Jacob Gichan for Economic Policies for the 21st Century: American infrastructure needs significant improvement, and President Trump plans to encourage the private sector to ramp up investments.
The American Society of Civil Engineers has given U.S. infrastructure a D+ rating, estimating that between 2016 and 2025 the U.S. will need approximately $3 trillion in infrastructure spending, two-thirds of which is needed for transportation. The society further expects that there will be nearly a $1.5 trillion funding gap. Private equity can step in.
The problem with infrastructure is not necessarily a lack of funding but more importantly a lack of using funds efficiently. Private equity can succeed where public funding has failed. Private equity firms (fund managers and institutional investors) invest either by making an investment in a company itself or by providing the equity financing for a specific project. In each case, when a firm invests it must put its own fund and reputation at stake, which creates an incentive to allocate money efficiently.
Most private contracts involve construction, operation and maintenance, all costs that need to be minimized. Private investment is also able to minimize financial risk in a way public funding cannot…
Past private equity deals in the United States can serve to illustrate these advantages. In 2006, the Indiana Toll Road was leased to the ITR Concession Co., which filed for bankruptcy in 2014 and was then sold to IFM investors for $5 billion. Since the toll road’s privatization, the road has expanded from two to three lanes, converted to electronic toll collection, and begun the Bridge Capital Plan, which aims to repair every major structure of the toll road.
This is an example of how private contracts that require construction and maintenance of roads incentivizes companies to efficiently use its resources and in the case of Indiana turn around a failing asset.
Rise of online commerce is progress
Michael Mandel for the Progressive Policy Institute: E-commerce jobs for production and nonsupervisory workers are paid on average about 25 percent more than production and nonsupervisory jobs for the private sector as a whole. That’s according to Bureau of Labor Statistics data.
Economic theory suggests that industries with faster productivity growth should have faster real wage growth. That’s exactly what we see in the case of the electronic shopping industry…
From 2000 to 2015, e-commerce productivity rose at an annual rate of 8.7 percent annually, compared to 2.6 percent for retailing as a whole…
What about jobs? Since 2007, the number of retail jobs has risen by roughly 420,000, while the number of “electronic shopping” jobs has risen by 140,000. That latter number is most likely an underestimation because it doesn’t include e-commerce jobs that are part of larger retail establishments. So e-commerce is a major driver of good job creation in the retail sector.
The implication is that as more retail jobs shift to e-commerce, wages and productivity will rise.
How to bag illegal immigrants
David North for the Center for Immigration Studies: A useful screening method to sort out real tourists from illegal immigrants has emerged from an unlikely source: a member of the territorial legislature in the Commonwealth of the Northern Mariana Islands, a U.S. jurisdiction just north of Guam.
The idea: Someone (in this case from China) who shows up with a tourist visa and six pieces of luggage is likely a would-be illegal worker, planning on a long stay in the United States. A similar traveler, with one or two pieces of luggage, is more likely to be a genuine tourist.
So why not screen tourists on the basis of their luggage, as an island politician suggested? …
The unlikely source: As someone who has worked with the Department of the Interior on island migration issues, the origins of the notion are ironic to say the least. The proposer is Joseph Guerrero, chairman of the tourism committee, of the lower house in the Commonwealth of the Northern Mariana Islands legislature. I have no first-hand knowledge of Mr. Guerrero.
But the islands’ officials, generally, were the ones who hired the notorious (and subsequently jailed) Jack Abramoff to lobby Congress on behalf of the migrant-exploiting garment sweatshops. Commonwealth of the Northern Mariana Islands officials to this day accept the fact that fully one-third of the members of the islands’ labor force have temporary non-immigrant status and are thus subject to exploitation, and the islands’ government happily accepts birth tourism.
Compiled by Joseph Lawler from reports published by the various think tanks.
