and it would be something that somebody entrepreneurial could start like the brookings institution, david, could start -- >> i got the message. [laughter] >> could start to generate -- >> i've got an app for that. there's great new technologies, if you put this thing in the cup holder when you driver in boston and will report to city government whether our potholes. we've got stuff that can be combined to be fantastic product for brookings. >> great, thank you. with that please join me in thanking larry and ed. [applause] and if i could get -- no break. you guys get out. newsha, dan and cliff, come up. take the mics off first though. [inaudible conversations]

>> we are a little behind schedule, so i'm i'm going to talk fast. i'm really pleased that wha whau wanted to do was bring together some people have actually done work in the area of infrastructure to talk about where there is evidence, where there is not evidence, where the things that government does, does make sense, and where things don't make sense. physical infrastructure is a rather broad term, and so we have a panel that is one part water and three parts transportation. newsha ajami is a research associate at the stanford woods institute for the environment, the director of urban water policy at the water in the west. macugen is a professor of economics at brown who is written quite a bit about transportation as ed mentioned. dan wilson on my right is at

federal reserve bank of san francisco and speaks only for himself and not for janet yellen or anybody else at the fed. and cliff winston as our college or brookings. what i passed each of them to do is to say, pretty and we had a president of united states who has a short attention span. [laughter] and pretend that he ran for office saying i want to spend a lot more money on infrastructure. i pretend for a moment that may be a tax credit that was something that peter navarro thought up and will never resurface again. what would you tell him about how we ought to wisely spend the money, and based on what evidence? so i've asked each of them to give us a seven or eight minute spiel that it would give in the oval office and we'll have some interaction. it's putting a lot of pressure on the time to ask them to keep to that thing, but i'm going to make you do it. so transix, maybe i can start with you because we haven't talked about water at all and it's been quite a bit of focus on water lately both the supply

of but also to which it is delivered. >> our nation to social and economic well-being obviously depends on access to clean water but, unfortunately, water is isn we call it a hidden infrastructure part because people really don't know where the water is coming from and where it goes. the connection to the water is i open the tap, water comes out, i flushed the toilet, water leaves. they really don't have a very good understanding of what it takes for water provided, to bring it to you and cleaned it up and put back in environment. so this connect has led into lack of interest and enthusiasm to invest in the water sector. as a whole. when it comes to water we talk about some interest in investing in the new infrastructure or replacing the pipes, but the numbers that are on the table

are very insignificant in terms of what we really need to be done. a lot of that water infrastructure is 40 years or older. they are aging and reaching to the end of their lifetime. we talk about investment. we talk about the money that's on the table, which insignificant compared to what we need. then we need to bury smart in the way we invest this money. when it comes to smart investments, one of the things that have been promoted a lot is doing asset management, try to focus on the fact that infrastructure that we have, we have to be first of all i think larry mentioned something very important which we don't bring to water. we generally we are very reactive to fix water challenges, water problems, the pipe breaks, everybody goes, everybody goes to try to fix it. understanding what the challenges are, where the infrastructure needs and try to

invest and build the challenges are red zones situation. active management is a great example for that. a lot of the cities can use this kind of system to evaluate their assets to see where, how the systems are working, where's the smart investments with a set of assets they have. i'll give you a very good example. ross city sanitation district in the bay area. they were having a lot of senator overflow issues. they were told that they had to fix this sanitary overflow challenge. they went to their users and said hey, we want to raise the rates to pay for this fix that we need to do, to meet the environmental regulations. people did not vote for that rate increase.

