New Yorkers know Felix Rohatyn as the banker who helped save the city from failure in 1975. A former Lazard Freres managing director and Clinton-era ambassador to France, Rohatyn recounts flying to New York 34 years ago to meet with then-governor Hugh Carey.
“I did a quick inventory of what the city’s bankruptcy would mean. It wasn’t simply that bills would not be paid. No less significant, it meant that the funds necessary for the upkeep of the city would also be frozen. A great city would deteriorate,” Rohatyn writes. “I would do whatever I could to try to help prevent such a disaster.”
Rohatyn did much but the city’s infrastructure was already suffering. It wasn’t until the early 1980s that the state starting putting money into its decrepit subway system, helping set the stage for two decades’ worth of slow, hard recovery from negligence.
Today Rohatyn rightly worries that the nation has ignored core assets like bridges and levees – and, worse, that there’s been little interest in such investments or much public faith that the government could do the job. In his new book, “Bold Endeavors,” Rohatyn recounts how his visceral reaction to the fiscal emergency that last imperiled New York’s physical infrastructure has shaped his thinking.
He offers 10 case studies of the government thinking big and – more or less – executing those public works projects correctly: From the audacious Louisiana Purchase to the construction of the Erie and Panama Canals and the Interstate Highway System to the enactment of the Homestead Act.
Conservatives should take note: When it comes to big infrastructure, there’s no escaping a big government role. As Rohatyn writes, private endeavors to build both the Erie Canal in the early 1800s and a toll-funded nationwide highway system more than a century later failed repeatedly.
Private-sector visionaries often have been the first to see what could be built before anyone else did. But to build flood protection for New Orleans or a national network of safe, modern roads, either the government funds and oversees the project imperfectly or it doesn’t get done at all. (Even the New York subways were conceived and funded by the municipal government.)
The Erie Canal offers hard-headed lessons on how to get some of it right. After the feds had delayed for too long, New York State, with half a decade of its own starts and stops, eventually funded the construction of the canal.
Because New York finally invested its own citizens’ resources, “after decades of false starts and apparent dead ends,” Rohatyn writes, it got its water-highway nearly four decades after first considering the idea. The canal’s effect on the state’s productivity, in opening up the rest of the state’s resources to the city and to world markets, made it worth the wait and cost. (Time and cost overruns on big projects aren’t a recent invention.)
Today again, New York should stop waiting for the feds and find room in its own massive state and city budgets to invest aggressively in transit infrastructure.
Rohatyn’s solution is a federally seeded National Infrastructure Bank to help fund the nation’s best infrastructure projects apolitically, “in a financially disciplined manner and on a project-by-project basis . . . support[ing] those investments that had the prospect of earning returns over the long term.”
But a new way of financing projects won’t create new money. It can’t save us from having to cut something else out of government budgets – or having to raise taxes, tolls or some other revenues significantly – to fund important projects.
Nor can it save the politicians from themselves. Infrastructure investment is just a math problem that must be solved by political will – and not having made such choices for decades is our problem now.
It would have been good if Rohatyn had shared his personal insight about how to regain the people’s trust in the public institutions responsible for public works.
Still, reminding readers that the government has in the past done one of its most important jobs competently is an excellent start.
Nicole Gelinas is a contributing editor to City Journal.
Bold Endeavors
How Our Government Built America, and Why It Must Rebuild Now
by Felix Rohatyn
Simon and Schuster