There is a dignity in the Hoover Dam, a massiveness that speaks to a grand national purpose. A country — our country — decided to build it. As the Hoover Dam was constructed, in the middle of the Great Depression, the nearby city of Las Vegas stretched itself from a sleepy town of 5,000 to accommodate tens of thousands of new residents: the people building the dam and staffing the associated businesses.In 1956, President Dwight Eisenhower embarked on the most aggressive public works project in U.S. history — the jobs-producing interstate highway system. And throughout the 1930s and ’40s, the government designed an elaborate set of public financing vehicles to build the great postwar suburban housing stock.America used to be a country that built things — using public and private resources. Great works of infrastructure provided jobs and returned an incredible social investment. It is inconceivable to imagine the modern economy without the vast investments in infrastructure made by preceding generations — everything from rural electrification to developing the Internet.So why aren’t we building more of it? One way to think about the question is: Why did we build infrastructure in the first place?The answer is complicated. We need to look to the political coalitions behind our immense public works and ask which coalitions today support the current infrastructure rhetoric. Seen through that lens, the real trend in infrastructure today is not building more of it but privatizing what exists.After all, building infrastructure implies the ability to build things here and being able to use the power of taxation to finance them. Privatizing infrastructure requires the ability to securitize revenue flows. Which one do you think modern America does better?Privatization takes inherently governmental functions — everything from national defense to mass transit and roads — and turns them over to the control of private actors, whose goal is to extract maximum revenue while costing as little as possible.Republicans have long advocated this in the name of free markets — saying that privatizing government services reduces the size of government. Democrats express more mixed support, but they sometimes go along for the privatizing ride.Yet it isn’t true, as a general rule, that privatization shrinks the public sector. When investor demand for high returns is combined with the natural monopolies of public assets, what often results instead is citizens finding themselves saddled with high fees and poor service.Even more perniciously, selling infrastructure such as toll roads puts the coercive power of the state in the hands of private actors. We have great public assets built by prior generations. We should and could be building a better country for our children, rather than liquidating what we have.The last great era of public works — the New Deal’s roads, bridges, arts programs and schools — did not come from great planning and bipartisan concern over U.S. infrastructure. It came from the desperation of then-new-economy industrialists, who sought an economic structure in which they could profit and a populace seeking to govern its own country.It was initiated by an unemployed and hungry citizenry and supported by builders clamoring for a government-backed housing-finance system, auto companies demanding roads and airlines seeking airports. The scorching class conflict of the Great Depression led to a national consensus in favor of avoiding unemployment that lasted until the 1970s.The greatest public works project of all time — the interstate highways — was begun in 1956 after heavy lobbying by the auto industry. It was financed straight up by gasoline taxes and provided jobs and an on ramp to the new suburbs, which solved pressing postwar housing needs.That period was unique in its political alliance between labor unions and capital-intensive industries that provided a continuously rising standard of living for most Americans. American firms had no rivals internationally, so free trade meant higher sales and profits for all.The political coalition today augurs for far different policies — despite what the politicians may say. The New Deal coalition melted in the 1970s, the political scholar Tom Ferguson points out, as international competitiveness and environmental costs drove the logic of cost reductions into our political order. Today, we are still living in the Ronald Reagan-Paul Volcker era of low taxes, low regulations, low pay, low spending and high finance.

Public pays price for privatization – Print View

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