Category Archives: Society and Networks

People in their places

Making infrastructure investment more attractive through consumption

I must have been offered at least a dozen credit cards in the past week, each one an opportunity to spend on clothes, electronic toys, food, travel, and other items for consumption. Each of the financial institutions hoping to attract my business was also hoping, I imagine, that I might by choice or chance not pay their bills in full and thereby convert my debt to a longer-term and high-yielding asset on their books.  I would be bound, according to terms typical of the offers, to pay interest on my unpaid balance at rates significantly above 10% annually, 5 to 10 times what the banks would pay me to lend them money by purchasing a certificate of deposit.

While I am certainly annoyed by the steady barrage of credit-card offers, particularly within the context of my recent memories of financial meltdown, mortgage crisis, and federal debt-limit bickering, my deeper concern is why are there no attractve offers to buy into my city’s or state’s or nation’s infrastructure.  With aging bridges and pavements, bursting water mains, and straining levees almost everywhere apparent in this country, the demand for infrastructure investment should be booming.  Meeting that demand—whether through private initiative or government action—would not only create immediate jobs in materials, construction, and facilities management, but also provide the services to support sustained growth in the economic sectors that depend on efficient transportation, clean water supply, and flood-free operations.  Can we create ways to make infrastructure investment—a good thing—as attractive and painless as—a bad thing—going deeper into consumer debt?

I think we can.  Here’s one idea.

Suppose a state government joined with an appropriate team of banks, utility companies, and local authorities, that is, form a serious public-private partnership. (PPP)  The PPP would begin by marketing an affinity-branded credit card and matching debit card.  The attraction for consumers using the cards would be a credit—say 3 to 5 percent of all purchases—to be applied against current infrastructure services (for example, transit fares; water, electric power, and natural gas fees; tolls and or parking fees), property and real estate transaction taxes, or purchase of tax-advantaged bonds issued by the government members of the PPP.  The bonds could be of the zero-coupon variety, to reduce the need for current cash flow and to encourage longer-term consumer saving.  Employers and utilities could use the card to store transit credits and demand-management incentives for employees and customers.

The cards’ branding could celebrate the social as well as physical infrastructure of the target market region. Card-holders would receive their credits only by using the card to pay for infrastructure services and taxes (or by investing in bonds), accelerating the trend toward reducing cash processing costs and revenue leakage.  The bankers gain access to a large population for associated marketing and data mining.  There seem to me to be a lot of winners in this scheme.

Feasibility seems proven.  Affinity cards and employee-benefit debit cards are well developed, of course.  There are rudimentary versions of what I am imagining in use, such as multi-system transit fare cards (Washington’s SmarTrip and Baltimore’s CharmCard), the E-ZPass highway toll-collection system, and the services offered by Toronto-based Skymeter.  While we are not likely to change from a consumption-driven economy, perhaps we can channel some of the consumption painlessly in savings, investment, and a sustainable infrastructure.

Sustainable Values and Infrastructure

There seems to be little question that we are now in one of those historically recurrent periods of societal crisis that tell us we must change our ways.  A plethora of recent books present dismal perspectives of our clash of cultures, changing climate, losses of species and languages, and financial crises, and how each threatens our well-being and lastingness.  The threats are very real, of course, but to me are interesting because, if relief is to be found, surely our infrastructure must have an important role.

Seeking to understand this role, I have finally plowed my way through Raj Patel’s modestly titled exegesis on modern economics and human nature, The Value of Nothing: How to Reshape Market Society and Redefine Democracy. (2009, New York: Picador)  With ample reference to both foundational and more radical texts of market economics and Western social theory as well as more personal accounts of current populist movements, the book has definitely generated buzz and expanded its author’s reputation to sometimes messianic proportions.  (For a review, see “Are You the Messiah? A political economist gets a following he wasn’t expecting,” by Lauren Collins, New Yorker magazine, November 29, 2010)

The reading took longer than expected, because as page after page turned I felt compelled to pencil in questions, opposing references, and outright objections to Patel’s perspectives. Where he sees elemental democracy in the masked pronouncements of a Zapatista Junta, I see the tyranny of the mob. When Patel disparages the possibility of getting prices right—or having any prices at all—for clean air and water, I despair at the idea that humans will forsake the desire to improve their lives, however privileged they may be, satisfied that their needs—defined by others—are being met. While Patel finds it essential to feed the world’s growing population by rationing necessarily limited food production, I wonder why humanity might not be happier and arguably better off limiting population to levels supportable with an abundant and varied food supply.  I suppose I must recommend the book at least because it offers the attentive reader ample intellectual stimulation.