they went back and tried to rethink. they bought a company. he worked with them. they did some evaluation of the system, asset management, then they identified what are the red zones, what are the base point that if they don't fix they are going to have a main break in the system. and actually ended up doing a better job of fixing some of those. i went back to the public afterwards and public was willing actually to pay for some of those investments that they've made because it was a smart investment. so that's like a very good example of doing asset management. but if you go beyond that i think one of the things and water sector we are a little bit behind is the sector is sort of shifting and sort of having this paradigm shift but we are as a government, we are not necessarily sort of reaching that point yet. like 20 years ago energy sector

was, they had the crisis, they dealt with it. they try to change the way they manage energy. they change the way the policy that been said. we are sort of going to the same ship with water. drought in california has been one of the species because access to clean water, access to reliable water supplies has been a critical issue for some of these communities when you go back to flint, michigan, the same situation. you have a water quality challenge which is again brings water up to the public interest. so there have been some issues going on that people started getting interested in. and what it takes to bring clean water to be. taking advantage of that opportunity, we need to think about how we can be smarter again in the ability to use the data to manage our system more effectively. there are so many technologies out there, smart meters, using, not even getting smart meters, using existing data that they

collect on people, the amount of water they use, how they respond to price change, how do they respond to sort of climate the variability, how do they respond to different messaging, and try to understand people are are cof the demand for water is changing and in what ways are so using this data to become smarter in the way we manage our water system, and then using that kind of information just what kind of infrastructure do you really need in the future. so right now a lot of water utilities think about big infrastructure, big pipeline, aqueduct to bring water from one location to the next pick maybe the next generation of our water system or 20% to water system does not require another damp or another aqueduct to bring the water to us. maybe we need to change it locally. maybe we need to replace some of our infrastructure with the doing from local projects such as recycling, reuse sort of

green infrastructure, another great example, it sort of has of this broad umbrella because when you think about -- which has water scarcity issues, infrastructure can help to enhance some of the water supply issues that we have. it captures the storm water and rainwater without getting polluted and uses it for future needs. when you think about east coast, d.c. as a great example of using green infrastructure to deal with some other water quality issues. are some of the solutions that are actually work for both side of the coast and in the middle, and sort of addresses that issue. one last thing i really would like for everyone to think about is the fact when you think about water, we have put in different buckets. organizations that do water supply, bring water to you. we have organizations that do wastewater treatment.

they collect the water. we have organizations that deal with floods and these are all different silos that we have created for this fragmentation that is caused a lot of inefficiencies in the system. the reality, this is all one water. that same water that we need to deal with floods, we can actually be better in taking that water, storing it, we using it so when it comes to again going back to some of the local solutions that we can use capturing some of the rain and floodwater and reusing it. and then when you go back to recycling and reuse, what kind of like demands to have for water and how that's going to impact the wastewater and how we can use that wastewater stream which again, remember, it's in the second silos which is wastewater treatment, and how can we connect that to our water supply, which is very important spirit and if the president said to you, sounds good but i've been hearing a lot of talk about

user fees, should we finance the pipes in flint, michigan, the flood recycling on the west coast by charging more for water at the place of which it is use, or should i take advantage of the low interest rates that larry talked about and have a giant national federal water infrastructure project like eisenhower skyways. >> i think both. user fees are very important. we are having this conversation right now in california on somebody's user fees. the reality is, when you talk about water, we're not necessarily recovering the cost of investment that when you do make for the future. this is a very important issue, which is for every dollar of revenue we have to invest $4 for capital investment to uptake in future investment for our water infrastructure. so think about it. we are not necessarily paying the amounts that we have to for the water infrastructure that we have.

and goes back to the public knowledge i think, public awareness is very important. there is a lot of resistance toward a user fees, but as you sort of raise public interest, , to make them understand, the reality is water is cheap. think how much you are paying for your water bill. seriously, people are willing to pay $100 for their cell phone. every family member and the household has a cell phone and every bill is about that much money. how much are you paying for your water? in my house, single-family home, for family members, almost $100 for both water and wastewater. that's nothing compared to what we need, what advantages that water brings to you, which is about health, well-being, you know, daily needs. you don't even think about it but the reality is if the water doesn't come out of that tap, you don't value it. a quick closing mark, in the

