Home Improvement

Category: Top News Published on Tuesday, 29 May 2012 12:21 Written by Phil Power

Travel often gives you new ways of looking at things … and that is certainly true of travel to China. My wife Kathy and I just got back from visiting our son, who lives and works in Shanghai.

We were there for 10 days, and it’s good to be home. But even through the fog of jet lag, the trip gave us plenty to think about.

And the main thing that hit me is what the Chinese are doing with their infrastructure. The trains are amazing. Our run from Beijing to Shanghai ran silently at a posted 303 kilometers an hour (that’s 187 miles per hour!) on an absolutely smooth rail bed.

Seats felt like the first class section of an airplane, with attendants bringing lunch and good views from wide windows.

The roads were wonders to behold, especially in Beijing, where virtually every one had trees, flowering roses and shrubs planted alongside, all well maintained and weeded. The expressways were well designed and in good shape. Traffic congestion in the cities was worse than anything we see here -- which isn‘t surprising, since automobile ownership in China is growing at an enormous rate.

The contrast with what we have here at home could not have been more striking. We’ve basically strangled our railroad system.

Sadly, we get delighted at news that the rail line between Detroit and Chicago will be improved enough to run at 60 mph. And, as anybody who drives in Michigan knows, our roads are still a mess.

So what’s going on here?

Naturally, we need to consider that it’s easy for the Chinese to build roads and railroads: The government doesn’t have to worry about private ownership or public opinion. It controls all the land, and ordinary people don’t have much say in an authoritarian regime.

China also has lots of cash to invest in their infrastructure -- which, sadly, isn‘t the case with us anymore. And when you have a dictatorship as they do, it isn’t hard to make serious political decisions and get them done quickly. Meanwhile, America’s politics are so gummed up these days that it’s hard to get anything done.

Part of the problem, clearly, is that our system is set up so that many varied interest groups are so deeply embedded in the political system that they can veto just about anything they don’t like.

Think Ambassador Bridge owner “Matty” Moroun and his so-far successful efforts to prevent building the New International Trade Crossing over the Detroit River, a bridge virtually everyone else in the business community says is vitally necessary. Think Detroit, where politics and unions are hobbling efforts to implement the consent agreement that might save the city’s finances.

By contrast, one of the remarkable successes of America’s private sector is how in recent years the processes of “creative destruction” have weeded out the inefficient and ineffective.

Whether working through hedge funds and private equity groups (think Domino’s Pizza) or the workings of the bankruptcy laws, American companies as a whole today are far more productive, efficient and profitable than they were just a decade ago.

Why hasn’t something like this happened in the public sector, where things like transportation infrastructure, health care and education are far too ineffective, bloated and unproductive?

One answer: Such activities have been sheltered for years from the bracing winds of competition by government preference and support. So, argue many, take away their sheltered monopoly status.

For example, to force public schools to improve, create competing charters. Those on the right usually want to do away with as much government as possible. That may be a valuable instinct, but taken too far, it runs the risk of throwing out the public interest baby with the monopolistic bath water.

Short-changing our schools and universities, for example, hasn’t seemed to make our people better educated.

Meanwhile, those on the left resist meddling with government-protected sectors, because they fear damaging society’s safety nets. But without the kinds of far-reaching changes that have so improved America’s corporate sector over the past decade, we could easily continue to spend more and more -- while achieving less and less.

To me, it seems clear that a more fruitful approach would be to identify and attack those interests embedded in the system that hold veto power over efforts to change things. In the case of schools, look to the unions. In the case of public transport, look to the veto power of public sector unions like Amalgamated Transit Union Local 312 and AFSCME Local 36. They represent the Detroit bus system’s drivers and mechanics and have held up efforts to create an efficient region-wide bus system. In the case of health care, look to the enormous market power of the big drug and insurance companies.

Don‘t expect hospitals to be change agents either; they pretty much like things the way they are.

How do we get past all this? What we need to do is identify and sideline those special interests that have veto power against changes to the workings of our public sector institutions. That approach, neither Chinese authoritarianism nor left-wing protectionism, seems most likely to offer an effective policy route to change.

The kind of badly needed change, that is, that Michigan needs to compete for jobs and prosperity in the future.

   ***

Editor’s Note: Former newspaper publisher and University of Michigan Regent Phil Power is a longtime observer of Michigan politics and economics. He is also the founder and chairman of The Center for Michigan, a nonprofit, bipartisan centrist think-and-do tank, designed to cure Michigan’s dysfunctional political culture. He is also on the board of the Center’s Business Leaders for Early Education. The opinions expressed here are Power’s own and do not represent the official views of The Center. He welcomes your comments at This email address is being protected from spambots. You need JavaScript enabled to view it.