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Fixing Infrastructure With Public-Private Partnerships

It has become clear that the United States is facing an infrastructure challenge that it cannot meet through federal investment alone. Just walk down the street and you will notice sidewalks cracking, highways crumbling and bridges falling apart, let alone new structures that need to be built to meet the needs of an expanding and increasingly demanding nation. Perhaps Public-Private Partnerships for Infrastructure (PPPs) could be a solution?

According to Kellogg Insight, the problem has become so bad that the American Society of Civil Engineers has given the country a D+, a rating more fitting for third world countries devoid of any health or safety standards. The United States should be on a B rating and would need to double its infrastructure budget to raise standards and fulfill its requirements.

Experts say, this is not just an issue for policymakers or politicians but future business leaders should also be concerned and should consider partnering with the public sector to fund projects.

Public-Private Partnerships for US InfrastructureIn a previous article on America’s Infrastructure Problem, Bold Business debated whether an increase in federal spending was needed to improve infrastructure standards across the United States.

It is important to improve the rules, regulations, standards and requirements surrounding the way in which infrastructure investment is made. Policy reform should also become a key component to increasing infrastructure investment.

The big debate is where this investment will come from. Congress has failed to come up with a long-term solution, and funding has been affected by the failure of past projects.

According to Kellogg, given the “fiscal and political restraints on public funding”, ambitious public works projects like the Interstate Highway System are a thing of the past. Experts claim the solution to America’s infrastructure challenges is by encouraging the private sector to have a greater role in infrastructure development.

There has been a trend toward privatizing infrastructure globally and this move has proved successful for other nations. The measure eases the pressure on public funds, drives the economy and improves standards.

There can be many benefits of funding projects through public-private partnerships (PPP). One is that it provides access to large amounts of capital from the onset.

The World Bank states that PPP projects are more often completed on time than projects funded entirely by governments. Public-Private Partnerships for Infrastructure have also been proven to deliver faster construction and are better maintained. If the long-term management of these projects is also pushed through the same partnerships, then the results prove more successful.

However, there are currently mounds of red tape and issues surrounding Public-Private Partnerships for Infrastructure in the United States, more so than in the countries where the model has proved successful.

According to Kellogg Insight, the first constraint is focused around America’s municipal bond market. The fact that the bond scheme is tax exempt and the market is so well developed leaves little incentives for governments to utilize PPPs.

What’s more many state governments do not allow PPPs to operate within their jurisdictions due to conflicts of interests and corruption fears that have plagued offices in the past. PPP models will only work if they are fully transparent which will always be an issue.

There are already a vast number of technologies, innovations and bold ideas floating around the private sector that could make drastic improvements to infrastructure right across the United States. However, federal funding is just not there to facilitate them.

If federal spending isn’t enough, then perhaps public-private partnerships are worth exploring.

America’s Infrastructure Problem

Investment in infrastructure development has been a problem in the United States for nearly two hundred years. Policymakers and politicians claim it’s now at its worst, and America’s infrastructure problem is crumbling.

Experts say that an increase in federal spending is needed to fix the problem, and to encourage America’s economy to grow. However, Bold Business looks at whether this tact really is the best way to improve infrastructure standards across the United States.

According to Chris Edwards at downsizing government.org, most projects are delivered by the private sector, such as power stations, pipelines, freight railways, and cell phone networks, and are a key economy driver for the country. However, the main problems lie within the infrastructure provided by the United States government, such as bridges and highways.

Federal involvement often leads to “waste and inefficiency”. Funds are mis-allocated and “projects get bogged down in mis-management and cost overruns”. These sorts of problems have “plagued federal infrastructure since the 19th century,” the report states.

The report argues that “the states and private sector are more likely to make sound investments without federal aid and regulations distorting their decision-making.”

The study looked at other developed countries and how they push their infrastructure projects through privatization, yielding great success stories over the past 30 years to deliver better airports, highways, seaports, etc.

The conclusion of the report determined that federal policymakers should “study the reforms abroad and work to reduce barriers to private infrastructure investment in the United States”. It also states that they should harness entrepreneurs and private investors to “fund, build, and manage infrastructure development” which would “reduce taxpayer burdens, improve economic efficiency, and spur innovation”.

Research compiled by downsizinggovernment.org, mentions that in 2015, most of America’s infrastructure was provided by the private sector. In fact, $2.3 trillion was spent on investments that included development of pipelines, factories, power stations, cell phone networks and in many other areas. In comparison, during the same time frame, the total federal, state, and local government infrastructure investment was $613 billion.

The rise in complaints and mis-management of funds led to a decrease in the amount government investment had been made on development.

America's Infrastructure ProblemIt is therefore blindingly obvious that if policymakers want to see an increase in investment, they should push for policy reform to increase spending. The report states that one reform would be to “cut the federal corporate income tax rate, which would increase the returns to a broad range of private infrastructure, and thus spur greater investment”.

However, it’s not all doom and gloom as some sectors have seen an improvement which dispels the notion that the government is under-investing across the board.