energy sector actually we had the same thing. when it started in california we started having blackouts and brownouts. people realized i really do need this electricity to survive daily. people are much more willing to think about what are the next options. actually we did have user fees in california which that use of the actually people realize user fees are good. it can really show transparency in the way you're using them. if you can say i take this use of the anti-invested in xyz, collect the data and she could go back to the public and say what you invested on. the same thing for water. we had this public goods charge, we had user fees, they're supposed to be invested in energy efficiency, and innovative energy infrastructure such as renewable energy, and also low income communities which you can help them to pay

for some of the supply costs of their electricity rates. actually that is really good. it has a big impact and her energy efficiency efforts in california because it's been very significant in action understanding where our demand is going to be defeated. demand management isn't the cheapest and least expensive way of dealing with future needs that we have for infrastructure. and those these actually went to some of his water -- energy utilities to invest. >> lets turn to transportation. >> thank you. had a friend who is a fisheries biology. he thinks there's a really important, and i'm a transportation economist. i think transportation transportation infrastructure is really important. before i start, let me try to give you a little perspective on this. imagine taking all of the stuff that you buy in a year or the government buys on your behalf and stacking it in a pile and

then stacking the money that you use to pay for that next to it. that stack of money would be gdp. if you think of assigning those dollars to the factors that major pile of stuff, about half of the pile would go to labor. about half of it would be wages. think about assigning the fraction of the pile that goes to trucks and boats and trains, it would be about 5%. you can bring that 5% up probably get 10 or take 10 or 15% if you think about commuting cost and the time people spend in the course. it is like the health that self-help book site. the important thing is people, not things. so with that said how to think about how important transportation is? the problem with thinking about transportation being a small second is that we wander, slurry said, if we reduce the cost of things can we somehow match up jobs in peoples and tools and

buildings so that we can make more from less? so that the world works better and we are all richer cracks that process is hard to observe, and we should think about some examples. i think ed some point we want to be very careful about thinking which projects we find is right because that every transportation project is going to have that sort of magic effect of letting us make more from less. some examples, but it would example of classics. st. louis, the example of the public transit in detroit is the classic example of this. in st. louis, they turn the stop lights off at 6:00 on weekdays because nobody's using those roads. the problem in those places is that they're more infrastructure that we need. if we put more there and will not let people do things better. it's just going to be more something that's not used. another example, and this is something you see in the paper, let's build infrastructure to great economic growth. how might that work?

i want to think about another example. let's consider improving the i-95 corridor which connects providence where i live to new york and we will add a link the hallway and it will mean you can try from province to new york 10 minutes faster. probably cost $10 billion, maybe 20. let's think about how to migrate economic growth. how could that create economic growth? supposed that there's some company which as a consequence of that reduction in time to new york chooses to locate in providence instead of somewhere else. what that tells us is that company really doesn't care very much where it locates. if that company is liable only because it can get to new york in two hours and 50 minutes instead of three hours, and it's those people had some other thing they could do that was almost exactly as good. suspending that $10 billion to get to new york in 10 minutes instead of two hours 50 minutes instead of three hours doesn't give us a lot of that magic where we can combine people and

cash a lot better. now, if you look at the date on these kinds of things, it is really easy to find examples where that improvement in road connection from new york to providence will cause some business that would otherwise have locator in north carolina to locate in providence. that's not great economic growth. that's not making us richer. that's just change or production happens. so when you look at transportation projects, the first effect you should think of it is not that it is great economic growth but a shifting at around. now, if we think of a transportation project that way and we want to apply careful cost-benefit analysis, what should we do quick so first everything that's been said that that maintenance is right. maintenance is really good because it means you are fixing stuff that gets used. so right away you are devoting your resources to things that

available, we had this preface, lots of people at the use of the stuff so much so it's wearing out, let's spend money on that. what else could we do? the other thing we could do, right, if any transportation infrastructure to a place shift people and economic activity, where do we want people? we want people in the places they want to go or where they are rich. instead of building roads and places that are empty where no one wants to be or places where they are poor, build them in seattle, san francisco. if you live in seattle, statistically identical workers in seattle make almost as much, twice as much money as a same worker in southern texas. so build, this is a heavy lift politically. this is the opposite, the stated intention of the statement infrastructure package was to build things in depressed places. places. don't do that. build them in places that are booming, right?

