we will lose. Yes, holland does it and we will be able to do it but most of the time we will lose the battle against rising tides. The good thing is we have 40 or 50 years to plan. 40 or 50 years is a long time in the life of a building. If we plan an orderly retreat it wont be a disaster. If we stand and fight i think i know how that is where we end up under water. Another thing we think about is we want to build our infrastructure so that we can manage an orderly retreat from something we predict will happen on the coast. Where is providence on the spectrum . Shore front property or under water . Providence is subject to periodic hurricanes and is only above water because of a massive sea wall. Another reason not to spend money on light rail. Thats right. The light rail system would surely be under water in 50 years. Another good reason. The president called you in. The first thing i would tell the president is just to repeat what you mentioned before, that everything i am about to say and everything i say today is my own views and not the views of the Federal Reserve bank of San Francisco or Federal Reserve system. I would start by asking what do we mean when we are going to get the highest return on Infrastructure Spending, what do we mean by the return . What kind of return . Are we talking about return in terms of gdp or employment or something more harder to measure like Public Safety or some other type of longer run benefit. So im going to focus my remarks on the Macro Economic returns. Thinking about gdp and employment. And so here the horizon we are talking about is really important. If we are trying to think of Infrastructure Spending as some kind of stimulus policy and trying to a question you asked trying to think of this as something that could stimulate the economy in the near term i think the Economic Research is not very optimistic on that. Especially in the current economic environment. And so i think the case for a longer run positive strong return to gdp or employment from Infrastructure Spending is stronger, and ill come back to that. But in terms of why the short run impact i think would be likely to be quite low, theres three reasons. So first, Theoretical Research of the last five, ten years has pretty consistently come to the conclusion that the shortrun economic multiplier, so the bang for the buck, and any kind of Government Spending, would be expected to be much lower in expansions than in recessions. So this is basically because when you have massive spending, it crowds out private sector activity and when you have an expansion, youre already at capacity restraint so that crowdout effect will be bigger. So the theory is clear that multiplier will be low in expansions on Government Spending in general. The empirical evidence that ive done and papers that ive worked on and im familiar with with mothers, the empirical work ive done and specifically to Infrastructure Spending, also suggests that it is low in expansions. This is the shortrun bang for the buck. So i did a paper a few years ago with a colleague of mine, former colleague of mine, for the mber macro annual conference and we were looking at the dynamic path of gdp and employment in response to shocks, to Infrastructure Spending. So we were looking specifically at the experience of states and how states get different amounts of federal funding from for highways from the federal government. We want to exploit the variations and say when you get more, do you get more, do you get more in terms of gdp or employment in the near term and over the longer term. What we found was that on average, you get a shock to federal highway grant to funding for projects. It led to an increase in state gdp the first two years of that shock. Then it faded away, then the second round effect like six to eight years later. So ill come back to that kind of secondround effect in a minute but in terms of the nearterm effect so we found that that was there on average. But when we looked at whether that effect was different depending on whether the state was in a recession or expansion we found the effect was entirely from recessions. So if youre in an expansion we found no effect on gdp or employment in the near term from this shocked Infrastructure Spending. Again, thats a side from the longer run benefit or medium run benefit that we did find. So the third reason you might expect the shortrun multiplier bang for the buck to be small from Infrastructure Spending is at least if youre thinking about employment, infrastructure, modern transportation projects, tend to be not very labor intensive. So research ive done and also work ive seen from others, including the jio, the cost of labor in major transportation projects is small. So these tend not to be very useful as a jobs stimulus at least in the short run. Now i mentioned that we found that there was a bigger impact say six to eight years after some initial funding increase and Infrastructure Spending. So that effect, that kind of down the road effect was quite sizeable. And didnt seem to matter whether it was sort of what the state of the economy was when the funding started. So theres a sort of stronger case to be made for Infrastructure Spending having longer run, medium run benefits. And those benefits, thats true for employment and gdp. Because those benefits are a supply side shock. What happens is, in terms of kind of the Macro Economic theory, the thinking is that you have long time to build lags with Infrastructure Spending. So you have a lot of contracting happening over many years but theres no per activity benefit to the private sector until many years later, say on average six to eight years for the typical kind of transportation project. So when the public capital comes online, investing in this for several years and then finally you have new bridge, new highway, whatever, thats when you have the productivity increase and the private sector is more productive because you have this improvement and so that, thats certainly there, and i would say if thats the goal, if youre trying to get a higher return in terms of these longer run or medium run economic benefits, then i think theres a strong case to be made. And then so lastly, i would just say in terms of the, if were thinking about, were going to do Infrastructure