For example, the Federal Highway Administration (FHWA) report showed improvement on the nation’s bridges. The surface quality of highways has also improved. Since 1989, the FHWA has seen improvement all round and concluded that the interstate system is “in good shape relative to its past condition”.

Despite this success story, there are often calls for increased federal spending, but advocates ignore the inefficiencies and failures of past federal projects.

Federal aid is mainly based on formulas and political motives, not on demands, the report states. Therefore, aid is never usually attributed to the areas that need it the most. The report argues that the solution to America’s infrastructure challenges is by encouraging the private sector to have a greater role in infrastructure development.

There has been a tried-and-tested trend toward privatization globally, and as stated earlier on this move has proved successful for other nations. The measure eases the pressure on public funds and can drive the economy.

The OECD states that the United States is lagging other nations including Australia, Canada and Europe in privatization of infrastructure.

Policymakers have called for the American government to privatize the infrastructure it owns to pull it out of one of the worst states it has been in for years. Not only would it benefit the users but would also generate the economy by creating new opportunities for investors, entrepreneurs, and businesses.

For the United States to improve its infrastructure and to be mentioned in the same realm as other developed nations, it would appear the answer lies more in privatization than by increasing federal spending.

Super Router Security Protecting Smart Household Gadgets From Hackers

With an increase in homes being filled with internet-connected devices, leading online security organizations have launched super routers to protect household devices from being hacked.

Leading tech firms BitDefender, Symantec and Intel have launched routers that scrutinize data as it flows across home networks to weed out the bad seeds.

The three leading tech firms have each produced a router that protects home devices from the threat of attack. Experts claim that the most important area is the entry and exit point for home networks, and determined that the routers were the best place to implement cyber security measures.

The devices are fast-becoming a necessity as the number of dangerous appliances being controlled by internet-based systems increases, including: ovens, microwaves, heating systems, lighting and other electronics.

What’s more the routers come with parental control options which can dictate time allocations for gadgets, how much internet can be viewed within a home, and can even control what can be viewed over the web.

Growing Security Threats - Super RouterThe “internet of things” revolution is here and security experts insist that protecting household gadgets controlled by the net is fundamental. Soon security, locking devices and household appliances will all be controlled via online platforms and hackers can easily infiltrate these systems.

According to the BBC, this interconnectivity and ease of use comes at a cost, the end of 2016 had seen a “surge in attacks that compromised net-connected CCTV cameras, televisions and media servers”.

The poor security on gadgets up until now has enabled hackers to perform significant attacks on networks which have proven how susceptible they can be.

In fact, the hacking issue has become such a serious problem that the US Federal Trade Commission is now offering prize rewards of up to $25,000 to help create defenses to online threats to household devices.

Although the big three tech firms acknowledge that there are some home routers that already provide a certain level of protection, they claim none are as sophisticated as theirs.

And, what is slightly different to the way these routers operate compared to the standard devices, they are controlled by a smartphone management system using an app.

So, as the IoT revolution takes hold the need for bold ideas from leading tech firms intensifies. Protecting devices from the threat of online attack has become an important part of not only retail strategies but to protect us from hackers.

Orbiting Around The Moon: A New Frontier In Space Tourism

Elon Musk’s SpaceX project is planning to send tourists into space, around the moon and back to earth by the end of next year. This space tourism project is an elaborate one. In fact, bigwigs at NASA have stated that it is almost impossible to breach Earth’s lower orbit—which obviously doesn’t account for the fact that they supposedly went to the moon in the 1960s, or did they? That’s a debate for another time!

According to the New York Times, if Musk can pull this off, then his company SpaceX will be the first in 40 years to send people that far into space.

According to Musk, the bold idea came about after two private individuals—no doubt offering millions of dollars for the privilege—approached him. These two asked to be flown to the moon, fly over its orbit, and then be transported back to earth. Musk is confident the project will go ahead and insists this mission would go ahead toward the end of 2018.

a photo with a drawing of the earth and the moon amid talks on space tourismAfter they are launched into space on their Falcon rocket, the two lucky travelers—who have not yet been revealed, and it is not known whether they are genuine space explorers—will spend over a week inside one of SpaceX’s Dragon capsules. The spacecraft will be controlled from a central position and the occupants will be able to enjoy the sights during this space exploration mission. Scientists have said that the delivery date of less than two years is an extremely ambitious one considering the Dragon capsules and Falcon rocket have yet to be fully tested.

Other Details on This Advancement in Space Tourism

NASA, one of the main funders for the SpaceX project, have also announced that they want to put astronauts onto the flight which could delay the project until at least 2019.

Private space visitors have so far only been able to visit the international space station which is roughly 200 miles from Earth, but this expedition will take the two individuals to the moon, around 400,000 miles from Earth.

It remains to be seen if this space project will go ahead—Richard Branson’s Virgin Galactic announced they would start delivering space travel to tourists in 2009 but still nothing.

Space tourism is a bold idea that is taking a long, long time to materialize. It sounds good on paper but putting it into practice throws up many issues and problems that are sometimes too great for Earth scientists to solve.

Bold Business will keep an eye on this developing story and keep you updated in due course.