Patel’s message seems to be that for two key reasons a market-based, democratic society is essentially unsustainable and revolutionary change is essential. First, there is no hope of getting the prices right for clean air, pure water, cultural diversity, historic associations, and myriad other resources we humans use in pursuit of comfortable lives. Second, our abilities as humans to work together toward success in this pursuit are hopelessly subverted by the existence of corporations, disembodied entities that behave with the legal rights and powers of a person but lack a person’s moderating moral and ethical judgment.   Without the restrictive forces of either appropriate prices or moral imperatives, corporations and people ruthlessly seek exclusive control of collective resources and private gain from exploitation of these resources.

Hope lies, for Patel, in a Buddhist theory of value.  “The real value of something,” he writes, “is not its ability to satisfy a craving, a desire, a vanity, but to meet the need for well-being.”  With enlightenment, we will recognize that our desire for cell phones, shoes, and other such “baubles and fripperies” is nothing but illusion created by hidden persuaders.  Corporations will somehow adapt, I suppose, and we will lose our lust for more, all settling happily for just “enough.”

British economist Diane Coyle’s book The Economics of Enough: How to Run the Economy as if the Future Matters. (2011, Princeton, NJ: Princeton University Press) takes a similar stance on the problems but offers a more moderate assessment of the underlying issues and, to my mind, a more practical prescription for what must be done.  She focuses her attention on the inevitable necessity of making tradeoffs among efficiency, fairness or equity, and freedom in how people are able to pursue and manage their resources.  Our values and our governance, as individuals and groups within our society, determine how the balance is struck, and today we have “tilted too far”—in Coyle’s view and my own—“in favor of individualism and the gratification of immediate wishes,” toward freedom at the expense of fairness and even efficiency. Where previous generations made investments, we now are consuming our assets.

Regarding values, Coyle’s views are not so different from Patel’s: We need a change of values to guide our behavior.  In Coyle’s analysis, however, a revival of what Max Weber termed the Protestant ethic, principles that guided people to work for the future rather than immediate gratification, could be effective.  Neither author has much to say about how we are to decide what is “enough” for individuals and groups in a pluralistic society. Patel would no doubt be the more austere judge.

To Patel’s call for changed values, Coyle adds changes in measures of achievement and in our institutions of governance.  The ways we measure economic growth, productivity, and well-being are simply inadequate for dealing with our growing understanding of the importance of intangibles. With the revolution in information and communications technologies, services account for an ever larger share of production; we do a poor job of measuring  quality of services, and the shortcoming is especially severe regarding what we term quality of life matters.  The  technology revolution is also transforming how individuals, corporations, and political entities relate to one another. Coyle imagines that societal decision making can be shifted from centralized agencies to “involve a more productive  and thoughtful interplay between markets and governments than we’ve typically had in the past…”, but here I could not quite make out her image of that future. Perhaps she envisions social networking platforms supporting grass-roots participation, a sort of Swiss direct democracy via telethon or Facebook.

Development of such a participatory system would certainly signal the integration of a new set of technologies into our infrastructure.  In past decades, new infrastructure technologies have been accompanied by—and arguably enabled or perhaps caused—changes in how society operates. Rail and then highway transportation changed the patterns of human settlement; piped supply of clean water changed the way households operate.  These changes in turn have been accompanied by changes in our fundamental values, on the scale contemplated by Patel and Coyle.  If we are to have the change in values these authors argue we need for a sustainable future, then I believe we must expect to reshape our infrastructure.

Our roads, our legacy

The nation’s network of roads, taken together, is the legacy of investments made over the course of many decades. The legacy includes land committed to enabling people and goods to be moved from place to place, and with that land forests and grasslands cleared, streams diverted, and flora and fauna displaced. Added to these natural resources are concrete, steel, and other materials, and the human labor of planning and construction to produce the pavement and bridges, signs and signals, guardrail and rest areas that daily carry millions of vehicles.

Despite the efforts of clever analysts, there is no authoritative appraisal of this legacy’s current value. That the legacy has any value at all is a proposition based on our society’s desire for access and mobility and our adoption of  economics as a way of understanding and directing our behavior.  The protracted discussions in the U. S. Congress and many state legislatures concerning how we pay for roads and government’s role in their management is a reflection of our lack of consensus on the value of the legacy and what we should do with it in the future.

