'Understand This ...' Ep. 2: What is ... Infrastructure Transcript

Brandon Baker: I'm Brandon Baker with Penn Today, a publication of the University of Pennsylvania. You're listening to Understand This, episode 2: Understanding

Our modern world begs for multi-faceted approaches to problems, for second and third looks through lenses that have otherwise been shelved or in need of a dusting off. In business, we consider how psychology and behaviors influence decision making. In medicine, doctors increasingly examine how storytelling shapes their interactions with patients in the form of narrative medicine. In law, language is the tool for informing classical [inaudible 00:00:34] communication and policy making.
Here, through this podcast, we unite disciplinary expertise with interdisciplinary dialogue to tackle big questions, all toward the goal of cross-discipline understanding, and more to the point of it all, problem solving. Last podcast, we thought big: What, we asked, is a fact? Today, we're only go slightly less big: What is infrastructure and how can we work toward building it again? And not just to mend roads and bridges, though that is important, but to keep an eye towards the future of technology and engage in some honest conversations about what infrastructure is in the first place. Infrastructure is the highway system and clean water supplies, yes. But it's also networks, access, and as we explore a bit here, public education.

The United States Congress is currently examining several different
infrastructure packages to address everything from repairing bridges, to funding the Postal Service, to improving low income schools, and expanding rural broadband. The Moving Forward Act, as it's called, a 1.5 trillion dollar package introduced in June and put up for a vote in early July, was quickly passed by the House but considered dead-on-arrival in the Senate. That said, it will surely not be the last we see of an infrastructure debate in the near future, especially as it stands to serve as an economic stimulus as the global pandemic continues. Here, with Professor Emeritus of City and Regional Planning, John Landis, and
Professor Emeritus of Finance, Business Economics and Public Policy, Robert Inman, we move the infrastructure planning dialogue forward while also explaining what infrastructure is and how we might consider paying for it.

So today we're going to talk about infrastructure and what will it take to build infrastructure for the future. So on the federal level, we're seemingly stuck in this loop of talking about how much we need infrastructure but then having multiple false starts. Despite it being something we all use, no one seems to want to pay for it. And now, of course that we find ourselves in a global crisis there's renewed appetite to put forward an infrastructure package in Congress, which is slated to be anywhere from 500 billion dollars to one trillion dollars, and use that to rebuild roads and bridges and build rural broadband, all in an
effort to stimulate, theoretically, the economy. 

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But before we dig into all of that and get too lost in the weeds, I want to start high level and kind of ask and throw it out to the group, what do we consider as infrastructure to begin with?
John Landis: Well, historically in the United States when we talk about government policy and infrastructure, it really goes back to the middle of the 19th century where the government had an interest in promoting the expansion of the railroads for a whole different range of mostly freight commerce. So it had a bunch of programs available to do that, including some funding, but mostly giving away land to the railroad company. Since then when we've come to identify infrastructure, we've mostly identified it with transportation. That expanded in the 1950s with the Interstate Highway Act. It expanded to environment infrastructure with sewer and water systems in the 1960s following Earth Day and things like that. So today when people talk about infrastructure funding it's mostly transportation and environment. When economists talk about infrastructure, they often talk about public utilities, electric systems, things that are often local. But they also talk about human capital infrastructure, like universities, and schools, and things like that. So the answer to what's infrastructure depends on where you sit. If you're in the construction business, it's stuff you can build. If you're in the productivity business, it's stuff that adds to the economy.

Brandon Baker: And you mentioned universities. Can you explain why public universities are considered an infrastructure?

John Landis: Well, because again going all the way back to the 19th century when the government first started aiding the railroads, or helping the railroads, the idea was by making certain investments in things that benefited more than just one community, in the case of a state or a public university system, you gave huge productivity improvements in the economy. That's the idea behind a public
university. By having potentially reduced tuition for young people in that state, they're going to get an education, grow up, stay in the state, and help the economy of that state.

