Affordable Housing Institute : US

[Continued from yesterday’s Part 1 .]

 

Yesterday we explored the challenge of financing public-good infrastructure – big capital expenditures that create networks valuable to all of us.

 

In the US, we’re familiar with this via our friendly municipal power company,

 

 

or its close cousins, the water and sewer company.  So inextricably linked are they in American minds that even in our games, they are the utilities.

 

The basics

 

The emergence of municipal water and sanitation.  In the US, municipal water and sanitation are a late-emergent phenomenon, dating back to the late nineteenth century with civic-works projects (like Chicago’s) and continuing into the twentieth (with the Swift River’s damming to create the Quabbin Reservoir).  Before then, well owners charged money, and as for night soil, you tossed it out the window.

 

Overhanging, the better to splash in the mucky street

 

The point is, nobody wants to deal with our excretions, and for most of human history, we’ve simply hoped they’d biodegrade, or flow downriver and be our neighbor’s problem, not ours. 

 

Among the many reasons cities were born by riverbanks is that rivers represent our zero-capital-cost solution to sanitation.

 

Monasteries were always sited at streams, with the kitchen, privy, and misericordia all located abutting the downstream point – to carry away the filth.

 

Kitchens and privies lay over the stream, one upstream, the other down

 

That’s a major reason why London’s richest neighborhoods have always been on the west side, and the worst to the east; the Thames flows west to east.  It’s also why London’s center of gravity has steadily migrated westward.

 

The city moved steadily west from the Tower, which was the original Norman encampment

 

I speculate – any readers want to comment? – that municipal infrastructure in W&S arose when it did because our cities became too large to cope naturally with their excretions. 

 

Ancient Rome solved water with massive, astonishing aqueducts.

 

Amazing engineering, two millennia old

 

In the last hundred-plus years, we have solved our problem with technology: generators, wiring, filtration, pipes, treatment plants.  We had to build the technology, and to do that, we had to pay for it.  Thus, as it always does, finance is linked directly with physical improvement.

 

What happens when the finance is lacking?  When neither the city dwellers nor their local governments have the capital?

 

They go without.

 

Outside the US, and particularly in the informal communities of the global South, water and sanitation are very much not provided by the municipality. 

 

Leaving people to shift for themselves.

 

Bundle it into a plastic bag and throw it in the storm drain

 

People in informal communities aren’t dirtier than we are; they simply lack the capital to build the infrastructure to live cleaner lives.

 

We see this in developing cities within the global south.  High-income neighborhoods get water and sanitation first; poor ones get it last.  Governments go not just where the votes are but also where the taxes are.  Over time, local taxes have to be redistributive, otherwise the city subdivides into distinct and separate rich/ poor communities.

 

Back to the modern environment, and domestic Wi-Fi.

 

A few important points seemed to distinguish muni Wi-Fi from the toilet robots.

 

The problem with a high-capital-cost infrastructure is that sometimes it’s not fully paid for, and until then, you have to keep funding its debt service. 

 

First, wireless skipped the whole issue of feeding wires into people’s homes, the stumbling block for so many ventures. And Wi-Fi routers, if not perfect, are a proven and cheap technology. They work great on college campuses. Even my mother has a Wi-Fi router.

 

In short, it’s a way better, cheaper infrastructure.

 

Meanwhile, a heavy-cost infrastructure is thus hostage to its bondholders, reducing its flexibility and ability to embrace a lower-hard-cost technology, if one comes along.  As a result, established utilities are anti-innovation, even if only subconsciously.

 

Consider the bank and the electronic bank.  A brick bank is high-cost infrastructure to save and protect people’s money. 

 

Costly

 

By comparison, an ATM is very cheap infrastructure to do the same things, and electronic money is (remarkably) easier to protect – thus rendering obsolete the old bank-heist movie.

 

In 2004, when Philadelphia announced it was considering deploying the first major citywide Wi-Fi system, many assumed it would be free, or near-free, just like when you get Internet access from a generous neighbor. But that kind of system, of course, would cost real public money. The city would have to pay for the deployment with no hope of return.

 

Actually, cities are the ultimate and biggest beneficiary of infrastructure, because as their population grows, so does their revenue base. Far-sighted governments recognize this, which is why New York state sponsored the Erie Canal, and Chicago’s civic leaders banded together in the late nineteenth century to create their sewage system. 

 

In a future post, I’ll tackle the problem of trying to prove this proposition.  But now, back to our story.

 

By 2005, it became clear that major cities didn’t really want to build out Wi-Fi networks as public works projects.

 

Because their leadership, having succumbed to the chimera of free public Wi-Fi, have yet to grip the long-term economic implications.

 

Time for Plan B:

 

We’ll take the capital from anywhere, even outer space

 

[Continued tomorrow in Part 3.]

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