Spending so if someone says we are doing Infrastructure Spending no matter what, just tell me where is the highest returns, i guess one thing i would say is that putting the money through state and local governments to me seems like the appropriate way to go because, and some other research i did, whether state and local governments actually spend the money they get from the federal government on transportation, on transportation. So theres been concerns, concerns in the 2009 stimulus act, that money the federal government was sending to state and local governments for transportation wouldnt be spent on transportation. That it would be used to pay down debt and used to fund tax cuts and tax increases and be spent on other things. So what we found again, the paper i did with sevan la duke, that the states did spend money on transportation and in fact it led to complementaries, and they get dollars in transportation grants from the government, and they ended up spending more than a dollar over the years on transportation. So states maintain the lists of projects that they would like to essentially wish lists. So they are well positioned to spend that money that they get and it seems that empirically they do spend that money on transportation. So why should i believe that federal government is incapable ranking transportation projects in order of their value longterm returns . Somehow state and local governments are enlightened and will not be influenced by politics and will do the stuff where its better . I would say that traditionally we have in our highway bills, weve paid for the nations roads through federal highway grants to states. So that system has been in place since the interstate highway system. So because of that system, states are maintaining these lists and try to identify projects they would like to work on and as they get funding they work on those projects. So it is just that i think we have an existing existence in place to efficiently spend that money. So having the federal government choose projects you have confidence in the state and local government making efficient choices . As much confidence as the federal government make in those choices. Fair enough. Cliff, your turn. Donald trump called. Okay. So i would mention five considerations to think about transportation infrastructure. And i will be constructed to say this is a good thing that we ought to spend money on. Okay, so the first one, and ill make dense communication since we have covered these, i will make it fast. First one is cost benefit. Thats critical, in my world. I want benefits to exceed costs. This is a problem in infrastructure, the system is not designed to do that. As we know money is allocated by formula. So the federal money goes in but is obviously not necessarily going to those areas in the country that will generate the highest return. Everybody gets in on it and there is no cost consideration that goes there. Once you get inside the state it is better because the npos are going at it and it doesnt go to the state that gets the highest return, everybody gets in on it. So you have those constraints immediately built into the system. Okay . And add on other regulations on capital labor and really, youre not going to expect the way the whole thing is designed that you will get many projects where benefits exceed costs. That said, second consideration is that the thing has to be politically appealing and popular. This is a politically pervasive system and if im going to suggest a project, someone has to say, what do i get out of it . And thats pretty much how it all works and point to projects that get completed as opposed to good things that help get you elected because you can say, this is what ive done for you. And this is a real hey good project that generates benefits. Third consideration is technology. A critical part in infrastructure in this country is it is not uptodate with technology. Many things could be done. Off the shelf technologies. Engineers are chomping at the bit saying, do this, do this, it will make it so much better. It is not done because we have status quo bias. We do this and we wont change how we do it. I want to come up with something thats technologically new. Didnt have to be super advanced but it has to be something we havent done before because of a technologically high component to it. Here is something we can do that takes advantage of technology. By the way, after you see how cool this is, you mention a few other things. Fourth consideration which has been mentioned a lot is pricing in investment. Again the system is not designed to be efficient but in a very, very distortionary way, investment is not done based on benefit cost analysis and that skews where money goes. So youre not using the best capacity. I want something that has the importance of pricing and investment and creating so many of the distortions that we have now. Quick footnote now. I want to talk a little bit about the macro and micro. Theres the impression that there should be some sort of conflict or at least there is a conflict. There shouldnt be. All right. All the micro concerns about efficiency benefit cost analysis and so on and so forth, they should reinforce and be consistent with the macro perspective on how we pursue infrastructure. Suppose i have a given amount of money and i want to increase employment. What should i do . Subsidize output . Subsidize capital . Or subsidize labor. I can hear your brains working. You are writing things down, taking derivatives, trying to get input demands and see for what parameter values is it going to be that for the given amount of money i get more employment with subsidies to labor, subsidies to capital, subsidies to output. Whether the answer is, the distortions that we have in capital, okay, are going to really hurt the Capital Infrastructure subsidies for trying to solve this macro problem. My point is, if the macro and micro consisted then micro will perform better and thats how we sell and improve employment through capital subsidization. But now, given how we do things, itll be the worst. Final thing, privatization. When i mention the word privatization, i do not mean Public Private partnerships. I dont like them. I mean competition. This is what this is all about. You want good results, you want private entities to compete. Not in partnership with government. They get together, thats not competition. So i want to think about way to expose privatization. So those are my considerations. Whats my project . I want two more minutes. Or i wont say it. Okay. Just kidding. 