Robert Inman: And I would add, Brandon, John's given a good overview. It is in many senses more than cement today. In our earlier conversations I think I left feeling that the infrastructure is to move things. John's emphasis of the university I think is really important. Moving ideas is I think going to be as important going forward as maybe moving physical goods and services and people. So I think we want to think fairly broadly about what we mean by infrastructure. For example, the internet now I think is easily thought of and wisely pursued as a problem of infrastructure financing and infrastructure management.

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Brandon Baker: Right. This idea of moving ideas, that lends itself to the more topical idea of infrastructure, I guess, which is broadband and things like 5G, and the Internet of Things. How is that shaping conversation around infrastructure and its funding today?

Robert Inman: Well, I think there're two issues. There is the management of the infrastructure, say who gets to use it? And the typical approach for most of our infrastructure was pay a fee and then you get to use it, and we're doing that. Then the second side of that exercise is financing of it. In the case of broadband and internet,
we're using much more of the marketplace than we have with other kinds of infrastructure, for the simple reason that it's easier for firms to capture the revenues from that. Now that raises an issue, as it was raised as John mentioned with public utilities, is if someone has a monopoly you run the risk of somebody running a monopoly [inaudible 00:06:59]. That will cut down use and really be from an economic point of view quite inefficient. So the two issues, both for the internet and for the financing management of hard cement kind of infrastructure is how much to spend to build it, and how do you want to price it to use it?

John Landis: Yeah, we've seen a lot of shifts in the idea of communications infrastructure. Historically, as Bob mentioned, when you had community infrastructure which is really what the internet is, it was provided by regulated public utilities, most notably the telephone company. Then in the 1980s we deregulated that and said the communication infrastructure should be left to the market. We're in
that age where we expect private providers like Comcast and Verizon to provide that key internet infrastructure. Now then as Bob mentioned, every private provider that I know wants to make more money. And one way you can do that is by trying to monopolize the industry. So it's not surprise that we see a lot of battles and discussion about which companies, whether they're content or hardware providers, have too much power. But I want to come back to one other thing here which is the federal government stopped funding infrastructure in a huge way in the 1970s. There was a backlash in the late 1970s and the 1980s led in California by Proposition 13 against local and state funding of big, new infrastructure projects. That had a lot of implications. And along came the internet in early 2000s, and the most recent example of that is 5G, where we said okay, we can substitute communicate communications and electronic networks for physical infrastructure, and by having those electronic networks make the use of that physical infrastructure much more efficient, we won't need to build as much of that, of the concrete
infrastructure. So that's where we've been for the last 10 to 15 years. We've been thinking, okay, we won't need to spend as much on physical infrastructure if we invest more in the internet and 5G. But I think you reach a limit which at some point you need more physical infrastructure.

Brandon Baker: Would you say that's where we are now?

John Landis: Absolutely.

Brandon Baker: What are your thought on that?

Robert Inman: Well, I think John's point is right. I'll give you an example that came up with cable TV. If a private firm owns the cable that sits out in front of your house, they essentially have monopoly control over what comes into your house and the prices they're going to charge for that. Same thing with the spectrum. If somebody owns the range of the spectrum that can do 5G, they can run it as a monopoly. So what you want to do is slice up the spectrum, or in the case of cable TV, have four or five cables, or if you wish one cable if it's sufficient and
then lease it to firms and make sure that the prices and the profits are not excessive. So when there's a single piece of infrastructure that provides lots of benefits the strategy, from my point of view, is to have it be publicly owned and then lease or shared according to a bid process where firms are allowed to access it, but only at the competitive prices. So the trick is to get this stuff built, which may mean one big builder. But then make sure that there's competition in how the activity gets used. That's what we're doing with the broadband, is we're slicing it up. So several firms can buy chunks of a particular section and then compete against each other in utilization of their product. That to me is very appropriate, economically efficient, and in many ways arguably a more equitable way to allocate this kind of infrastructure.

