President-elect Trump’s infrastructure plan should start here

Justin Vélez-Hagan,

In a shift from the traditionally parsimonious Republican platform, President-elect Trump has promised a national infrastructure spending bill to promote economic growth.

Maintaining and revamping the country’s roads, bridges, tunnels, and more are necessary for continued commerce. However, an even greater contributor to future growth (and a better return on investment) will come from building infrastructure that will provide for a more competitive technological ecosystem.

Our recent economic stagnation has had a greater impact than most of us may realize, and is the reason behind both parties’ election-year proposals to expand infrastructure development.

While we are adding jobs consistently, we are not increasing nearly as quickly as we have after most recessions (leading to a large pool of underemployed individuals and historically-low labor force participation), which has curtailed our investment in education, healthcare, and other social programs. 
Overcoming this slow-growth barrier will benefit everyone.

To do so, we should not limit our focus to traditional forms of infrastructure, but rather consider the “hidden” infrastructure that has an even greater potential to lead to fast, long-term growth.

If the government invests in infrastructure that ensures the advancement of the technology and telecommunications sectors, but more importantly does more to incentivize the private sector to increase its own investment and participation, it will not only impact tech, but will drive growth in nearly every sector of the economy.

In fact, a recent paper by the Progressive Policy Institute’s chief economic strategist concluded that improving infrastructure that allows for the inception of the next generation of wireless communications would lead to an acceleration of the slow-growing “physical industries” comprised of manufacturing, health care, and construction (nearly 80 percent of our economy) that increasingly depend on wireless communications in their everyday business operations.

The improvement would likely be an additional $2.7 trillion of economic output by 2030, or nearly a full percentage point in GDP growth, and at least one million new jobs in these industries. Given the proliferation and growth potential of so-called “Smart Cities” and the Internet of Things (IoT), the potential for the telecommunications sector is much grander.

The Smart City market is expected to triple to $1.5 trillion over the next few years, while the IoT market’s exponential growth will lead to a seventy-fold jump over the same time.

Industries across the board are increasingly interested in implementing new technologies that allow for greater efficiency and bottom-line growth, therefore policies that extend this growth to other sectors will substantially improve our long-term development opportunities.

Doing so will require expanding our focus to the infrastructure of the future.  While it may be hard to predict trends in the technology sector next year, no less five years down the road, there are several areas that policymakers can prioritize to ensure that we don’t stymie the growth opportunities that are emerging within the tech sector.

Increase market-based spectrum management.  Spectrum is the bandwidth required for wireless products such as IoT and mobile devices. It is limited and the government has been hoarding immense amounts of it for years, unsure of whether companies can be trusted to best use the valuable resource.

Some have estimated that the private sector will need approximately three times today’s bandwidth just to maintain the current trajectory of growth over the next few years.  While a small number of spectrum auctions will take place this year, they will not be enough to fill future needs.  The FCC and NTIA should consider policies to increase the spectrum available to investors and growing companies.

5G and other wireless infrastructure.  Again, our projected needs are outpacing existing levels of infrastructure in the growing wireless world. However, with the expected release of fifth generation mobile technologies (5G), combined with greater consumer demand for mobile devices, businesses and individuals are going to be putting a lot of pressure on existing transmission towers and other sites.

In fact, we will need four times the existing number of cell sites to maintain our current levels of growth. “Small cells” create an opportunity to improve communication without putting up additional, giant towers, but policymakers need to catch up to the trends to ensure they don’t impede progress.

Modern electric grids.  All of the technological advancements in the world will be meaningless to extra-tech sectors if the nation’s electricity grid isn’t reliable. Currently ranked 16th in the world in terms of reliability, we continue to maintain, in some cases, infrastructure that was first built in the early 20th century.

If we want businesses to invest in new technologies that make us more competitive with the rest of the world, we must ensure that we build a modernized system for managing our national demands on this form of energy.

While national, state, and local legislators across the country will think of an unlimited number of uses for new spending, Congress and the new administration should create a standard framework that ensures we continue to invest in those areas that offer the greatest potential return, while also creating a regulatory environment amenable to public-private partnerships and increased private investment to enlarge the impact of our efforts beyond the government’s capabilities.

Vélez-Hagan is an economic policy researcher at the University of Maryland-Baltimore County, founder of the National Puerto Rican Chamber of Commerce, and author of The Common Sense behind Basic Economics (Lexington Books, 2015). @JVelezHagan