Earlier this year, the American Society for Civil Engineers roundly panned America’s disintegrating infrastructure, giving it an overall D grade and estimating that “it would take a $2.2 trillion investment…over the next five years to bring it into a state of good repair.” One of today’s discussions at the Clinton Global Initiative focused on how to develop infrastructure in both the U.S. and the rest of the world, and the role that government plays in such development.
General Electric CEO Jeffrey Immelt — who has been critical of the business community for investing too much money in preserving America’s status quo — noted that successful infrastructure improvements, particularly in creating the capacity for clean energy, means coordinating government standards with private investment:
The thing about infrastructure is that it’s a systems problem, and by a systems problem I mean you have to align technology, government policy, capital markets, execution skills — all have to be aligned to make it happen. And the government is a central part in how that goes, both in terms of the U.S., but also in terms of any country in the world.
Energy in this country, if we want to have a clean energy future, the investments are basically 40, 30, 20 year investments…I think, one of the key roles the government has to play is what are the standards? How should the capital markets work? How do you risk-share some of the key technology evolutions? And so, if you want to have effective infrastructure, you really do have to have a good public-private partnership.
In Immelt’s world, the government would set the standards, and then let the private sector loose to achieve them, or, as in China, lay out five-year plans for infrastructure development. This is a distinctly different take from most of the rest of the business community, which recoils from standards, aided by conservatives who claim that if we just “let the free market work,” everything will take care of itself.
Of course, Immelt must see a way for GE to come out ahead under such a policy, but that doesn’t mean that his viewpoint doesn’t make sense. Smart standards, regulation, and a cohesive policy from the government would make energy investment — and infrastructure development as a whole — much less scattershot and much more effective.