because you expand the capacity of those places to help people and people go there. and there we are not banking on the magic of this thing is very hard to see and that i'm convinced is small that infrastructure lets us combine things better and make more from less. we are banking on the fact we know some places are better at making stuff and others. we can see that. that's easy to measure. let's get people living in places that are good at doing that. so little things beside that. don't build light rail if you need a subsidy. instead built buses. every time i think of providence, providence is a little town and it was completely honest commits out of the way and not very important. they want to spend $100 million to build a small a small right little system. you do the math on that come on the basis of the projected ridership.

these are projections by the people who want to get paid to build a thing. the taxpayer was going to be paying between seven and $10 per rider after they collected the affairs for everything a person who got on that train. okay? there's just no way to make that make sense. buses are the way to go. so train bad, bus good. congestion pricing. congestion pricing is also something that, we all like that. last thing is that sees arising. the sees arising. we still the 40 or 50 years before it gets to be a crisis. but if we fight that most of the time we will lose. yes, holland does it and will be able to do sometimes but most of the time we lose the battle against rising tide. the good thing is we have 40 or 50 years to plan. 40 or 50 years as a long time in the life of the building. so if you plan an orderly

retreat, it won't be a disaster if we stand and fight, i think i know how that story will end up underwater. so another part of this thing to be think about is we want to build our infrastructure so that we can manage an orderly retreat from something that we can predict will happen on the coast spirit is it going to be shorefront property or is going to be underwater? >> providence is subject to periodic hurricanes and is only above water because of the massive seawall. stick another reason not to spend money on a light rail spin that's right. the light rail system which would be underwater in 50 years. another good reason not to build it spirit the president has called you in spirit firstly, i would tell the president, repeat what you mentioned before, that everything i'm about to say and editing essay today is my own views and is not the views of the federal reserve bank of san francisco or the federal reserve system.

so i would start by asking what do we mean when you try to get the highest return on infrastructure spending, what exactly do we mean by the return? what kind of return? are we talking about gdp or employment or something more harder to measure, like public safety or some other type of longer run benefit. i'm going to focus my remarks on the macro economic return. think about gdp and employment. and so hear the cries were talking about, the return is really important. if we are trying to think of infrastructure spending as some kind of stimulus policy, trying to count this as a question you asked larry, trying to think of this as something that could stimulate the economy in the near-term, i think the economic research is not very optimistic

on that. so a special in the current economic environment. and so i think the case for a longer run positive strong return to gdp or employment from ever such as ben is stronger, and i will will come back to that. but mentions why the short run in fact i think would be likely to be quite low, there's three reasons. so first, theoretical research over the last five, 10 years has pretty consistently, to the conclusion that the short run economic multipliers, the bang for the buck, tends to be much i would be expected to be much lower in expansion and in recessions. so this is basically because you

have, when you have massive government spending, it tends to crowd out private-sector activity. and when you have an expansion, you're already at capacity constraints and so that crowd out the effect is going to be bigger. so you can have, so the theory is sort of pretty clear that the multiplier can be low and expansion on government spending in general. the empirical evidence that i've done in papers i've worked on and that i'm familiar from others, empirical evidence on the short run multiplier to government spending, and especially to infrastructure spending, also suggests that it slow and expansions. so this is the short run. so i did a paper a few years ago with a colleague of mine, former colleague of mine for the macro annual conference ever look at the dynamic path of gdp and employment in response to shocks

to infrastructure spending. so we were looking specifically at the experience of states and how states get different amounts of federal funding for highways from the federal government. we want to export the variation across states and when you get more, do you do more in terms of gdp or employment in the near-term and over the longer term? what we found was that on average, you get a shock to federal highway grants, funding for projects, the lead to an increase in state gdp immediately in the first one or two years after the shock. but then it faded away. and then you got the cigarettes affect like six to eight years later. so i'll come back to that second round effect in a minute but in terms of the near-term effect, we found that wasn't there on average, but when we looked at

whether that affect was different to bid on whether the state was in a recession or expansion, without the the effect was entirely from recession. basically if you're in an expansion we found no affects on gdp or employment in the near-term from this shock to infrastructure spending. again, that's aside from the longer run benefit or the medium run benefit that we did find. so the third reason why you might expect a short run multiplier to be small front infrastructure spending is at least if you're thinking about employment, infrastructure, projects tend to be not very labor-intensive. ..

