A Call for Public & Private Sector Collaboration in Trump’s $1TN Infrastructure Plan
The Trump Administration’s “Infrastructure Week” came and went with minimal fanfare, yet there is a concerning element of the President’s U.S. infrastructure plan in need of greater attention: what appears to be a lack of private-sector technology input in the ideation, design and implementation of such an ambitious infrastructure program. Successful infrastructure investment necessitates collaboration between the public and private sector, and the increased polarization of the political discourse may jeopardize perhaps Trump’s only uniquely bipartisan policy agenda. (This is especially topical given the recent departure of Elon Musk from the President’s Advisory Council and the Administration’s increased alienation from private sector technology leaders.)
The ambitious plan to spend $1 trillion on American infrastructure is a generational opportunity to reposition American infrastructure assets for sustainability and longevity. To put this in context: if implemented, Trump’s infrastructure program would represent the single most significant investment in US infrastructure since President Franklin D. Roosevelt’s New Deal. But as was the case in 1933, the government faces a tension: it really only has one chance to get large scale public works right, since the assets you build persist for decades. New technology paradigms like industrial Internet of Things (IoT), smart cities, smart infrastructure, construction and materials tech, energy efficiency solutions, co-working, co-living, and — most importantly — autonomous vehicles are still nascent. But for precisely this reason, long-term planning is extremely challenging today, given where we stand at the early days of so many transformational technologies and resultant societal and consumer behavior shifts. And such shifts can rapidly lead to the functional obsolesce of infrastructure assets and extreme fiscal waste. Is it really possible to rebuild American roadway infrastructure without a careful consideration of the aforementioned technological changes? (click on the link below to see a more detailed presentation)
Fifth Wall Presentation on Trump Administration’s Infrastructure Program
The technology to operate fully autonomous, or “driverless”, vehicles has become increasingly viable, and the roadway infrastructure needed to accommodate such autonomous vehicles will soon follow. Simultaneously, computers have become small, powerful, and prevalent enough to be incorporated into the transportation infrastructure we interact with daily, such as traffic lights, signs, and toll booths; and a plethora of new high-speed public transportation concepts like Hyperloop now seem to be just on the horizon. In all of this, there remains a greater opportunity for the use of data and analytics, robotics, automation, and even drone technology for city planning, construction, and monitoring. Just consider the market-map of “Smart City Tech” put together by CB Insights below. These examples are only just a few of the most imminent technological innovations that today’s governments must address in any infrastructure program.
The potential societal benefits to be unlocked cannot be overstated. Vehicular homicide remains one of the top causes of death in America: according to the National Highway Traffic Safety Administration, 35,092 people died in vehicle crashes in 2015, and motor vehicle crashes carry a total cost of ~$836 billion annually. This is not to mention millions of hours of time and productivity wasted while in traffic. According to Morgan Stanley, we spend some 75 billion of hours spent driving, while a 2014 INRIX study found that traffic congestion robbed the US economy of a further $124 billion in 2013 at an annual cost of traffic per American household of $1,700. Imminent solutions have the potential to undo this damage. Autonomous vehicles could unlock up to $507 billion in productivity gains. “Smart” cities will potentially generate $1.5 trillion in value by 2020, according to Frost & Sullivan Research. The open data from smart city infrastructure could could unlock $3 trillion of value, according to a 2013 McKinsey Report. Much of this technology is available today, but precise and active government involvement is needed to unlock full potential.
The federal government is in a unique comparative position to advance the best innovations available in the modern economy. It has the largest pool of capital available in human history, and many of these multi-billion dollar infrastructure projects are fundamentally beyond the reach of even the largest private investors and funds. Assessing and planning a large-scale public infrastructure project according to a typical 10-year venture capital or private equity investment time horizon simply doesn’t work, and there are imperfectly aligned interests and incentives between financial returns and the public good. Consider the case of a high-speed public transportation concept, where a lack of government intervention could lead to dramatically higher ticket prices and a decrease in accessibility for the members of a community who need such transportation the most.
If the Trump Administration is successful in getting Congress to back its infrastructure plan, what might be the most sustainable way to deploy it? The greatest minds in both technology and infrastructure innovation must be integrated into the process to give it the best chance of success. One promising solution would be to form a brain trust of leaders and CEOs in real estate and infrastructure, venture capitalists, entrepreneurs focused on innovations, and the best and brightest researchers and academics. This brain trust would be designed to foster collaboration and could work to effectively support and advise the various branches and levels of government implementing its infrastructure program. By doing so, the new administration can maximize the full potential of its proposed $1 trillion infrastructure plan, increase the chances of delivering on the President’s promise of advancing the country’s position, and clearly establish America as the global leader in infrastructure investment & innovation.
Leadership federally can still borrow from leadership elsewhere: many governments have already begun to take advantage of this latest wave of technological innovations, from municipal governments domestically to sovereign governments’ initiatives internationally. Singapore, for instance, has a “Smart Nation Platform” that aims to be a national network for 100 million urban infrastructure objects connected via a centralized municipal operating system. The Chicago Infrastructure Trust, in coordination with the City of Chicago and the Chicago Park District, has launched a major initiative to upgrade more than 270,000 of the city’s street, alley, and park lights to more reliable and higher-quality (LED) lighting — smart lighting management system included. Both Atlanta and Miami Dade are testing vehicle-to-anything (V2X) advanced communications platforms to facilitate communications between autonomous vehicles and the environments around them. These initiatives are all compelling demonstrations of the value that can be tapped via proper government infrastructure planning.
There are major risks in infrastructure planning, and many governments have gotten this wrong — very wrong, in fact. With major leaps in innovation (and potentially huge economic outcomes), many intrepid entrepreneurs and companies will line up to offer solutions for government funding. Selecting the best innovations and investments to implement broadly is a challenging endeavor at every level of government and should not be underestimated. One need look no further than Boston’s Big Dig, the nation’s most expensive highway project, or the California High Speed Rail, an over-budget and increasingly obsolete transportation solution, to see clear examples of the many challenges that can emerge when governments heavily invest in large-scale infrastructure and technology projects. With an insufficient amount of public and private sector collaboration, many such projects will continue to fail — functionally or economically — from the sheer scale of their undertaking or the many unforeseen variables at play. And breakdowns in US public infrastructure are more than just bad business; their significant public health, security, and safety costs to society are enormous, burdensome, and often difficult to remedy. Avoiding this type of misfire must be a priority of the US government if it ultimately chooses to deploy $1 trillion dollars in infrastructure projects.
