Rebuilding An Infrastructure Needs Entrepreneurs

Jonathan Ortmans, President, Public Forum Institute

Today and tomorrow I find myself in Dubai and Doha on various missions on behalf of entrepreneurs.  When you fly around this part of the world, you cannot help be struck by how fast countries like the UAE and Qatar have built their state-of-the-art physical infrastructure in these desert lands and how old by comparison much of our infrastructure is in the USA. Cost-effective physical infrastructures – the systems of ports, airports, bridges, roads, rail, transit, water, sewer, communications networks, and energy grids – provide the essential platforms for the activities of any healthy economy. Modern infrastructure should be increasingly “smart,” incorporating next-generation technologies to manage scarce resources, such as clean air and water, used in infrastructure systems. As our leaders invest stimulus funds devoted to infrastructure projects, it is important that they not overlook the role of entrepreneurs in building infrastructure that supports creative, risk-taking behavior.

The American Society of Civil Engineers assigned an overall D grade to the nation’s infrastructure. We all experience this reality of loss of economic activity. Inefficiency of the nation’s electrical grid causes losses of $100 billion per year for U.S. businesses. The costs of congestion are nearly $50 billion a year and rising as the population grows. Wireless innovation is hamstrung by inefficient use of licensed spectrum. Overall, infrastructure spending is 20 percent below what would be required to simply stay in place, according to Congressional Budget Office estimates.

Because of their “public good” nature, government plays a central role in financing, if not operating, such infrastructure systems. The planning and construction of many projects has historically has been delegated to the states because so many infrastructures are local. Harnessing the experience, talent and innovation of private sector entrepreneurs in improving public infrastructure will provide significant opportunities not just for short-term economic stimulus and job creation, but also longer term economic and social benefits.  The growth of the Internet, for instance, has been fueled largely by competing cable and telecom providers seeking to meet consumer demands for faster computational power and transmission speeds. To advance the modernization of our electric grid and help fulfill the promise of “green-collar” jobs, the Department of Energy has entered into public-private partnerships with leading champions of the Smart Grid. According to the U.S. Government Accountability Office, public-private partnerships are an increasingly successful framework for infrastructure provision using public financing to support private provision of infrastructure and services.

Yet the government can facilitate the role of entrepreneurs even more. It could, for example, support the development of a smart grid by creating a better regulatory climate for startup firms and reduce unnecessary barriers to adoption of smart grid technologies, practices, and services. To address the problem of underutilized spectrum, the FCC could establish an accessible database of spectrum licensees, and allow licensees to sell their spectrum licenses that will put them to potentially far more valuable uses. Certain infrastructures, like broadband, involve delicate balances between competition among private actors and the goals of efficiency, lower prices, and higher speeds and broader deployment. Engaging innovators and entrepreneurs can reveal such tradeoffs.

Sound policies and investment in infrastructure attuned to market and environmental needs will have an entrepreneurial return. An infrastructure that supports creative, innovative behavior attracts smart, entrepreneurial people. If those entrepreneurial people come to an area, they will help to maintain and improve upon the “smart” physical infrastructure they need to succeed and connect with other innovators and entrepreneurs to share ideas. These two related tasks can foster productive, sustainable growth in our economy. While the investments will already spur significant job creation in the short run, integrating entrepreneurs will sustain job creation in the longer term, enhancing the stimulating punch.We can learn something from post-recession Dubai for even though the economic growth has slowed, the role of entrepreneurs in pioneering a future society is alive and well.

 

Jonathan Ortmans is a senior fellow at the Kauffman Foundation where he focuses on public policies to promote entrepreneurship in the U.S. and around the world. In addition, he serves as president of the Public Forum Institute, a non-partisan organization dedicated to fostering dialogue on important policy issues.

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