It’s as though we are beneficiaries gathered for the reading of the will following the demise of a wealthy relative. We’ve inherited a family estate and now must decide what’s to be done with the property.  Is there a substantial bank account, stocks and bonds?  Do any of us want to live in the mansion; can we afford it?  What’s to be done with the art collection?  Is the land still to be farmed or subdivided for development?  Can the gardens and fen be conserved?

Our legacy is a diverse collection of assets.  The fundamental questions facing us are whether to use these assets to realize the greatest return to the beneficiaries or to keep the legacy intact at the lowest cost.  We may seek advice from the financial advisers, groundskeepers, curators, and other staff who have cared for these assets in the past.  The answers will depend, however, on what we judge to be important, what we think we can afford to do, and how well we can agree among ourselves.  It’s all very complicated.

These are the issues facing the people who take responsibility for managing our roads  For more than a century the network was growing as the nation moved across the continent and trucks and cars began to compete with trains, wagons, and trams as primary means for moving from place to place.  Today we have more than 4 million miles of public roads in the 50 states, District of Columbia, and Puerto Rico, according to the U. S. Department of Transportation; about 2.7 million miles of these roads are paved. The strategic core of the network is the National Highway System (NHS), about 160,000 miles of paved roads judged to be important to the nation’s economy, defense, and mobility. Within the NHS, the Interstate Highway System, inaugurated by President Eisenhower in 1956, accounts for just over one-quarter of that, about 47,000 miles.  While the Interstates represent just over 1% of the nation’s road mileage, they carry about 25% of the nation’s traffic, measured by vehicle-miles of travel. (1)

We have reached a point where the demand for new roads nationwide has been largely satisfied. Additional capacity would be welcome in some places where population and jobs are growing, and this means adding lanes and upgrading standards on some routes. Substantial revisions of facilities will be wanted in other areas to enhance livability and improve safety, for example replacement of Seattle’s Alaska Way Viaduct with a tunnel. It may be that we will choose in coming years to make substantial new investments in rail transit and other forms of mass transportation, and this may necessitate alterations in communities’ roads.  But in much of the nation the primary task facing the people responsible for our roads will be managing our legacy assets.

When it comes to roads and other public works, the job of “asset management” has come to mean primarily looking after the facilities’ condition and maintenance to ensure they can provide the services for which they were constructed.  Other than re-purposing a freeway lane for use by high-occupancy vehicles only, dedicating road right-of-way for transit use or installation of fiber-optic cable, or converting abandoned rail lines to bicycle trails, road assets are not particularly fungible, that is, easily converted into other forms of assets. (Stock markets, for example, make it possible for owners to easily exchange shares for cash and vice versa.)  The nascent market in private-sector leasing and operation of toll roads (the Chicago Skyway, for example) and other facilities are a step toward encouraging infrastructure asset managers to think about how the value of  might be redeployed to increase public benefit, but we are still a long way from managing a road system as though it were a mutual fund.   In the meantime, asset preservation seems to be the primary objective, simply making sure that everything is still presentable and in working order when the family finally decides what to do.

(1) See http://www.bts.gov/publications/national_transportation_statistics/html/table_01_04.html,
http://www.fhwa.dot.gov/policy/2008cpr/es.htm

Infrastructure asset management advancing in Canada

I spent part of last week at the annual gathering of the Canadian Network of Asset Managers (CNAM) in Burnaby, British Columbia, a part of the Vancouver metro area.  CNAM is a 2-year old association of government and private sector professionals dedicated to advancing asset management principles and practices for municipal infrastructure. As someone accustomed to the ways we have been doing infrastructure asset management—or more accurately, not doing it—in the United States, the meeting was an eye-opener! 

For a start, there seems to be a high level of Canadian interest in infrastructure and its management.  Some 250 people were there, coming from across that nation and many municipalities, large and small.  A glossy print periodical, ReNew Canada: The Infrastructure Renewal Magazine offers news and commentary, not simply vendors’ views of how the world should work.  Canada’s Public Sector Accounting Board’s standard 3150 on Tangible Capital Assets (requiring municipalities to report such assets on their financial statements) is the counterpart of the U. S. Government Accounting Standards Board’s Statement 34, but my conversations with other meeting attendees suggested there is a much broader interest in Canada in integrating asset management into financial planning and management rather than simply meeting minimum requirements with minimum effort.

