Clinton’s ‘Field of Dreams’: Infrastructure Spending : CALIFORNIA PORTFOLIO
If tax cuts were the “magic bullet” of Reaganomics, infrastructure spending seems to occupy a similar station in Clintonomics. Going well beyond con ventional notions of Keynesian pump- priming, many in the new Administra tion express a near-religious faith in the idea that upgrading America’s immovable assets--bridges, roads, transit systems, communications networks--will lure global investors to the United States.
This “field of dreams” mentality--”if we build it, they will come”--largely grows out of economic assumptions that downplay the importance of local and national companies as drivers of economic strength. High value-added producers--multinational firms, skilled workers, managers, lawyers and entertainers--are seen as essentially nomadic economic forces, alighting only where local conditions are attractive. To induce these stateless producers to invest and establish themselves, America must build the world’s most advanced infrastructure.
But a “field of dreams” industrial policy for America will fail if not supplemented with national technology and regional development strategies, particularly in recession-battered California. If the Clinton Administration just spends money in the hope that spanking-new railways, smooth streets or fiber-optic telephones will accomplish its economic goals, the country will repeat, on a much vaster scale, the unfortunate history of the Suncoast Dome in St. Petersburg, Fla. The dome stands in solitary glory, without a team or even a prospect of one. It is virtually useless.
Instead, Clinton’s economic planners should first concentrate on ensuring that the United States has the “teams”--strong U.S. companies, business networks and workers--that can take advantage of the upgraded assets. Short of that, the new Administration could spend a public fortune for an infrastructure that attracted no new economic players.
Indeed, few of America’s trading partners, or increasingly aggressive regional-development authorities around the world, would center their strategies on imploring the stateless economic elite to set up shop within their borders. Even as the economy becomes global, these countries seek to maintain their industrial bases by importing and diffusing technologies, as well as providing technical and financial resources to upgrade the capabilities of local companies. In successful economies like Japan’s, investing in roads, bridges or even fancy high-tech communication systems has long been a lower priority than in many other nations, including the United States. It represents just one part of comprehensive efforts to create opportunities, quality jobs and skills for their citizens.
Countries that focus on infrastructure investments, by contrast, are almost certain to be at a disadvantage in the global competition of the 1990s. France, for example, invested heavily in such high-tech infrastructure projects as the TGV high-speed train and its Minitel national computer system, yet these showpieces have done little to encourage the development of strong domestic manufacturing or information industries. Even by torpid European standards, France’s overall industrial competitiveness has slipped, particularly in high-technology electronics, and the country’s trade balance depends largely on its highly protected and heavily subsidized farming sector to overcome a growing manufactured-goods deficit.
In contrast, successful infrastructure spending, such as that initiated in California under Gov. Edmund G. (Pat) Brown Sr., must satisfy clear “customer needs.” Brown’s program of highways and school construction was not a product of wishful thinking but a response to a skyrocketing population desperately in need of new roads and places to educate their children.
In much the same way, the expansion of the University of California met a clear--and expressed--desire of the state’s already existing aerospace and high-tech industry, which needed personnel to service its large and growing worldwide market. Also, the California Water Project answered the needs of agriculture, long the state’s largest industry, to meet growing demand for fruits and vegetables from its global and domestic customers.
Before blindly setting off to build and rebuild U.S. infrastructure, we should take a page from the Japanese playbook, particularly in mass transit, where American firms frankly lack many of the necessary skills and technologies. In projects such as Southern California’s huge 30-year, $183-billion transit-building program, highest priority should be placed on reinvigorating sophisticated local industries so that much of the high technology and skilled portions of public-works contracts will not simply end up lining foreign pockets.
To expand the regional impact of transit spending beyond short-term cement-pouring jobs, the Clinton Administration should first create a national technology policy to encourage U.S. alliances with advanced foreign producers, much as the Japanese have done with Boeing. This would bring bring new technologies and skills into the country. At the same time, federal money should be directed toward such projects as Southern California’s electric-vehicle development effort, CALSTART, which is forging industrial networks and fostering technological skills among regional firms. That way public-works spending will not just build shiny subways, but also lay the basis for the further development of regionally based industries.
For most Americans and Californians, the true “field of dreams” lies not in being able to boast about having the world’s most advanced railways or electronic highways, but in securing good jobs in growing industries that can offer a chance of future prosperity for themselves and their families.