in infrastructure spending. so that if that comment that down the road of fact was quite sizable and didn't seem to matter what the state of the economy was when the funding started. so there is a certain stronger case to be made for infrastructure spending having a longer run or medium run benefit. and those benefits, true for employment and gdp because the benefits are basically a supply-side. what happens in terms of the

macroeconomic theory, that the keenest that you have a long time to build lives of infrastructure spending. you have a lot of construction activity over many years, but there is no benefit to the private sector until many years later come essay on average six to eight years for a typical kind of transportation project. so when the public capitol comes online, investing in this for several years and finally you have new rich, new highway or whatever. that is when you get the supply-side benefits. product to be increased. private sector in general becomes more project that because you have this improvement. so that, that certainly they are and i would say if that is the goal, trying to get a higher return in terms of longer run or medium run economic benefits, and then i think there is a strong case to be made.

and then, so lastly i would just say in terms of thinking about -- we are going to do infrastructure spending. no matter what. just tell me where is the highest return, one thing i would say is that putting the money through state and local government to me seems like the approach real way to go because some other research i did about whether state and local governments actually spend the money that they get from the federal government on transportation on transportation. there's been concern to the 2,002,000,000 fact that the money, the federal government state and local government would not be sent on transformation. it would be used to pay down debt and news to prevent tax

increases cannot be spent on other things. so we found again that the states actually did spend the money and it was fleeting than to spend even more. they ended up spending even more than a dollar over the next three years on transportation. they would like to wish list, so they are well positioned to spend that money at baghdad and it seems empirically they do spend money on transportation. >> so why should i believe that the federal government has typical of ranking transportation projects, but the state and local governments are enlightened and will not be influenced by politics. >> a day traditionally we will

have in our highway bills. they pay through federal highway grants first dates. that system has been in place since the highway system. because of that system, states maintain these lists. they try to identify projects they would like to work on and they have a nexus to system plays so having the federal government choose. >> they are making efficient traces. >> your return. donald trump just called. >> i was going to mention five consideration to think about transportation, infrastructure and i will turn to the project. we will take those into account. it's a good thing we had to

spend money on. so the first one, we've covered all these things. i'll go over it last. that's obviously a critical in my world. i want the benefits to exceed cost and this is a problem. the system is not designed to do that. as we know, money is allocated by formula. the federal money goes in but it's not necessarily going to do serious in the country that will generate the highest return. there's certainly no cost-benefit from their. once you go inside and again it's not just going to those parts of the state that would generate the highest return. everybody gets in on it so you have this constraint immediately built into the system. and bad from other regulations on capital waiver and really

you're not going to expect to read the whole thing is designed that you get many projects are benefit. that said, the thing has to be politically appealing. this is a politically pervasive system and if i'm going to suggest a project, what am i going to get out of it? that's pretty much how it all works. according to project as opposed to maintaining our good things and help you get elected, you can say this is what i done for you and is a relic of project that generates a lot of benefit. wondering what that possibly is. third consideration technology a critical part of infrastructure with technology. there are many things that could be done off the shelf technology. do this, do this. it will make us no better and it's not done because we have status quo bias of how things

work. do it this labor not been a change i would do it. i want to come up with something technologically new. it is something that we haven't done before with the very high technology component to it. so to illustrate, here's something we can do and by the way after you see how cool this is, there's a few other things. with consideration that has been mentioned about, pricing and invest in. this system is not designed to be efficient, but in a very discretionary way the prices are inefficient below marginal cost and investment has not been based on benefit cost analysis and that really skews where money goes. in a sense you're defeating yourself often times not making the best use of capacity. i want a project that's going to illustrate the importance of investment with so many distortions that we have now. quick footnote now.