2 47 left. Dont waste it with oneliners. Okay. My project is, heated runways at major airports along the east coast and the midwest. Heated runways. And since im spending money, lets heat up the tarmacs in terminal areas too. What are these things . You think about them. Exactly what i say. Youve heard of heated driveways. Certain people heat their driveways. Snow comes down and there is no snow accumulation on these things. Green bay packers football stadium, they have a heated field. They arent playing in the ice bowl any more. Heated runways are exactly the same thing. You see a snow forecast coming. You crank the thing on. Coils underneath. There will not be a single millimeter of snow accumulation. If it hit, it will melt. So youre not going to have two feet of snow accumulating or one foot or all you need in this part of the world, three inches, that will mess things up. Now why does this do it . Benefit cost. The delay savings are enormous in this, right . When you have delays, they turned into cancellations. So cost you as a traveler starts multiplying through because you have to get your next flight. That can be hours or sometimes days. These are wealthy people. High value time. You can just see things toting up. Cost to airlines. Remember their planes are stuck there. Capital isnt moving anywhere. Isnt where it should be on the west coast. You put all this together and you trade that off with upfront capital cost which arent that much. Politically, totally a winner. Who is opposed to this. Technology, not the coolest thing in the world because as i said, all you know are 1 , all the 1 percenters have heated driveways. We could have done this decades ago. But this is still something new. What is our problem with runways . Woodbased landing fees. Beyonce, jayz, they come in to see the outgoing president. Ceos come in to see the new president. They are in private planes. They play nothing. We as commercial people have to pay a lot more. That puts a lot of pressure that our heated runway will draft but the pricing in drafting are are adding to the problem. Finally, last but not least, punch line to the whole thing, privatization. Reverse the question. The president says, this seems like an obvious idea, why dont Public Sector airports do this . What incentive do they have to do Something Like this . Seriously. Why would a Public Sector airport, which certainly is not in the business of maximizing economic welfare, you can blame the way the system is set up. You can blame the kind of managers that they have. They arent going to say we want to put these things in and save travellers time. It is going to cost us money and what do we get for it . Right . Landing fees are regulating. They get their landing fees. Financially they are not that much better off and they will say, we will get our money anyway. Right . Consider the private sector. Suppose we privatize hartford, connecticut. Providence, rhode island. New hampshire. Right . You dont think one of those airports would say, lets nut heated runway and charge people for it. Just think of the benefit they would get from doing Something Like that. I have no doubt if we privatized our airports initially as the market works, someone would experiment with these things. They realize, yes, people realize the value of heated runway. We will charge them for it, there are ways to work this thing out and lo and behold others will say, we better do this too because it is killing us financially because people will come and use these guys there. The only reason not to consider this is if we truly have Global Warming and we wont have snow any more. But mr. President , i dont think this is a chinese hoax. Thank you. Thank you. [ applause ] im going to ask you to respond to something thats been said a couple of times. Which is, lets not waste a lot of money on flint, michigan because basically those people would be more productive if they move to seattle. Is that something that how do i square that with you telling me with have lead water pipes all over the country and we should charge user fees all over the country and even in cities where we are losing population. First of all, it is hard to move a community from one location to another. Unless you really have jobs ready for them. And can move them there. If you dont have skills, you cant move from one place to another. Or so thats definitely is not going to work. But think about it this way. You have communities really in need. And you have communities that are capable of covering the cost of the services they need to get. And there is enough option to try to kind of take federal money maybe to invest in the communities that really do not have the means to deal with their Water Infrastructure challenges. And not necessarily send as much money to the communities that do have this kind of capacity. They can deal with their challenges. This may not be a popular statement and im not an economist but from a social perspective that might be a way to go. One thing i want to mention, though, is one these systems that we have in place, they have fixed costs associated with them. Maintenance and operation is a fixed cost. Even if you dont use a drop of water, that maintenance then operation system has to go on. So it is important to remember that the economics that is used to price water, it is the opposite of what we really need. For every drop of water you play a dollar. Imagine, right . Obviously not that much. But for every gallon you pay 40 cents. You stop using that gallon, the person operating that Water Infrastructure still needs to pay for that system. So connecting the revenue to the amount of water people use is just doesnt work that way. One thing that Energy Sector did, and we are really talking about a lot right now in the water sector about it, and sort of restructuring the rates process. Recoupling. So you say we should pay for water the way we pay for electricity. Yes. You pay a fixed cost. Yes. So you would tell the president , economists say