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April 17, 2008
This Country Is Falling Apart. Literally
While many of the booming industrial countries today are investing unprecedented amounts of money into building new structures and restoring old ones, much of this nation's brittle framework seems to be failing. Where do we even begin?
It seems like every month brings news that some piece of infrastructure in the world, the United States being no exception, breaks down and creates a tragedy or at least some distress — congested airports, environmentally unfriendly railroads, bridges collapsing, urban apartment buildings toppling and, the mother of critically brittle infrastructure in contemporary times, dubious levees.
Fortunately, many of the booming countries in the industrial world are investing unprecedented amounts of money into building new structures and restoring old ones,
"During the past two years, the flood of money into infrastructure funds has been astonishing: the world's 20 largest now have nearly $130 billion under management, 77 percent of it raised in 2006 and 2007 and about 63 percent from new entrants," according to a recent McKinsey Quarterly report.
Yet while much of this nation's brittle framework seems to be falling apart, the money put toward building and restoring remains wanting.
While "existing funds have been repeatedly raided to pay for other programs," total federal spending of approximately $60 billion annually is well below the $155.5 billion needed annually to improve surface transportation infrastructure conditions nationally, according to the American Society of Civil Engineers (ASCE).
Between 2003 and 2007, the percentage of the U.S.' 599,893 bridges rated structurally deficient or functionally obsolete decreased only slightly from 27.1 percent to 25.59 percent, according to the ASCE.
Nonetheless, the U.S. is roughly "20 years behind in developing, repairing and maintaining its transportation infrastructure," one engineer and bridge expert told Logistics Management last September. He noted that structural problems identified in the late 1970s have not been fixed by "any more than 3 percent to 5 percent."
It is crucial to remember that infrastructure refers only to roads, but also to bridges, airports, brownfields, dams and levees, drinking water and wastewater and inland waterways.
For all this, the ASCE has estimated that $1.6 trillion is needed over a five-year period to bring the nation's infrastructure to good condition.
As such, opportunities to invest in public infrastructure will increase over the next few years. So say the authors of the McKinsey Quarterly report entitled How Investors Can Get More Out of Infrastructure, published in February.
"From 2006 to mid-2007, we estimate, private investment funds raised $105 billion for infrastructure projects [worldwide]," the McKinsey authors write:
One key attraction of infrastructure investments is the prospect of reasonably straightforward operations: there is less scope for management discretion in running a bridge, for example, than a global retail chain or a software house — not, of course, that such investments leave no room for operational improvement or can't create significant value. This straightforwardness is a characteristic not only of the roads sector, traditionally seen as one of the most operationally undemanding categories of infrastructure, but also of more complex categories, such as airports, power plants and transit systems.
Of course, the importance of operational improvements will grow as infrastructure projects become more complex.
"Even the apparently straightforward business of rail maintenance offers room for greater efficiency," says McKinsey, whose authors point to work with a range of Organisation for Economic Co-operation and Development (OECD) rail operators that suggests, for instance, implementing best-practice procedures in maintenance scheduling, repairs, purchasing and overhead management can cut annual upkeep costs by 15 percent to 30 percent.
Taking into account leverage, a billion dollars of equity funding could, in some situations, pay for up to $10 billion in projects.
"Opportunities to invest in global transport and other types of infrastructure — to build and operate new projects and manage old ones — are set to increase in the next few years, but so will competition for deals," according to McKinsey.
So where do we start in the U.S.?
Based on a year-long investigation, a new special report in the latest issue of Popular Mechanics delves into the crumbling infrastructure in the U.S. — "some problems are widely known, and work is long overdue" — making clear that we need to begin rebuilding the nation's infrastructure somewhere.
Popular Mechanics offers these as 10 places to start:
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4 Comments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
April 17, 2008 4:09 PMEVERYONE NEEDS TO UNDERSTAND WHERE THE MONEY WENT. READ "SHOCK DOCTRINE: THE RISE OF DISASTER CAPITALISM" BY NAOMI KLEIN. FROM 2001 TO THE PRESENT, OUR GOVERNMENT HAS CREATED A PARALLEL SECURITY INDUSTRIAL COMPLEX, RIGHT ALONGSIDE THE EXISTING MILITARY INDUSTRIAL COMPLEX. NO BID AND UNSUPERVISED CONTRACTING HAS CAUSED A MASSIVE TRANSFER OF WEALTH TO MULTI-NATIONAL CORPORATIONS, WHILE THE WORK ITSELF IS DONE FOR PENNIES 3-4 SUBCONTRACTOR LEVELS DOWN THE FEEDING CHAIN. HALLIBURTON IS ON IT'S WAY TO DUBAI AS WE SPEAK, AFTER MAKING $2.7B IN PROFIT IN 2007, WHILE BEING CHARGED WITH $2.3B IN CONTRACT FRAUD. WHAT IS THE OLD SAYING, WHENEVER A BUBBLE BURSTS, THERE WAS USUALLY A REGULATORY DEFICIT." TO WHICH I WILL ADD, "WHEREVER THERE'S A REGULATORY DEFICIT, THERE'S CORRUPT POLITICIANS WHO'VE BEEN BOUGHT AND PAID FOR BY SPECIAL INTERESTS AND THE MULTI-BILLION DOLLAR LOBBYING INDUSTRY.
April 17, 2008 4:58 PMAmen. Keep up the good work.
April 22, 2008 10:15 PMWe not only need to rehab the physical infrastructure, we have to renovate and rehabilitate almost every social institution, process and program.
What are the solutions?
The innovations and changes most needed in our country and our government require two huge steps.
First: take a wide, wide view of America's deep needs and its vast potential.
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Second: harness the collective will and energy of the people to meet the myriad needs that come into focus during this examination.
Without fulfilling our deepest needs, we can never reach the highest heights. Think of each person without health care; without access to a decent, well-paid job; left behind our economic growth; untreated for mental illness suffered from abuse, PTSD from war or other trauma; or who falls between any of the myriad cracks gaping because of flaws in the capitalist fantasy of the trickle-down effect as a panacea for all societal ills--all these problems keep us from achieving our potential greatness and well-being.
A good start - Federal Priorities Task Force
We need a federal National Priorities Task Force on this and America's other myriad, mostly social, problems.
It should identify the areas of biggest need, those that threaten to create the most devastating problems for individuals, the economy, ecology, health and well-being, as well as national security, foreign relations and other areas. It should take in continual citizen input, perhaps organized through local governments, and constantly clarify the overall picture of America, and what to do about its problems.
Then it must present the results and recommendations in strict terms to the People, Congress and the President. All citizens must join, support and push for a national action plan.
This must be a renovation of our society and priorities as far-reaching as the promise of Roosevelt's New Deal, Johnson's Great Society and other reform programs--maybe as radical as the Protestant Reformation.
We need innovation and action, and thought before we act. What are your ideas on how to achieve these changes? And how will you communicate them to those in power?