i want to talk about the map row and micro. they should be censored of conflict or at least there is a con like. all of the concerns about efficiency benefit cost analysis so on and so for should reinforce and be consistent with the macro tip on how we pursue infrastructure. in other words can ask the father not a question. i have an amount of money in and i want to increase employment. what should i do? subsidize out poe? subsidize capital or subsidized labor? so your brain is working. you are writing down a production function, derivatives to get the input demand and for what parameter values is it going to be given the amount of money i'll get more employment for subsidies to labor, subsidies to capital, subsidies throughout that period whatever

the areas commended churches that we have in capital are going to really hurt the capital infrastructure subsidy trying to solve this macro problem. macro will perform better and that is how we really want to sell to improve employment through capital association, but right now given how we do things it's going to be the works. find out they, privatization, i do not been public private partnerships. i mean competition. this is what this is all about. you want to get good results, private entities. they get together. that's not competition. i want to think about a way of exposing the important privatization. those are my considerations. what's my project?

i want to my minutes. [laughter] >> two minutes in 42nd. >> okay, my project is runways at major airports along the east coast in the midwest. heated runways and then spending money, let's see, let's eat at the tarmacs in the terminal areas, too. they are exactly what i say. certain people heat their driveways, snow comes down. there's no snow accumulation on these things. green bay packers football stadium, they have a heated field. heated runways are exactly the same thing. the snow forecasts coming, crank the thing i come up coils underneath. there will not be a single millimeter at accumulation.

if it hits, it's going to melt. you are not going to have two feet of snow accumulated or one feet, or a unit in as part of the world, three inches to mess things that. why is this benefit cost? the savings are enormous and nice. when you have delays, they turn into cancellations. the cost u.s.a. travelers multiplying through. the commute hours, sometimes days. these are valuable people. you can just see things coming. cost to airlines. their planes are stuck. moving anywhere software should be on the west coast or wherever. put all that together, the capital costs aren't that much. operating costs through there. totally a winner. who's going to be opposed to this? technology, not the coolest thing in the world. all you know, one per centers

have heated driveways. we could have done this decades ago, but it is still something. pricing about that? what is our problem? beyoncé, jay z, they come in to see the outgoing president and ceo to see the new president. they pay nothing. commercial people have to pay a lot more. that is putting a lot of pressure that the runways going to drop the distortion price and investment are added to the problem. last but not least is the punch line of the whole thing. privatization. the president says to me, this is an obvious idea. why don't the public sector airports do this? what incentive do they have to do something like this? seriously. why would a public-sector airport, which certainly is not

in the business of maximizing economic welfare. you can blame the way the system is set up. you can blame the kind kinds of managers a hat. they are not going to say save travelers times. they are going to get their landing fees. financially they are not that much better off. we will get our money anyway. consider the private sector. hartford connecticut, providence rhode island. you don't think one of those airports with a let's put in a heated runway and charge people for it. just think of the benefits they would get from doing something like that. i have no doubt it would privatize our airports initially at the market works, someone with experience up with these

things. they realize gas, people really value a heated runway. there's lazy can work this thing out and lo and behold the others will say we better do this, too. people will calm and do things they are. the only reason is if we have all the warming number not going to get going and why. but mr. president, i don't think this is a hoax. >> i will ask you to respond to something said a couple of times, which was let's not waste a lot of money it has basically those people will be more dead if they move to seattle. is that something -- how do i square that with your telling me we have led and water pipes all over the country and we have to spend money, maybe it charge user fees to replace tom, even