John Landis: You've seen some of that idea in transportation where the government built the interstate highway system, but it needs repair now and it needs upgrading. So in Pennsylvania's case you saw the state entertain the idea of leasing parts of the interstate highway system to private contractors or providers who would maintain the system and keep it in good working order, or a certain part, and in return they would get most of the tolls. So the idea of the government coordinates the overall provision, but then uses private operators to provide the
service, has a lot of possibility.

Robert Inman: Brandon, to mind in some ways you're in the elevator and somebody asks you how to manage this stuff. I'd say public ownership and private management is probably a decent way to go, where you offer private management in a competitive bidding process, where they set prices and of course, have to deliver on [inaudible 00:11:53]. But when there's a single big asset, whether it's an airport of a chunk of the spectrum, public ownership but private management, as John implied, is often really the most efficient way to go.

Brandon Baker: So that could apply as much to a noteboard as much as cell phones is sort of the idea.

Robert Inman: Yes, exactly. You lease gates at the airport, but the airport is owned in a fundamental sense publicly. Then you have competition for the gates. They bid for the gates. The revenues that are gotten from the gates are used to maintain the airport. But also is a way implicitly of controlling how much profit margins there are. To not get too nerdy about it all, you could imagine the government even being a monopoly, saying okay, we're going go start to really, really high price. The problem of course is that denies travel opportunities for folks who
aren't just doing business trips. So you want to really think about what the public objective is in terms of the utilization of a piece of infrastructure.

John Landis: And the hitch of that plan is that eventually you need to update those gates, right?

Robert Inman: I'm sorry?

John Landis: The hitch of the plan is that eventually you need to update those gates, right?

Robert Inman: Oh, yes. Absolutely. Absolutely. Go ahead, John.

John Landis: I want to build on what Bob said here. It's really important that the network or the system be planned by the government, potentially built by the government to begin with. Because if you leave it up to the private company, back to the airport, if that private company, let's say flies to Paris but not to Africa, they will only build enough gates to fly to Paris, they'll never fly to Africa. They won't build enough gates to fly to Africa and Africa will get no service. So you really need government go step in and look at the big picture, again which has to do about overall productivity, overall connectivity. But once that system is designed... And that's the way the interstate highway system is done.
Once that system is designed, maintaining it and upgrading it, you need to think about how that gets planned as well.

Brandon Baker: Are we finding success in structuring it that way with 5G so far? Is there some sense of equity?

Robert Inman: Off the top of my head, the answer to that is probably no.

John Landis: Yeah, I would agree with that. 

Robert Inman: John might have a point of view.

John Landis: I would agree with that. We're in that in between space now where we don't know what the productivity gains associated with 5G are going to be. If it just mean you can download a movie and watch it in two seconds, I'm not sure that's productivity. If it means cars can communicate with each other and avoid accidents and keep people safer, that's productivity. So we're not sure that 5G is going to mean in terms in productivity, whether it's just more amenities or whether it's really productivity. But we're not really going about it very smartly. In the model that Bob laid out, we'd have government sort of plan the system and plan the extension. But that is very costly. So instead what we're doing is letting a bunch of monopolists do that, which is about the worst way to do it in my opinion.

Brandon Baker: Right. Would this be referring to the telephone carriers?

John Landis: Pretty much, yeah.

Robert Inman: Yep. And Brandon, I would add I think the economist is going to want to emphasize sufficient allocation and yet I think [inaudible 00:15:47] fairness is going to be an important part of the element at least from a societal point of view, worrying about do people have access and in some fundamental way independent of income.
I think the Postal Service is a wonderful example of the importance of access. The notion that I can mail a letter to my mother who's in a tiny town in northern Michigan and have it get there in three days to me I think is a terrific thing linking the country together. Yet, there's not private firm that's going to actually run a post office in my mother's tiny town in upstate Michigan. So government has I think an important role on the fairness side, or if you want to think of it as social glue in some sense, because infrastructure does that. It moves ideas and people. You know, the interchange on a highway that allows you to get to a farming communities might be really inefficient economically, but I think in
terms of connecting people to people, ideas to ideas, that kind of additional value comes and ought to be considered carefully.

