Top Down vs. Bottom Up

The Brookings Institution’s Robert Puentes takes a look at infrastructure procurement and reaches exactly the opposite conclusions as the Antiplanner. Puentes says that successful infrastructure needs 1. visionary leadership; 2. public sector expertise; 3. standardization; and 4. public-private collaborations.

To the Antiplanner, all of these goals and recommendations are exactly wrong. My recommendations would be: 1. get the incentives right; 2. rely on user-fee driven processes; 3. let hundreds of flowers (or at last 50) bloom; and 4. gradually turn infrastructure planning and management to the private sector.

Leaders follow incentives. No matter how visionary the leaders are, bad incentives will lead to bad outcomes. Get the incentives right and the visionary leaders will follow.

The public sector has demonstrated time and again that it will distort its analyses and misuse of its experts in order to follow its incentives and come up with the wrong solution. No one can seriously believe that Norfolk’s Tide light rail was a good idea: despite collecting the lowest average fare, it has the lowest weekday ridership of any light-rail line in the country. Yet next-door Virginia Beach is so eager to spend hundreds of millions to extend this failure into what passes for its downtown that it bought light-rail cars even before it has the funding to build the rail line. Where’s the public sector expertise?
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Standardization means top-down management. Some people think, for example, that the federal government should set a national standard for licensing self-driving cars. The Antiplanner thinks we are better off if each state sets its own standards: even if 49 of them get it wrong, they can all learn from the one that gets it right, whereas if the feds do it, it will be almost certainly wrong in all 50 states with little chance to learn from the experience.

All too often, public-private partnerships mean guarantee high profits for the private partners while the public covers any and all losses. Such partnerships have been used to justify huge taxpayer ripoffs, such as Denver’s Eagle P3 which (contrary to frequent claims) didn’t save taxpayers a dime but allowed Denver’s transit agency to circumvent voter-approved debt limits.

If getting the incentives right is the number one goal, and user fees are the best way to reach that goal, then there is little need for public agency involvement at all. The United States is not going to privatize its highways and other transportation infrastructure tomorrow, but increasing reliance on user fees will not only mean better incentives, but less need for political interference.

Puentes obviously sees the same problem through a very different lens from the Antiplanner. Where he thinks government is good and just needs the right leaders, the Antiplanner knows that political failures are far more costly and destructive than market failures. I have seen government agencies that worked, for awhile, because the incentives were right. But in most cases, the incentives are wrong to begin with and even when they start out right they tend to drift in the wrong direction, a problem that is only made worse by leaders who think they are visionary but in fact are merely engaged in political grandstanding.