“’What’s the use of their having names the Gnat said, ‘if they won’t answer to them?’ ‘No use to them,’ said Alice; ‘but it’s useful to the people who name them, I suppose.” Louis Carroll
Why drive massive investment into infrastructure? Three forces are pushing three very different kinds of agenda: first, there is a drive to support increased economic productivity; second, another agenda focuses more on opportunity – with a heavy weighting on equity; and still a third group focuses on speed – increasing the velocity of decisions, and our response to global warming. Here I provide a quick guide to assessing – and supporting – the Biden Administration’s coming infrastructure initiative.
Status Update – Where We Are Now. We are heading into a very tough economic period – hopefully not a ‘winter of despair,’ but we all get the idea. Covid is on the march across the country, and our overall economic recovery has slowed. The vaccine – for most of us – is months away. So we need action on infrastructure – both as an effective short-term fix, putting people to work, giving them hope, and – hopefully – as a long-term economic and social solution to this transformational moment.
Here are ten guideposts to help assess President-elect Biden’s overall infrastructure initiative:
10. Quick Wins Matter. Quick wins – getting projects moving, people employed – matter. A targeted, lightning, impact initiative would tell us a lot – something like funding three priority projects in each state, 150 projects overall, is something that would work. The cost would be less than $500 billion ($482 billion, according to our stimulus map), creating 500,000 direct jobs and saving thousands of professional service firms. The Administration could do this with the stroke of a pen, on Day One, with already authorized CARES Act funds. The alternative – getting bogged down with tiny projects, or big skirmishes – would be a big problem.
9. An Infrastructure Office in the White House. There has to be a way of coordinating a whole of government effort. Only from the pinnacle of government will priority projects – and programs move quickly. Joe Biden won the election, and he gets to drive the infrastructure train. He’s going to have to do that form the White House: the approval process is too slow and bureaucratic, when we need speed; technology innovation, and the advantages of that innovation, need to be brought to market in 2021. This moment requires something of the speed and resolve of wartime.
MORE FOR YOU
8. New Infrastructure is the North Star. A focus on new infrastructure – everything from 5G to the internet of things (and the security underlying that business), electric and autonomous vehicles, solar and wind power, and new ways of storing energy – is the right area for strategic emphasis. Focusing on new infrastructure accomplishes two objectives: it addresses all three infrastructure constituencies: productivity, opportunity and sustainability/green; and, at the same time, it creates a high margin, world-leading, infrastructure business.
Note: An important byproduct – the utter transformation of our $34 trillion in existing infrastructure – reservoirs, power plants, public buildings, transit and water facilities, airports – will drive extraordinary performance results. In a recent CG/LA survey survey 78.5% of respondents from the infrastructure industry said that an infrastructure initiative should focus on either brownfield or new infrastructure assets.
7. Institutional Investment is the Key Fuel. An extraordinary U.S. strength is the $27 trillion held in pension and insurance funds – 10% or more of which should be invested in our country’s infrastructure. Two facts: currently 84% of the U.S infrastructure market – water, airports, transit, highways, ports – is ring-fenced from private investment, so how to open that up?; virtually all green infrastructure – solar and wind, battery storage, electric vehicles – is 100% fueled by institutional investment, so how to increase that velocity? Can the Biden Administration quickly tap into this resource, as country’s across the world have – including Canada, the UK, the Nordics, Australia?
Note: Channeling institutional funds into the cauldron of technology innovation, local needs and the discipline surrounding institutional funding, is going to be critical – and would be vastly improved if we were to create a national infrastructure bank. An explosion in infrastructure entrepreneurship is just waiting to happen: Performance contracting (water, transit, public buildings), land/air value capture (transit, highways, airports), and long-term leasing (transit, public buildings) are proven strategies that just need to be unleashed.
6. The Public Sector Really Really Matters. The public sector, full of gifted people, is at the core of the Biden infrastructure initiative. Repurposing the public sector towards results – strategic thinking, rapid action, performance management – is essential. There is a new public sector leadership model that emerges in times of transition. A grand bargain may be in order: on the one hand, the public sector has to play a strategic role, at speed; and on the other, the private sector needs to be better at sharing information, resources and credit! Standing up a Strategic Infrastructure University, along the lines of the National Defense University, would signal to all of us the seriousness of the effort undertaken.
5. Our Voice Must be Engaged, Loud. Doubling investment, accommodating visionary technology, increasing the space for institutional investment – all of that adds up to a national course correction. We’ve voted enough for infrastructure, every election since 1992, so can we finally have that national conversation? Perhaps an Infrastructure & Technology Summit along the lines of President-elect Biden’s Summit of Democracies? We are not just investing, we are designing – casting forward – the country that we want, and in which our children will live. At the beginning of this once in a century economic transition, do we have the energy, and the creativity, to engage democracy’s shareholders in a real debate?
4. Great Projects Guide us Emotionally. One big thing missing – so evident in buildings like Grand Central Station, Beijing’s new airport, or the beautiful Millau Viaduct in southern France- of the powerful effect of the grandeur of great projects. Think of Anbaric harnessing the wind of the Atlantic Ocean to drive green energy to the Eastern Seaboard! Projects are powerfully symbolic, with an emotional power to inspire and motivate us. They are cathedrals – giving us a sense of who we are, and who we want to be. The modern focus on “low bidder” and “least cost” is precisely the reason that infrastructure – the foundation for productive and opportunity – is such a weak brand.
3. Domestic Reality Mirrors Foreign Policy. The shape of our global leadership is going to rely on the direction and health of our domestic economy. If part of our leadership involves – either directly or through partners – enabling countries around the world to build their futures, then we better invest heavily at home. That will produce the stuff of leadership – investment capacity, great companies, and rich expertise. The global infrastructure investment gap (the expertise gap is much more severe) is nearly $1.3 trillion per year – prior to Covid. This is a tremendous opportunity for the U.S. to engage with the very core priorities of countries around the world; the entry code, and China knows, involves real investment.
2. It Works When it Brings Everyone Together. The business of bringing everyone together around 5G has to be a core initiative of the Biden Administration. 5G is the foundational technology for the world’s future – and it is crucial for both rural and urban inclusion, enabling everything from medicine, to schooling to remote work. High speed broadband (minimum of 25/3 Mbps, but hopefully much higher) would demonstrate not just commitment – but the kind of vision that drove Eisenhower to create the interstate highway network. A national investment in “5G for All” – at a base cost of $50 billion – would put real political capital into the Biden infrastructure bank.
1. A Clear Vision is the Keystone. We’re not going to double the level of U.S. infrastructure investment, maintain that level for at least 10 years, focus on digitally-driven infrastructure, and revitalize our incredible base of existing assets, without a clear vision – one that makes enough sense to enough of us to get it done. “Without vision the people perish,” and without vision the infrastructure initiative will not get up and running!
Hard Decisions are Easy – When Necessary. The ten guideposts above are meant to describe an ecosystem of hard decisions – and the intent, velocity and impact of each on the Biden infrastructure initiative. If past performance is a predictor of future results, then the U.S. needs strong signals of a robust direction at the very outset of the Administration. It’s just a matter of decision. Two leading questions: Who is going to be President-elect Biden’s U.S. Grant, the leader who embodied his own favorite saying that “in war anything is better than indecision?” And will it take the President-elect as long to find that person as it took Lincoln?