John Landis: One of really interesting things here. It was the invention of the user charge in the 19th century, tolls for people who wanted to use turnpikes in the 19th century to get from one town to another. So government would help in planning the system. Then there would be a private operator and they would charge tolls. The users paid for those tolls. That's the system we did with the interstate highway system, where the users pay for the interstate, not with tolls initially but with a gas tax. So the people who drove more and used the system more paid for more of it, and it made a lot of sense.

Then as these systems got a lot more expensive and you couldn't pay for them with gas taxes and other things, you had to find new ways to pay for this additional infrastructure often which is upgraded. That came about in the 1980s and we mostly just didn't do a good job of that. We didn't say, okay, how do we pay the new infrastructure in a similar way, or how do we upgrade things? We just sort of kicked that ball down the road, or kicked that can down the road, and we've been doing that for the last 20 years. Rather than coming up with systems that pay for the right amount of infrastructure, every five of six years Congress would get together and pass a bill that fills in the gaps. Let me be clear about that. Rather than thinking systematically at this point, we're just filling in gaps.

Brandon Baker: Are there any [inaudible 00:18:34] that people come up with?

John Landis: There lots of them, in fact, technology makes it easier.

Brandon Baker: Are they [inaudible 00:18:37]?

John Landis: So instead of just paying a gas tax, you could pay what economists and [inaudible 00:18:45] call a VMT tax. So every year your car sends a signal to the state that says I drove this many miles this year and I drove this many miles on the interstate highway system or on local roads and the government would send you a bill based on how much you drove on freeways and local roads. It'd bemvery easy. A lot of people are talking about it. I don't know if it's going to happen. I don't know about you, but I don't currently pay that amount. So if you ask me whether I'd say it's a good idea, I'd say, I'm not so sure about that.
Technology should make user pricing easier, but it's just going to take some political will and a little cleverness.

Robert Inman: Brandon, the kind of model that John is describing it would work for local road and state highways where people are on it for two miles. Now, you're not going to have a toll booth at every exit on a local highway. So this technology allows that to be priced in a way that can be efficient. And there's nothing again that precludes the idea that as I fill out my income tax form I've got a column that says, how many miles did you drive on... Then if I'm in the highest tax bracket I'd
pay a slightly higher fee than if I'm in a lower tax bracket. So the kind of technology that John is alluding to I think has wonderful potential,
both for paying for these services, overcoming this political problem of oh my gosh, you mean I have to vote for a tax increase? And yet it can be managed in a way that could be equitable in the sense that you would like the fellow who's commuting to a manufacturing job pays much less than John and I who are commuting to a fancy university job. So I think you can manage this is way that has lots of appeal, both in terms of efficiency and in terms of fairness.

Brandon Baker: Yeah, I think you might find yourself in kind of a cultural battle with that idea, even just thinking about insurance, right? I know in my experience I've had two insurance companies in the past two years. One monitored how many miles I drove and adjusted my insurance rate based on that. The other one is like, no, no, we appreciate your privacy. We're not going to do that. I think that's exactly
[inaudible 00:21:22] even though there's a great argument to be had based on paying for miles and maybe even fairness.

John Landis: I think the way you have to make that argument is to note that we think about infrastructure as wearing out, the road gets a little bumpier or something like that. I could live that. I could live with a bumpy road if you don't raise my taxes. A lot of these infrastructure systems fail catastrophically, like the bridge in Minneapolis, and that's when people's lives are lost. If you ask people, "Would you have been willing to pay a little bit more in taxes so that 20 people, or 30 people, weren't killed?," they'd say, "Yeah, I think I would." So we have to make it clear that the problem with infrastructure is not just when it physically fails, but when a link is reduced or eliminated, when there's a
flood or something like that. Even for two weeks that occasionally happens across the Mississippi Valley and things like that. The costs are big and you end up paying for it one way or another anyway.