in cities where we lose population. >> first of all, it's really hard to move from one community to another unless you have jobs for them. if you don't have skills -- but i think -- think about it this way. you have communities that are capable of covering the cost and there is enough option to try and pick some of the federal money between the communities that really do not have the means to deal with the water infrastructure challenges. and not necessarily spend this much money for the communities that do how do capacity. they can deal with their own challenges. i know this might not be a very

popular statement or not necessarily an economist, so i'm just saying from a social active it might be a way to go. one thing i want to mention is we had the systems that we have in place on six associated with them. they didn't in operation is a fixed cost. even if you don't use a drop of water, that's maintenance and operation system has to go on. so it's very important to remember that the economics that are used to price water is also what we really need. every drop of water you pay a dollar. you had that 40 cents. you stop using mac outline. the person is operating and maintaining the infrastructure

still needs to pay for that system. connecting the rabbinate to the amount of water people years just doesn't work that way. one thing the energy sector debt we are talking about a lot right now is sort of restructuring the rate process, decoupling, trying to disconnect the cost you >> is equally we should pay for water that would pay for electricity. so the two things you would tell the president is the economist may tell you to have the admin to declining cities, but socially you think that is a bad idea and you are willing to subsidize wanton that the people of san francisco pay a little more further water. secondly, the pricing transportation is bad, pricing monitor is even further from the ideal. >> can i add something. something that i want to

mention, roads, bridges, think about water while you're doing it. desired dollars. if you think about collecting some of the storm water on the runway at. >> with the smart power grid -- [inaudible] if any of you want to weigh in on the things that transportation and then i want to go to the audience. is there anything you want to add? >> do you like heated runway is? >> sounds good to me. you don't need them in san francisco. >> you do. of course you do. >> in other words, if we get an half an inch of snow tonight in washington and, you may not get back to san francisco so you should be willing to pay for that. then return to the audience here to question are in the back. brittany, please.

>> hi, tracey gordon from the urban institute. the previous ban on this one have put it on the question of politics, but the politics and economics of transportation of structure are very important. i have to ideas that i want to put forward to the panel and i wonder how you would react to them. they are still run in infrastructure never understood because it do value of infrastructure is reflect it in property with the skyscrapers of transportation in hong kong, there should be out there saying look, i'm doing deferred maintenance. it should be increasing property values and homeowner should be chomping at the bit to reward them at the ballot out. i don't understand why there isn't more disclosure and perhaps the government could descend into toothing on state and local governments to do that. there was an accounting role that the state and local governments were opposed to and perhaps it could provide some coordinating mechanism. i would love your reaction.

secondly, dh yet to a veto power being distributed is true of local government. a lot of political fragmentation you have to get approval from local concerned citizens, which was the tenor of the comment earlier, but it kinases a decent social districts that overlap. why can't the federal government by her local government to get their ducks in a row before awarding of the heads of discretionary money. >> thank you. over here. why do you come over on this side. >> hi, stephen hendricks and yet it seems like the theme from this panel and a discussion earlier is we need a big increase in infrastructure and invest in it, but the reason that is publicly popular are good reasons to invest in infrastructure in the real important long-term reasons aren't necessarily that important to the public.

going back to david's premise that you're affirming the president-elect on undersell a large investment, is it better to try to the average of the public seems to care about and do it in a good government sort of way or do you need to educate the public on why we need to make long-term strategic investment that for some reason, the pothole argument doesn't seem to resonate with people that jobs and jobs earning the gdp do. >> i think will talk about politics more later. the gentleman right here. and the guy in the back. >> retired government. the situation, it has becoming critical of the fact that the water level is strapped to the point where not only is it a question of sufficient water supply for the area, but also to power electricity generation. it's never been as low as it has

been. recent rains occur but i don't know how effectively communities. is there a possibility could be converted to charter foe greater portions of it and the evaporation rate would be greatly decreased and water supply would be more constant. >> guy in the back. >> charros lane, "washington post." one thing nobody in either panel has yet discussed even though i'm sure their thoughts about the infrastructure bank from the federal infrastructure bank and given all the questions that have been raised about efficiency of finance team and choosing projects. if anyone has a anyone has upon him that i'd be curious. >> just respond to one question about leveraging with the public release is just a warning that when you tell the public something is going to create a lot of jobs and it doesn't. you end up with long-term costs. so that's just my 2 cents.