Most exciting to me was hearing about examples of how specific communities are developing and using their asset management systems. The city of Vancouver, for example, has integrated their enterprise accounting system (they use SAP) with their infrastructure inventory and condition monitoring software (they use Hansen).  The city’s mayor Gregor Robertson, famously a campaigner for making Vancouver “the greenest city in the world by 2020,” is said to be firmly in favor of the asset-management program.  Calgary staff reported that their efforts are not far behind Vancouver’s.

Such efforts are not restricted to the larger cities.  The District of Lake Country, a 10,000 person municipality in British Columbia’s wine country, presented their 7-year history of developing and applying asset management principles. The responsible staff and consultants described how elected officials “got it” when maps of aging, at-risk facilities were shown and how they sorted through the issues of deciding public priorities for maintaining performance in delivery of infrastructure services. 

There is work to do, of course. Vancouver has had to add additional staff members to deal with the large volume of data being produced by their infrastructure management systems.  Smaller municipalities in mineral-rich areas of Saskatchewan and Alberta are just starting to develop management systems to keep up with growing demands for infrastructure services. I expect there will be lessons learned as more of these Canadian communities develop and apply asset management principles to their infrastructure.

No Little Plans: The Dream of Abuja

Infrastructure provides an armature for urban development, and nowhere is this more apparent than in Abuja.  Nigeria’s dynamic and restless capital city, now the home of some 800,000 people and maybe more than a million, sprang from the bush barely just over three decades ago. As the nation settled down from a civil war and ten years of military rule, the young constitutional government resolved to build a new city in the middle of the country.  An international competition was held to select planners for the then-nameless capital. An American consortium won. In 1979, the master plan was published.  (Disclosure: I was a member of the core group of International Planning Associates professionals and subsequently Chief Planner for PRC (Planning Research Corporation) Nigeria.)

The new city—the name Abuja, originating as a 19th-Century emirate, was transferred from a small city now called Suleja, just to the north—was to be centrally positioned and ethnically neutral in a nation of diverse tribal identities, a showcase for national unity and modern African
urban development.  The underlying concepts were hardly revolutionary: Washington, DC, and many state capitals in the United States, for example, as well as Brasilia and St. Petersburg (Russia) had similar origins. In addition Lagos, the capital at the time, had grown beyond the capacity of its infrastructure; the city’s often chaotic services and gridlocked traffic threatened to choke the nation’s development.

Aso Rock would be the capital's backdrop

The desire for Abuja to provide a strong image and sense of place, representing Nigeria’s position as the most populous nation in Africa and a rising democratic force in the continent were decisive in the mater plan’s development.  As the capital, Abuja would have symbolic as well as political and economic importance.  The siting of major government buildings and the layout of the transportation networks were intended to take advantage of dramatic topography and provide the matrix for a centralized urban form easily served by transit.

Transit spines and modular urban expansion areas

The plan’s curvilinear form was meant to serve the requirements for water supply and drainage by following the contour of the site in the shallow basin bounded by the Aso Rock and its surrounding hills. Parallel central transit spines and peripheral highways were planned to provide a framework for modular residential and commercial “mini-cities” that would be developed outward from the urban core as needed, each accommodating between 75,000 and 200,000 people and a full range of schools, healthcare, recreation, and other community services.  The program for residential land and housing sought to balance the government’s desire for high living standards for its citizens and the planners’ projections of incomes and affordability within an advancing but still relatively
less-developed economy.   With a government-set target population of 1.6 million by the year 2000 and 3 million ultimately, Abuja was planned be the largest free-standing new city ever built.  The federal government was to move from Lagos to Abuja by 1986.

It has been written that Daniel Burnham said, “Make no little plans. They have no magic to stir men’s blood and probably will not themselves be realized.”  Certainly Abuja’s master plan qualified as a grand scheme able to generate a certain excitement.  While government functions would be the principal foundation for the city’s economy, the plan represented substantial private-sector investment opportunity and, to use developers’ vernacular, the numbers worked. However, speaking at the American Association for the Advancement of Science annual meeting in Houston in 1978, I noted it would not be easy.  Threats to success could be foreseen in potential shortages of construction materials and labor, congestion of the poorly developed transportation network in Nigeria’s Middle Belt region, management challenges associated with such a large-scale undertaking, and the need for steadfast government support of the enterprise.