Brandon Baker: Right. Do you have a sense of how close we are to having more of those catastrophes? It really does seem like we haven't funded on a big scale for those kinds of projects in a very long time.

Robert Inman: You know, I think there've been a variety of efforts to try and measure that. I think civil engineers go out and stick a letter grade on how the states are doing, A, B, C, D, and F. I think that's useful as a warning sign, but it's not useful for a decision making tool. The problem i have with it is a civil engineer looks at a bridge that somebody hasn't driven over in two years, and it's in terrible shape, and they give it a D of an F. Well, if no one's using the bridge, let's just put a couple of barriers there and say, "Please don't go over the bridge." So what you really want to do is measure the state of the bridge and then compare it to its importance and usefulness, as indeed the Minneapolis bridge
was. John may know the details, but I think the warning signs on that bridge had been around for a while. So this raises the question, which my colleagues in Wharton have considered and thought long and hard about. It has to do with flood insurance and the others, is what's the change of the bridge in Minneapolis falling down? Well, an engineer will tell you, "It's a one in 100 chance, or one in 50 chance." Most people go, "Well, that's zero." Well, I'm sorry one in 100 times 100 million dollars in lost resources, and then the loss of 20 lives all worth 10 million dollars each, is big money even though the chances of it happening are small. The question is how to get the debate to accept and engage these small events of which infrastructure I think is a really central example, engage these debates with a small chance of a really big, big problem. That's not easy to get politicians or even the average citizen to think hard and carefully about.

Brandon Baker: Yeah. Well, the most prominent thing that I can think of right now is probably the Gateway Project going from New Jersey to New York, right? That needs something in the ballpark of 30 billion dollars or more to fix.

Robert Inman: That would be fixing the current one and adding some new tunnels as well yeah.

Brandon Baker: Right. But there's a ridiculous amount of our GDP that funnels through that tunnel every single day. But even that, as an example, has had a terrible time getting funding in this particular political climate.

Robert Inman: And again, the example would be shut that tunnel down and have to repair it over a year. Any guess as to what the GDP consequences for the country would be, forget about just New York, for the country if Washington couldn't connect to New York and Boston. It would be disastrous.

John Landis: I taught for many years in California, and I've said this before, I think what we need to do is somehow recreate the consensus that existed in California in the 1950s and the 1960s when you had business, and population, and labor, and government all come together and say, "You know this is a very attractive place. A lot of people want to be here. They're coming here, and a lot of people are starting businesses here. If we can get a lot of smart, young people to come to California, and they can start businesses, we can grow this economy and be very
prosperous. What do we need in order to grow this economy and become very prosperous?" And they identified, we need a highway system. We have to build a highway system. We need water system. They built a water system. And we need a public university system, and they built a fantastic public university system. So basically the thinking of these different groups coming together and saying, “What do we need to do to invest in prosperity that we all benefit from?" That we all benefit from. And as long as you have growth of smart people who are
going to invest in both your society and your economy, that's what you're going to get. That's how you think about investing in infrastructure. Instead we've had the mindset where you're going to come into my community, and you're going to use up my roadway and I'm not going to have any for me. So we have to switch from that sort of zero sum model to the joint prosperity model. We haven't had any federal leadership displayed to do that.

Robert Inman: I think the way to maybe expand a little bit on John's point is the issue is how to show the benefits of this big, big project. You know, don't come into my backyard, but if we could somehow allow you into my backyard, generate sufficient benefits, and then figure out a way of sharing the benefits across all those who are enjoying and paying the costs, then we're in a position to put together an arrangement. The issue is who's going to put together the deal? Certainly in all interstate activities, of which this example of the tunnel into New York is a good one, requires federal leadership, requires national leadership to put together the kind of coalition that you need, that not only produces the
infrastructure and pays for it, but does so in a way that allows the sharing of the benefits across all of those in society, even folks who may not be using the Amtrak lines. How can you share the benefits that having that line available provides to everyone?