abandon this but socially thats a bad idea and youre willing to subsidize flint and let people in San Francisco pay more for their water. And secondly if Pricing Energy is less than ideal, pricing water is even further from the idea. Right. Can i actually add something. Please. We talk about infrastructure and transportation this whole time and something i want to mention is you want to build new roads, bridges, runway, think about water while you are doing it. Be smart in the way you invest your dollars. If you think about collecting some of the storm water that lands on that runway, that has heated system, you can perfect. Then you can have two if we have a power grid, we can move it to San Francisco. If any of you want to weigh in on transportation, i want to go to the audience, we dont have much time. Anything to add, matt or dan . You like heated runways . Sounds good to me. We dont need them in San Francisco. Yeah, do you. Of course you do. You need people to come to San Francisco. In other words, what cliff is telling you, if we get a half an inch of snow tonight in washington you may not get back to San Francisco so you should be willing to pay for that. Okay a question very far in the back there. Britney, please. Hi, tracy gordon. The Previous Panel and this one to some extent have punted on the subject of politics. Infrastructure is very important. I have two pet ideas to put forward to the panel and i wonder how you would react to them. The concept that mayors dont run on infrastructure, i dont understand. If the value of infrastructure is in property, as ed mentioned with sky scrapers in hong kong, they should say great, and homeowners should be chomping at the bit to award them at the ballot box. I dont understand why there isnt more disclosure and maybe federal government could lean on state and local government to do that. A rule that came out a couple years ago state and local government were opposed to and perhaps the federal government could have a coordinating mechanism. So i would love your reaction to that. And then second thing, veto power. You have fragmentation to get approvals not just from local boards of concerned citizens can which i think is sort of the tenor of the comment earlier but counties and cities and special district that overlap. So why cant the federal government require local governments to kind of get all their ducks in a row before awarding say funds or other discretionary money. Thank you. Over here. Britney, why dont you come over here on this side. Hi. Steven hendrickson. So it seems like the theme from this panel and discussion earlier is that we need a big increase in Infrastructure Investment but the reasons that its publicly popular arent actually good reasons to invest in infrastructure and the real important longterm reasons arent necessarily that important to the public. So going back to davids premise of forming the president elect on, how to sell a large investment, is it to do what government cares about in Good Government sort of way . Or educate the public on why we need longterm Strategic Investments that for some reason dont seem the pothole argument doesnt seem to resonate with people the way that jobs and sort of jumpstart the gdp do. I think we will talk more about that later. There is a gentleman here. And britney, the guy in the back. Retired government, the situation like at lake meade, it has been becoming critical in the fact that water level dropped to the point where not only is the question of sufficient water supply for the area but also to power electricity generation. It has never been as low as its been. Recent rains occurred but i dont know how effected lake meade is. Is it possible to convert it to a sister and put a giant roof over it or portions of it and the evaporation rate would be greatly decreased and water supply would be more constant. Okay, the guy in the back. Just on the your name, please. Charles lane, washington post. One thing no one on either panel is yet to discuss, though im sure they have thoughts on it, is the federal Infrastructure Bank. And given all the questions that have been raised about the efficiency of financing and choosing projects, if anyone has a thought on that, i would be curious. A response about leveraging what the public believes, is just a warning, that when you tell the public something the create a lot of jobs, and it doesnt, nafta, you end up with longterm costs. So thats just my two cents. Infrastructure bank, anyone . Can i just follow up on that . Yeah. I think that addresses the first two questions about the politics of it and the timing. This is what i was saying before, the shortrun effects seem to be small so it is going to be damaging in terms of the longrun politics to try to sell infrastructure as near term stimulus. I think that get to these, some of these like tracys questions about politics that a mayor or governor or trying to sell government on an infrastructure plan now. The political economy problem is that the benefits may not come for many years in the future and that person is out of office by that point. So they have to be very, you know, so maybe this get to the second question that you need to educate the public of what is the point of this . What is the benefit of this . To be able to sell them on something where the person selling them is not necessarily in office to take credit when the benefits happen. It seems to me the deferred maintenance thing is a really frustrating one. All of us who live in washington, d. C. Are very aware the cost of the deferred maintenance in the washington metro doesnt lead any of us to want to give more money to the washington metro and nobody ever was willing to pay for an escalator that didnt break. It is hard to explain to people the values of that. It does take extraordinary leadship and politicians who seem to be relatively shortterm. I think the guiding principle is one that both ed and larry spoke to. I think it is important to connect the cost of services with the price. I see people not getting you want people to pay to use things, something that reflects the cost of providing the service and to the extent that you make funding mechanisms in ims complicated and not transparent, it makes it harder to not happen. So i think the rule is to make mechanisms