Early construction at Abuja, 1985

As it turned out, in the early stages of development some large buildings were constructed in advance of supporting infrastructure, so that government ministry workers in the early years labored under much-less-than-ideal conditions. The official shift of the capital to Abuja did
not occur until 1991.  The Nigerian press reports that electricity, sewer, and telecommunications systems continue to be problematic. Housing and land use have remained sources of continuous conflict over the years, with the master plan cited variously as a myth used to justify forcible evictions of lawful residents and a neglected guide for balanced growth.  (See, for example, a 2008 report from the Centre on Housing Rights and Evictions.)

Satellite view of Abuja, 2010 (Google Earth)

Scottish poet Robert Burns wrote, “The best laid schemes o’ Mice an’ Men, Gang aft agley….” (To a Mouse, 1785)  The thought is a suitable caution to Burnham’s successors.

Measuring Infrastructure Performance Is Complex

Performance is the execution of a task or fulfillment of a promise or claim. Musicians give a good performance when they play well, provide listeners with insights to the meaning and emotion behind the music, and entertain their audiences. Employees of large companies have annual performance reviews to reflect on how well they and their immediate supervisors think they are doing their jobs.
For civil infrastructure, performance has something to do with moving people and goods, supplying water, removing wastes, and keeping us comfortable. However, just as we might disagree about whether a singer has given a good performance, individual infrastructure users, companies that depend on infrastructure, government agencies that build it, people who live near the facilities, and others may have their own ideas about both what is the task or promise the infrastructure should fulfill and how well the job is being done. Because these several groups all play a role in shaping our infrastructure, determining how it is used, and taking advantage of the services (or disservices, as some might say) delivered, we often refer to them as stakeholders.
These stakeholders are a wonderfully diverse bunch and their ideas are dynamic. Trying to understanding what might be meant by “good performance” for infrastructure gets complicated. The U. S. Army Corps of Engineers in the 1950s and ‘60s built the Buford Dam and others along the Chattahoochee River for power generation, flood control, and navigation purposes. Lake Lanier, a large reservoirs created near Atlanta, Georgia, became an important part of that growing region’s water supply as well as a popular recreation area. Downstream, where the river joins with others rolling south toward the Gulf of Mexico, oyster harvests in Apalachicola Bay depend on the freshwater flows. The states of Alabama, Florida, and Georgia have feuded for decades over the water management in the river basins. Since construction of the Buford Dam and Lake Lanier was completed in 1957, the tasks they are expected to perform have certainly shifted.
Sometimes stakeholders are very direct in stating the broader objectives they have in mind. Public works investments during Franklin Roosevelt’s “New Deal” era, for example, were planned to give jobs to some of the legions of people left unemployed by the Great Depression as well as to provide the services of municipal buildings and libraries. Huge water projects built in the vast and largely empty southwestern areas of the United States were intended to enable settlement and consolidate the nation’s hold on land which (to quote Robert Frost’s famous poem, The Gift Outright) “was ours before we were the land’s.” The spending of public funds on new roads and water mains is routinely justified by expected gains in property values and subsequent tax revenues expected when newly accessible and serviced land is developed.
Sometimes our objectives are less overt. Some highways built in urban centers during the 1950s and ‘60s were viewed by their planners as instruments of slum clearance as well as transportation arteries. Public backlash gave rise to more general resistance to new construction and the term NIMBY—“Not in my back yard!”—that has since come to be recognized in many languages. A recent Saint Index© survey of U.S. attitudes about real estate projects and development found that our extended economic downturn may be softening opposition to new development in general, 74 percent of American adults still do not want it in their own community.
Sometimes we simply have too narrow a perspective. Vitruvius, the 1st Century BC Roman who gave us the 10-book De Architectura, wrote famously that our infrastructure should not only ward off hostile attack, glorify the gods, and enhance public convenience, but should do so with “strength, utility, grace.” A panel of experts convened by the National Academy of Sciences to consider principles for improving the nation’s infrastructure (full disclosure: I served as the staff support and a primary report author-editor) asserted that we must manage our infrastructure to “… incorporate effective recognition of infrastructure as a multimodal and multipurpose system—a stream of services—as well as an armature of community development.” In other words, no infrastructure should be conceived of as doing only one thing.
In any case, whether the objectives, promises, or claims are narrowly or broadly conceived, explicitly or implicitly stated, the performance of infrastructure as a public investment must be judged by how well it serves the community. Measuring the return on investment will always be complicated.