Brandon Baker: Sort of a state to state tension too, right? Like when you're talking about New York and New Jersey. I'm thinking back to the beginning of that particular project when Chris Christie was still governor of New Jersey, and you had a Democratic governor and a Republican governor trying to figure out who's going to pay the bill.

John Landis: That's a perfect example because we've been thinking about the Gateway Project for about 30 years now between New York and New Jersey. Go up the Hudson River about 15 miles and Andrew Cuomo built a new Tappan Zee bridge in five years.

Robert Inman: Which, by the way, for others who don't know is in New York.

Brandon Baker: They always say there's no shortage of critics when it comes to infrastructure. Former UK Prime Minister Margaret Thatcher sometimes let a sense of humor shine through on the subject. She said to the Conservative Women's Conference in 1985, "You might have heard a lot lately about infrastructure, the new N word. Some of you might even ask what it is. You and I travel by rail or road. Economists travel by infrastructure." And something else that probably goes into play a lot, especially politically, is the story of urban and rural divides. I mean a lot of I would imagine a lot of infrastructure tends to have an outsized benefit for cities more than the countryside. Is that accurate?

Robert Inman: Yes, I think the evidence is really very clear that most of the traffic, certainly if you think roadways, most of the traffic is in urban areas. There's I think little question in the long run that the central economic beneficiaries of the interstate highway system have been urban areas. Again, this gets back to the question of how can you get the revenue from the urban areas in a way and allocate it in a way that might be sufficient to swing a few rural votes. The one clear way of
doing it is to plan their property taxes because what goes up a great deal is urban areas is the value of property. But I think again, the central issue is sharing.
One of the dilemmas I think in policy generally is if you say to the farmer in Nebraska, "We're going to build a terrific interstate that helps Omaha and allows Chicago to boom," and, 'You know what? Your daughter in 25 years from now is going to be working in Chicago and do terrifically well." Maybe went to the University of Nebraska and is now in Chicago doing really well. "You're just going to have to wait 25 years to get the benefits." That might be a hard sell, but it's absolutely true. I mean, her future is significantly enhanced by the fact that we have a good interstate highway system. So how do you persuade Dad that this is a good investment for his family?

John Landis: I want to take that from a slightly different perspective on urban versus rural. Urban infrastructure is just a lot more expensive to build than rural infrastructure, because the construction and the operation has all sorts of impacts on neighbors, inconveniencing and sometimes negative effects on the neighbors. And the neighbors are rightly concerned. So the way we incorporate this is we require an environmental impact assessment or something else, but it just looks at that project, that small, maybe one mile, and says what its impact
going to be. For every time we take a small project we have to stop for two or three years, study it, consider whether we want to go ahead. That's going to raise the cost a lot.

What we really need to do is what a lot of people call cumulative impact
assessment, which is look at a portfolio of infrastructure investments that we're thinking about doing, look at their cumulative negative impact, see who's more disadvantaged, or most effected badly. Help them, rather than doing this on a project by project basis. That's how they did it for the Tappan Zee Bridge, in some ways looked at it more cumulatively. So by thinking about positive and negative impacts of a cumulative set of things I think we could lower the cost of infrastructure substantially.

Brandon Baker: What would you consider some of our major infrastructure challenges in the Philadelphia area?

Robert Inman: That's a really good question. John is probably a far deeper thinker on this than I. But my reaction is public transit.

John Landis: Yeah, I agree. I agree.

Robert Inman: I think there's no question, at least from what I've read and understand, public transit is really the most efficient way to move people. I'm struck when I go to [inaudible 00:33:46]. But going to major cities in Europe. The subways come every 10 minutes. They're packed with people, and they cover the entire metro area. What a wonderful way to move people around. Obviously there's traffic congestion but subway, and public transit, a well-run public transit can be a huge benefit.

