Infrastructure Development - Where to Begin

For a government, its businesses, other organizations, and citizens to flourish, its people, goods, and information must have the ability to move and interact freely in an integrated, cost efficient, resilient, and effective manner.  Reliable, responsive infrastructure helps make this possible.  Infrastructure includes the physical structure, components, and systems that provide the energy generation, transmission, and distribution, transportation network, digital communications network, water treatment and distribution, wastewater treatment, flood control, solid waste disposal, and educational function of the government’s territory.  Determining the proper mix of infrastructure investment by type and cost to be provided by government within its jurisdiction requires careful consideration and analysis of a significant amount of information.

Typical U.S. local elected officials[1] should acknowledge that much of their constituencies’ infrastructure—its roads, sidewalks, streetlights, bridges, dams, public schools and colleges, public hospitals, the electrical grid, the water system, the storm water system, the sewage system, and many other major societal support systems—have been neglected for far too long.  In order to address this neglect, they should seek to invest in revamping most of the old and constructing some new infrastructure in their communities.  First, they should inventory the current infrastructure in their jurisdictions, assess its scope and extent, and catalogue the histories and timelines of its construction, maintenance, and operation, including each system’s direct and indirect costs.  Next, they should categorize their jurisdictions' infrastructure wants and needs based on (1) these current inventories and their current providers (i.e., private sector, my jurisdiction, or another (special district or differing level) jurisdiction), (2) the current and projected adequacy (or inadequacy) of this infrastructure to meet expected needs, (3) the current states of repair and remaining expected lives of this infrastructure, (4) the current and expected future unmet infrastructure wants and needs (based on historic failures, internally anticipated inadequacies, and surveys of the constituency), (5) the current and projected funding sources[2] (and its adequacy or inadequacy) for current and anticipated infrastructure that includes planning, construction, maintenance, and operation over the full life-cycle, and (6) special considerations such as zoning and other laws and regulations, environmental concerns and constraints, and public safety issues.

Once this information is collected, they should work with other elected officials to rank potential infrastructure investment based on a combination of societal need, public safety, sustainability, public desire, and life-cycle funding source adequacy, respectively.

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[1]  Since much of American infrastructure is built and operated by local or state governments, state or local officials are the main intial drivers of infrastructure development.  

[2]  These may include direct taxes, user fees, grants, bonds, private-public partnerships, or combinations thereof.

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Bell, California and its Comprehensive Annual Financial Reports (CAFRs)

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Bell, California

“The Government Finance Officers Association [GFOA] established the Certificate of Achievement for Excellence in Financial Reporting Program (CAFR Program) in 1945 to encourage and assist state and local governments to go beyond the minimum requirements of generally accepted accounting principles to prepare comprehensive annual financial reports that evidence the spirit of transparency and full disclosure and to recognize individual governments that succeed in achieving that goal.  Reports submitted to the CAFR program are reviewed by selected members of the GFOA professional staff and GFOA Special Review Committee (SRC), which comprises individuals with expertise in public-sector financial reporting and includes financial statement preparers, independent auditors, academics, and other finance professionals.  Each CAFR is reviewed using a checklist designed to determine compliance with both generally accepted accounting principles (GAAP) and program policy as established by the GFOA’s Special Review Executive Committee and the GFOA Executive Board.”

Bell, California was a 2008 winner of the Certificate of Achievement for Excellence in Financial Reporting (this is the most recent year GFOA has awarded) and a 2007 winner of both the Distinguished Budget Presentation Award and the Certificate of Achievement for Excellence in Financial Reporting.

Perhaps, the criteria for these “distinguished national awards” should be re-examined.

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Recalls and Risk - Another Update

John Aquino points out that, in isolation, the recall information as presented is unfair to Toyota since it ignores overall fatality per vehicle statistics (certainly a fairer proxy for manufacturer safety) and it fails to address the potential conflict of interest inherent in a U.S. agency deriding an import (since it can transfer sales to the quasi-governmental domestic makes).

When we add the data as displayed in the following table, he is correct insofar as Toyotas overall have fewer fatalities per vehicle.  The acceleration problem, then, is a problem of risk perception.  People tend to be more accepting of the voluntary risk of driving as opposed to the involuntary risk of sudden acceleration.  SARF principles may potentially help Toyota manage this risk.

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Capitalism against Capitalism

Michel Albert, author of Capitalisme contre Capitalisme, compares the neo-American model of a capitalistic market economy with the Rhenish capitalism of Germany's social market economy. The neo-American model is based on the ideas of Hayek and Friedman, and the latter, according to Albert, is founded on principles of publicly organized social security. Albert asserts that this model is more equitable, efficient, and less violent.

To the general public (and certainly most Americans), however, the neo-American model appears more attractive and dynamic.  Part of this attractiveness, he asserts, is an illusion because, as Albert (in 1991) argues:

The largest banks know, however, that they are literally 'too big to fail' and can count on a helping hand from government if the worst comes to the worst. America's political leaders would step in to prevent the crash of a major financial institution on the grounds that it could set off a lethal chain reaction culminating in widespread disaster. ... Thus, in yet another intriguing but ominous irony of history, 10 years of ultra-liberalism have resulted in a US financial system whose future may only be assured with the help of federal government handouts. [Michel Albert. Capitalism Against Capitalism. London: Whurr, 1993.  p. 61]

Alberts ideas for a "better" capitalism include finance controlled more by banks than stock exchanges, closer relationships between between banks and companies, more balance between shareholders and managers, more partnerships between employers and unions, more loyal employees, more educated employees, a dual education system (more apprenticeships coupled with classroom learning), more regulation, and greater societal emphasis on equality and solidarity.  Perhaps Washington should, at least, consider some of these alternatives.

Mandarins and their Protections

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Union members who work for the government now outnumber privately employed union members in the United States, according to the Bureau of Labor Statistics. Overall union membership is now 15.3 million; 51.5 percent of these members are government workers. As of December 2009, the U.S. non-farming private workforce had 108.4 million workers; the government had 22.47 million. Thus, 35.1 percent of government workers are unioned, and 7 percent of private sector workers belong to unions.

Public employee unions primarily act in their member's interests (rather than in (or in addition to) the interest of the optimization of the government entity) and drive up the scope, cost, and size of government. Whereas private unionized industries are subject to the corrective forces of the market, government is a permanent, protected monopoly with the coercive ability to increase revenue through taxation.

The Supreme Court's recent ruling allowing unlimited funding of elections by unions should help maintain a course toward soldifying the power of these mandarins of American government.

See, also, http://reason.com/archives/2010/01/12/class-war .