transparent and as people propose institutions and funding mechanisms that are broke with that those are things you should look at with suspicion. It makes it harder to untangle what people are willing to pay for a service and what it actually costs. Okay, now im concerned that people missed the point. I listed basic considerations to justify a project that are all met. Hardly anything like this. And my punch line was, there is no way the Public Sector would ever do anything like this. There is no way i will say we should increase Infrastructure Spending, not in this political system. Thats the whole point. This system is so inefficient and so riddled with status quo bias, everywhere you go along the line, that it is not serious to think about reforming this in an efficient way. This is not an accident. This is built up for decade. And they are very powerful interests along the lines as well as just status quo bias to do it. Now Something Like Infrastructure Bank, this is the kind of thing that is thrown out. What about this, what about that . What problem are you trying to solve as opposed to what problem do you continue to feed into. The Infrastructure Bank is more of the same. We wont improve efficiency in this thing. In terms of where the resources are allocated or how operations are run in terms of pricing them better or how new technology is put in. None of that will happen. This is what we are dealing with. Fortunately, and this now is back a month ago when we had a program on autonomous vehicles, the private sector is coming through with innovations that are going to improve the performance of the infrastructure. And the process they really may expose the vast inefficiencies of the Public Sector and things that they could have done but havent done, but we will see. But fortunately, that is where things are moving. And that is where we will see improvement. But we will never see them in my lifetime. In the Public Sector. All these simple things are just not addressing the fundamental problems. Can i add something . Yes. Last word but short. You know, we have a couple years ago last year we started having this which is supposed to work for water sector. And the lowest margin for the communities to get access to this money was 5 million. There are a lot of innovative water projects out there. Such as recycling and reuse. Onsite reuse. Or this storm water project. Green infrastructure that they never fit the 5 million limit. So you never even get to that threshold ever to be able to access this. It doesnt matter if you say Infrastructure Bank, green bank, anything you put out. You need to be more forward looking in the way these are set up. We need to think about, what is it that we need in the future and how do we set up these Financial Systems or mechanisms that address 21st century problem rather than trying to solve a 20th century problem which we dont have as much any more or even want to do any more of that. I think one things that comes through your presentation says that we should be careful that we are solving, we have solutions to the problem we have. If we have trouble raising money, thats something the federal government does well. If we have trouble having highest return projects, thats something the Public Sector doesnt do well. If we have a shortage of jobs we know Macro Economic policy could do something about it. The infrastructure probably wont have a shortterm return. If there is something that comes through, as you said, make sure that solution you have fits the problem at hand. With that, im going to dismiss this panel and invite my colleague, lee shaner, up here to move us to private investment. I mean, human Capital Investment. Both private and public. Encourage you to stay for that. If you stay for that, you get a free lunch. [ applause ] this weekend on American History tv on cspan 3, saturday evening at 6 of okay eastern on the civil war, author and historian, harold holeser on Abraham Lincoln view owns immigration and his efforts to core the germanamerican vote early in his career. 1 in 10 immigrants join the Union Military as soon as they arrived. By lincolns optimistic calculation, the result with black eb listment factored in, and even with the dead wounded captured and missing, subtracted, was a net gain for the military and for the country at large. Then at 8 00 on lectures in history, Rhodes College professor Charles Mckenny describing early civil rights efforts to end segregation during world war ii. The new deal creates spaces for africanamericans and southern africanamericans in particular to start it push forward civil and economic rights. Civil and economic rights. It gives them again to use roger will kins phrase it use to push for aspire for the mainstream mer tan life. Sunday at 4 00, the real ameri america, the United States information film communist propaganda. . What do the communists having to say concerning the air force . An american saber jet accidentally dropped rockets over florida. This report gives us every ground for questioning the possibility of accidents in general. Since it claims that approximately 70 of the officers and enlisted men in the air force are psycho neurotic. At 6 00, american artifacts. Museum of the American Revolution is scheduled to open this spring in philadelphia. See a preview of the artifacts discovered during its construction. We we got them pasted together, we see it says success to the tray grain. Whats the try feigna . You have to go to the newspapers. You see how urban archaeology is this interweaving of the written record, primary record, secondary record, artifacts, thats whats really fun about it. We just weave it all together. For our complete American History tv schedule, go to cspan. Org. More now from this forum on Public Investment as Wellesley College economic professor Kristin Butcher talks about the short and longterm impacts of poverty impact programs on children and families who receive them. Then a critique of her work. That will raise future living standards, you know, everybody thinks investment means roads and bridge answers we think that investment can be much broader. Wasnt to think about Human Capital. This next session about Human Capital in way that is tr traditionally not
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