John Landis: Yeah, I agree with Bob. Public transit. You know for an economy of the Philadelphia region's size and productivity, we have not a lot of traffi congestion. If you go to Los Angeles, or Washington DC, or New York, which are bigger, but some of them are not that much bigger, you see a lot more traffic congestion. Why is our traffic congestion situation not so bad? Because of public transit. So public transit has traffic congestion benefits, reduces it. It has environmental benefits. It has huge equity impact by enabling a lot of people who would have a hard time maintaining, say, car insurance or things like that, to get to a job easily and support their families. Huge benefits and we don't invest in it at the level that we should. The other challenge coming up is going to be climate change for our water supply system. As we get sea level rise we have to worry about where the inlets are for our water supply system which comes out of our rivers. As those rivers get more salinity we're going to have to spend a lot more on upgrading our water and sewer system.

Robert Inman: To the point that John made about the equity advantages of public transit. I think in Philadelphia one of the central issues is [inaudible 00:35:41] suburbanizing the King of Prussia area, and yet we have no way that can easily and conveniently move people from Center City out to those areas. I'm going to guess the trains are every two hours. Buses an hour and a half drive. A subway system would be a wonderful advantage for sharing the benefit of Philadelphia's
significant suburbanization of jobs with the folks in Philadelphia.

Brandon Baker: Thinking about exurbs and the like, I think about DC. They've built some rails that go out to some of the newer suburbs. Is that something that's even feasible for Philadelphia? You mentioned King of Prussia in particular. We don't even have a separate line that goes out there. We have a bus route, but we don't have a train line. I can't even imagine how complicated that would be even negotiate who would pay for that.

Robert Inman: Yeah, again, I think the beneficiaries are going to be city suburban cooperation. In this area for years, they're thinking about getting these guys to cooperate on tax policy. I can't be thoroughly optimistic that they're going to cooperate on transit policy, but that's what's required. You have to make the argument that there are benefits at both ends of the rail line. From city residents getting a job, and for the employers in the suburbs to get labor they need to expand. So it's
somebody stepping up to the plate, making the collective argument, and then having the institution capable of delivering on regional or statewide solutions.

John Landis: Particularly on public transportation, we've really been remiss on equity. If you look at where a lot of the recent investments in subway and light rail systems have been, they've been out to airports which generate a lot of prosperity for the region and business for the region. There are a number of low income workers who work at airports, but we haven't extended our transit systems to the same extent to low income areas to improve the mobility for low income families.

Brandon Baker: You touched on climate change and I was wondering what some other considerations we might have on a national level for how that might, or maybe should, be impacting our funding of infrastructure and what we're funding.

Robert Inman: Let me give you an example of some of the work that I have done on water, and harbors, and the Corps of Engineers. You can think of this in some ways, as John implied, infrastructure managing the consequences of climate change, not solving climate change, but managing the consequences of it. It is incredibly politicized. Not shock there. And because the activities, construction is localized. You know, we're going to build this harbor in Baltimore. We're going to build these levees in New Orleans. The politics of it become not what makes the most sense nationally, but how can I bring a project to my congressional district? So the work that we had done on water and Corps of Engineer kind of projects is that, gee, everybody got a project. 436 projects, and that often made very little sense in terms of allocating the money. Again, it's going go be, and I'm sounding a bit like a broken record, but leadership on this stuff. Jimmy Carter was an engineer and he loved to build stuff. There was a long list ready to go when Carter was president. And Reagan came in. He had a fellow named David Stockman who was [inaudible 00:40:11] economist, and Stockman said, "Hey, this doesn't look terribly efficient, these 435 projects." And to Reagan's credit he really did prioritize them. The way he did it was to say to the local congressional district, "You know we were paying for the whole thing. I'm sorry you've got to pick up 50%." [crosstalk 00:40:31] a project that you'd like to do where you're paying half the cost. And gee, about 200 of those projects disappeared when suddenly they had to pony up some of
their own money, even though the benefits largely were localized. So I think the trick is to have somebody at the top who's thinking carefully about how to allocate these resources in a way that has national benefits but in the case that there are local benefits, shares the cost with the locality.

