Walking down Lexington Avenue this week, I came across a homeless man whose pitch for money, articulated in neat block letters on a piece of cardboard, included the information “I do not have a yacht or even an i-Phone”. I thought it was a great line, one that underscored something incredible about America today – a lot of people have a lot of money.
It is, of course, not true that the lack of a personal ocean-going vessel qualifies you for charitable contributions from your fellow citizens, and even i-Phones are still luxury goods. Yet it is also the case, as The New York Times recounted last weekend, that in some parts of the country, like the Silicon Valley enclave of Menlo Park, people with a net worth of a mere million or two feel rather poor.
This private abundance casts into stark relief another hallmark of modern America – the dilapidation of its public infrastructure. This summer’s tragedy is the collapse of a Minneapolis road bridge. Closer to home for me, last month an underground steam pipe exploded in mid-town Manhattan, tearing up the street.
A sad fact of human nature – or at least of my own flawed character – is that it can be hard to get excited about something as stolid and sexless as infrastructure until it touches your own life. So what got me really worried was when much of New York was brought to a halt by a severe rain storm this Wednesday morning.
A lot of the subway was shut down and many commuter trains were seriously delayed. Those who did slog their way into work in the swampy heat often found, as one moaned in an online forum, that “I’ve arrived to an empty office”. Many of the New Yorkers who took their rage into cyberspace discovered, like me, a sudden interest in their city’s physical carapace. “Jack Ryan” warned: “It’s really pathetic that our city is crumbling … the way we are going, we will simply be the next old Rome.”
Something jars about Americans’ newfound preoccupation with things such as levées, subway pumps and bridges. It feels a little 19th century, and America loves to be the land of the new – we are supposed to be building virtual worlds nowadays, not shoring up cracks in our physical one. Moreover, it is hard to think about infrastructure without at least considering a phrase that is close to profanity in many American circles: “raising taxes”.
Take, for example, this exchange between Rudy Giuliani and David Yepsen, columnist at the Des Moines Register, during the debate between Republican presidential candidates last weekend. When Yepsen tried to ask the former New York mayor if he supported raising the gasoline tax to finance spending on bridges and roads, as some politicians had proposed in the wake of the Minneapolis disaster, he got short shrift.
“David, there’s an assumption in your question that is not necessarily correct, sort of the Democratic, liberal assumption, ‘I need money; I raise taxes,’” the Gotham City tough guy shot back.
But there are signs that the idea of spending more public money on infrastructure is climbing up the national agenda. The strongest signal is that the issue has been picked up by Senator Hillary Clinton, whose tactical brilliance in the campaign has won the grudging admiration even of Republicans. On Wednesday Clinton called for more government investment, warning that: “Something is very, very wrong when, at the dawn of the 21st century, in the richest country on Earth, people are actually nervous about driving over bridges for fear that they’ll collapse.”
So how to square the circle of rebuilding America’s public spaces without violating the national reluctance to spend too much public money? A partial solution that Wall Street is getting excited about is public-private partnerships.
One source of their appeal is as a vehicle for the growing pools of global money seeking a long-term home. As Mohamed El-Erian, who runs Harvard’s massive fund, told me: “You have long-term investors like found-ations, endowments and sovereign wealth funds who perceive infrastructure as being the longest-dated asset they can own consistent with their return objectives and risk tolerance.”
Oddly for a nation that prides itself on being at the cutting edge of capitalism, public-private partnerships are less developed in America than in western Europe and Canada, an investment banker who specializes in North American infrastructure projects told me.
He also warned that “every single public-private partnership is going to bother somebody”. I am sure that is true, but when I called Andy Darrell, New York regional director of Environmental Defense, an NGO, I was surprised to find him volunteering the idea of public-private partnerships as one solution to America’s decaying infrastructure.
In this increasingly stakeholder conscious world, support from people such as Darrell will be essential. But I should caution American bankers that when things go wrong, as they surely sometimes will, they are the ones who will take the public rap.
London’s infrastructure lament of the summer is the woeful state of Heathrow airport. But moaning local financiers won no sympathy from one FT reader. He got “very cross” when City figures complained about Heathrow “because it was the same people who just over a year ago sold BAA … The City should learn from its mistake and persuade the new owners to sell BAA back to the British public.” You have been warned.
Chrystia Freeland is the FT’s US managing editor
More columns at www.ft.com/freeland