infrastructure bank, anyone? >> can i follow-up on that? that addresses the first two questions the politics and the timing, what everything before is the short run effects seem to be mall. so it is going to be damaging in terms of the long run politics to to sell infrastructure is a mere terms to mail us. i think that kids to some of these, like tracey's question about politics that a mayor, governor or president trying to sell public on an infrastructure plan now, the political economy problem is that the benefits may not come for many years in the future and that person is out of office by about point. so they have to be very -- maybe the second question that you need to educate the public of what is the point of this, what

is the benefit of this to sell them on something that -- where the person selling them is not necessarily going to be in office to take credit when the benefit happens. >> it seems to me the deferred maintenance thing is a frustrating one. all of us who live in washington d.c. are very aware the cost of the deferred maintenance and the washington metro doesn't need any of us to want to give more money to the washington metro and nobody ever was willing to pay for an escalator that didn't break. very hard to illustrate to people. it seems to me that does take extraordinary foresight and leadership of politicians who tend to be rather short term. >> i think that the guiding principle is one that both ed and larry spoke to you it's important to connect the cost of services with the price. if you want people to pay to use things, something that reflects the cost of providing the

service and to get and that you make funny mechanisms complicated and not transparent, and except harder to happen. the rule should be to make funny mechanisms employed transparent and as people propose and to tuition and funding mechanisms that are broke, that those are things you should look at suspicion because it's harder to untangle the relationship between what people are willing to pay for a service and what it actually costs. >> i want to get the point of my presentation across because i'm not turn people miss the point. some basic considerations to justify projects. a punchline was theirs no way the public that there would ever do anything like this. so there is no way i am going to say we should increase infrastructure spending. not in this political system. this is the whole point.

it is so inefficient. it is so brittle status quo bias. everywhere you go along the line, it is not serious to think about reforming this and inefficient way. this is not an accident. they are very powerful interest along the lines as well as just status quo bias to do it. there's something like infrastructure bank. this is the kind of thing that is thrown out. what about this, what about that? what problem are you trying to solve as opposed to a problem when you continue to feed into? the infrastructure bank is just more of the same. we are not going to be improving efficiency with this thing. in other words and terms of where the resources are allocated for how the operations are run in terms of pricing the better for how new technology is put in. then that's going to happen. this is what we are dealing with. fortunately, back a month ago we

had a program economist vehicles if the private sector is coming through with innovations that are going to improve the performance of the answers rapture. in the process they really may expose the vast inefficiencies of the public sector and the things they could have done that haven't done. but we will see you fortunately, that is where things are moving and that is where we can see improvement. we will never see them at least in my lifetime as the public during all the sort of simple names are just not addressed in the fundamental problem. >> last word. >> i talk a little bit about that. a couple years ago or last year we started having -- [inaudible] the lowest margin for the community to get access to this money was $5 million. there's a lot of innovative

clutter projects out there such as risk a claim view surfaced on water project and infrastructure, the dave mather that that limit. you never can get to that to be able to access this. it doesn't matter to infrastructure, anything that we put out. we need to be more forward looking. we need to think about what is it that we need in the future and how we need to set up these financial systems are mechanisms that would address the problem rather than trying to sell the 20th century problem which we don't have anymore. >> i think that one thing that comes through all your presentations is that we should be careful about we are solving solutions to the problems we have. if we have trouble raising money

, that is something the federal government does well. if we have trouble having highest return projects that are sent in the public sector doesn't do well. if we have a shortage of jobs, we know they could do something about it in the build an infrastructure takes -- if there's one thing that comes through as you said, make sure that the solution you have is the problem at hand. what i am going to dismiss this panel and invite my colleague to move fast to private investment investment -- human capital investment, both private and public and encourage you to stay for that and if you stay for that, you get a free lunch. [applause]