Tag Archives: civic

A Cautionary Tale

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On January 15, 2018, Carillion, a general contractor for an amazing array of work for the United Kingdom’s government sector, collapsed into compulsory liquidation.  The collapse calls into question the prospects of its 43,000 employees and 30,000 subcontractors, as well as the fulfillment of government contracts spanning three decades into the future.

Carillion’s fall also calls into question the entire political philosophy that it and other companies now operate under around the world.  It exemplified a way of privatizing government functions pioneered by Britain’s former prime minister Margaret Thatcher, and was then copied widely by other nations, especially America beginning under the Reagan administration.  Where once governments provided public services, they now contract them from private companies.  The argument is that doing so will subject moribund state monopolies to the competition and innovation of the market.

Carillion shows just how wrong-headed this argument is.  Not only are there the moral hazard[1] and rent-seeking[2] behaviors, but it is aggravated by the market’s unhealthy concentration.  It’s a similar situation in other privatization industries.  Only three companies operate private prisons in American and Britain.  Governments frequently contract for massive, long-term projects based on fewer bids than the average voter would use to renovate their kitchens.

The corruption, inefficiencies and lack of innovation blamed on government is even worse within these large companies providing government services.  There is also greed.  Carillion’s board ensured that the bonuses of its managers cannot be clawed back, even while the company was losing billions of dollars.  Carillion ‘wriggled out’ of payments into its company pension schemes as its troubles grew, while it carried on paying shareholder dividends and bosses’ bonuses.

Does this sound like a political model that is good for society and its citizens?

 

 

1. Moral hazard is the risk that a party to a transaction has not entered into the contract in good faith, has provided misleading information about its assets, liabilities or credit capacity, or has an incentive to take unusual risks in a desperate attempt to earn a profit before the contract settles.

2. Rent-seeking is the use of the resources of a company, an organization or an individual to obtain economic gain from others without reciprocating any benefits to society through wealth creation. An example of rent-seeking is when a company lobbies the government for loan subsidies, grants or tariff protection.

National Automobile Slum

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What many people probably call suburban sprawl, James Howard Kunstler likes to call the “national automobile slum.” He also thinks it’s appropriate to call it the greatest misallocation of resources in the history of the world. Kunstler’s TED Talk titled “The ghastly tragedy of the suburbs” is worthy of watching.

Despite the sometimes flamboyant language used by Kunstler, he has done some deep thinking about what makes America worth preserving and defending. Kunstler starts by talking about what makes any place worth caring about. The major characteristic about them is a sense of place. He describes sense of place like this:

“[Y]our ability to create places that are meaningful and places of quality and character depends entirely on your ability to define space with buildings, and to employ the vocabularies, grammars, syntaxes, rhythms and patterns of architecture in order to inform us who we are.”

Importantly, this sense of place is highly connected to who we are as Americans, how our particular form of civilization is maintained and understood by its citizens in a common way. Quoting Kunstler again, as he describes this so well:

“The public realm in America has two roles: it is the dwelling place of our civilization and our civic life, and it is the physical manifestation of the common good. And when you degrade the public realm, you will automatically degrade the quality of your civic life and the character of all the enactments of your public life and communal life that take place there. The public realm comes mostly in the form of the street in America because we don’t have the 1,000-year-old cathedral plazas and market squares of older cultures. And your ability to define space and to create places that are worth caring about all comes from a body of culture that we call the culture of civic design.”

2502675002_ce2eb6e7eb_oSo what’s wrong? How did we end up here? After World War II, we collectively threw that body of historical knowledge about how the public realm worked into the garbage. We thought we knew better, or could create something better from whole cloth. It was the jet age! The space age! Cheap money (low-interest, subsidized loans) and massive highway expansion fueled sprawling new housing tracts and a blurring of the lines between city and country. And consequently, we can now see the result all around us.

 

GeographyofNowhere

All too soon we will also see how this post-war style of building and civic-hostile public spaces is not just bad for our psyche and our civic life, but economically untenable. We simply cannot afford this kind of built environment, and the loans from the past 70 years since World War II are going to come due.

Do we want to save our places from decay? I’ll let Kunstler have the last word:

“We have about, you know, 38,000 places that are not worth caring about in the United States today. When we have enough of them, we’re going to have a nation that’s not worth defending.”

The Highway System is Going to Shrink

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Recently, the director of the Iowa Department of Transportation Paul Trombino made these remarks about the highways his department is responsible for in Iowa:

I said the numbers before. 114,000 lane miles, 25,000 bridges, 4,000 miles of rail. I said this a lot in my conversation when we were talking about fuel tax increases. It’s not affordable. Nobody’s going to pay.

… And so the reality is, the system is going to shrink.

There’s nothing I have to do. Bridges close themselves. Roads deteriorate and go away. That’s what happens.

And reality is, for us, let’s not let the system degrade and then we’re left with sorta whatever’s left. Let’s try to make a conscious choice – it’s not going to be perfect, I would agree it’s going to be complex and messy – but let’s figure out which ones we really want to keep.

And quite honestly, it’s not everything that we have, which means some changes.

Many DOT directors around the country privately admit to a similar kind of thinking, but Mr. Trombino is the first to say it aloud to the public, for which he should be lauded — and emulated.  Because the cold, financial truth is, we have way overbuilt our national roadway system compared to what we can afford or be willing to pay to maintain.  We’ve done this because as a result of a 60-year experiment with auto-oriented infrastructure, cheap money (borrowing) and faulty government policies and incentives that have aided and abetted this flawed idea.

For the last few decades, I have been become increasingly thoughtful about auto-centric planning and its profound impact on our nation’s infrastructure and urban development.  Many people never really think about our country’s decaying infrastructure until they blow a tire when their auto runs over a neglected pothole, but even the densest politician realizes our transportation infrastructure is broken.  Conventional wisdom suggests we should throw a lot of money at our decaying road, bridge and rail system to fix it.

I insist that no new roads should be built until the nation’s existing road infrastructure is fixed.  This may seem a little draconian given the fact politicians love to name new roads after themselves, but it’s become obvious that infrastructure planning over the past 60 years has revolved around the automobile rather than people.   Some would even suggest transportation planning was more of a social experiment than any real attempt to develop a limited but effective transportation system.

Regardless of one’s point of view, our current infrastructure planning requires quite a bit of rethinking.  Especially at the city level, we lost sight of what the infrastructure is there for — the people.

The indicator species of a successful city is not the automobile, it’s people.