Public-private Partnership as Remedy for Crumbling Infrastructure: Is this Hope Looking for Reason?
23 Pages Posted: 11 Apr 2019
Date Written: April 11, 2019
It has become commonplace to describe publicly-provided infrastructure as being in a sorry state, and to advance public-private partnership as a possible remedy. This essay adopts a skeptical but not a cynical posture toward those claims. The paper starts by reviewing the comparative properties of markets and politics within a theory of budgeting where the options are construction and maintenance. This analytical point of departure explains how the incongruity between political and market action creates a politically-generated bias toward construction and away from maintenance. In short, political entities can engage in an implicit form of public debt by reducing maintenance spending, only the need to roll over debt does not manifest in higher interest rates but rather manifests in crumbling bridges and other infrastructure.
Keywords: public-private partnership; dyadic vs. triadic partnerships; construction vs. maintenance; budgetary politics; implicit public debt
JEL Classification: D78, D91, H54, L32, P16
Suggested Citation: Suggested Citation