John Landis: So back to climate change for a minute. This year we think we're at about 416 parts per million of CO2 in the atmosphere. We're headed probably to about 450 to maybe 500 in the next 30 years which is really very scary on many fronts not the least of which is a sea level rise and inundation. If you look at the East Coast of the United States, from Corpus Christi up to Galveston, up to New Orleans, the entire coast of Florida, Charleston, Norfolk, not so much Philadelphia, New York City, Boston. Those places are going to get three feet of sea level rise. They need levees. They need berms. They need to start raising
their building, particularly those that are close to the ocean. If you think about what they're doing on the Jersey shore in the aftermath of Sandy by raising some apartments and houses. That's what we're going to need to be doing. Miami, to its credit, is facing up to that and starting to talk about both additional levees and water management and raising buildings. But really no one else is. 

By the way, the country can afford to do this. Many of those places, New York City, Boston, they can afford to make those investments. But as Bob said, we need the leadership that's going to think about it and communicate to people that if we don't start thinking about how to finance it now, we're not going to do it.

Brandon Baker: Okay. So I guess I want to close this out by thinking optimistically. So I guess what is going on right now that might give us some hope? What are you hopeful about based on the state of things?

Robert Inman: What am I hopeful of. Well, I do think there are serious infrastructure problems that have to be addressed. Am I hopeful? Yeah, I'm always a pretty optimistic guy. I think what worries me is that we wait till a disaster happens then we're scrambling, as John implies. And I think Miami, maybe there's a hopeful story in Miami stepping up to the plate. I think California's story, as old as it may be, I think has the outline of how this can be put together. I think the question is, and I guess it's the broken record, is someone going to step up to the plate and
persuade us that collectively we have an interest in allocating these resources? That, to me, I think is the central issue. There's no question we have the tools to think about this carefully, and certainly the engineering and intellectual talent to do it. The shortage is somebody who can bring it all together, persuade the short-run losers that they'll be long-run beneficiaries, and figure out a way of managing the resource [inaudible 00:44:14].

John Landis: So I'm hopeful in three areas. There's some areas I'm not hopeful in, but I'm hopeful in three areas. The first is technology. As I said before, I think technology makes this idea of user charges, or user-based pricing, much more feasible which means we can find some ways to have the people who enjoy the benefits finance the cost of the infrastructure. So I'm hopeful there. The example of the VMT tax is an example of that based on how much you use your car. I'm hopeful. I think there's a movement in this country to lower the cost of public university education, maybe not to zero, but substantially. That's going to enable a lot of people who are very smart and can do a lot of great things for society and the economy to go to universities and do well. We don't think about that as a physical infrastructure investment, but that's an investment in infrastructure of human capital. So I think the movement to reduce the public university education is a really good one.
And then internationally we're gaining a lot of experience with something we call public-private partnerships, which are ways to do what Bob talked about before, which is to bring the private sector in, and in particular private sector capital and private sector financing to help upgrade our infrastructure. We don't do that very well in the United States because PPPs, public-private partnerships are regulated by 50 states rather than the federal government and no financier 
wants to deal with 50 separate entities. We could do a lot better in the US if we had a national PPP strategy.

Brandon Baker: Thanks for listening to the second episode of Understand This, a production of the Office of University Communications at the University of Pennsylvania. Like what you heard and have a subject you'd like to hear discussed in a future episode? Send all notes and feedback to bkbaker@upenn.edu. For all the latest news, views, and breakthroughs, check out Penn Today at penntoday.upenn.edu. For notifications about future episodes, subscribe on Apple Music or your preferred audio listening platform.

Transcript by Rev.com