Friday, January 18, 2013

Infrastructure is the Key

Carlos Ghosn is not exactly a household name. For one thing, how to pronounce it? (Apparently one just ignores the h and the s and goes with "Gon". I'll refer to him as Carlos - most of us can handle that!) Carlos is the embodiment of successful international business. Head of the Renault-Nissan Alliance, uniting French and Japanese automotive giants, he was born in Brazil, completed secondary school in Lebanon, and earned his engineering degree in France. In 1996, after spending his earlier career in the tire industry, he joined Renault; three years later, after a corporate alliance was forged, he became head of both Renault and Nissan. This alliance (which Carlos stresses is not a merger) manufactures one tenth of all the automobiles in the world.
Co-Chair Carlos Ghosn captured during the World Economic Forum's India Economic Summit 2009 held in New Delhi, 8-10 November 2009. (This is a file from the Wikimedia Commons.
Tuesday evening (January 15) he took time off from the Detroit International Auto Show to speak at the University of Michigan School of Engineering. The house was packed in Stamps Auditorium, and a video link was sent to another nearby auditorium. Carlos, cutting a dapper figure in a grey silk suit, took only about 20 minutes to speak before turning the session into a lively Q&A. His major theme was the importance of research in the automotive industry, and the rapid changes he expects to see during the next decade.
But progress in the auto industry is not the focus of Wake Up Washtenaw. Of course, we applaud the emphasis Carlos and most other auto makers place on reducing or eliminating emissions and becoming less dependent on non-renewable energy. Increasing safety in driving, another research theme championed by Carlos, is certainly a laudable goal. But we remain concerned about several topics not addressed by even forward-thinking auto execs like Carlos: the sheer mass of vehicles and the space they demand on the planet in competition with people; the health problems caused by too much personal automobile use; the growing cost of transportation as a percentage of family income when autos are necessary for productive living.
So why blog about him? Here's what really jumped out at me: the importance Carlos attribures to infrastructure in the overall economy of a region. One of the students asked Carlos about "global gridlock" - the problem that arises all over the world when too many cars crowd too little road space. Here's what Carlos had to say: investment in infrastructure is key to growing a region's economy.
Of course, he was talking about automotive economy, but his conclusions are clearly applicable to economies as a whole. He drew a quick comparison between three countries: China, India, and Brazil. China and India are roughly equal in population, very different in culture. Brazil has much lower population and is blessed with abundant natural resources. Which of them should have the fastest-growing economy? Here's my transcript of the core of his statement:
Brazil is an extremely rich, rich country. Even with this, China has a much higher growth rate than India, and much higher growth rate than Brazil. It's really surprising! You say, well you know what? Brazil should grow more than China, because there is less population and there is a high density of leveraged [?] companies with a lot of resources, but still the growth rate of Brazil is lower than China. And if you try to analyze why, at the end of the day you come - and I'm not trying to make a kind of focal analysis of it - but I would say that the one fundamental factor is, the Chinese always and systematically have dedicated a lot of resources to their infrastructure, and they have been building infrastructure before people need the use of infrastructure. ...
And in fact, our own investments, when we have been studying to go to a country and how much we should invest in a country, always takes into consideration how much funds the country – how much attention the country is dedicating –  to developing infrastructure.
...frankly, nothing can replace the necessary investment in infrastructure, especially important in emerging markets.
All very well for emerging markets, but what has that got to do with Michigan? I'd say, a lot! We are struggling to emerge from a prolonged recession, but our income and education levels have declined rapidly over the last ten or twelve years. If we continue on this course, we'll find ourselves clearly in the category of what people politely call, "emerging economies". It's critical for us to listen to the advice of people with wide experience of how "the world" works. We must not take refuge in the mantra, "But We're Different!". Because we're not so different that the laws of business economics don't apply to us.
So when Gov. Snyder, in last night's "State of the State" address, urged the Legislature to provide revenue to improve our transportation infrastructure, he was talking business sense. Republicans may complain that he's just trying to levy a new tax, and "No New Taxes" has been their live-or-die motto for years. But "No New Taxes" = "No New Investments", and what business has ever succeeded with such a motto? On the other side of the aisle, the Democrats are complaining that the taxes are unfairly distributed, with the greatest burden on the middle class. But we must all share the burden - quibbling about who's shouldering the heaviest load gets us nowhere.
The sooner we all shoulder the responsibility for improving our infrastructure, the sooner we'll see more investment in Michigan by businesses of all kinds - because all kinds of businesses, as well as private citizens, benefit from robust, reliable, sustainable transportation infrastructure. What's more, investment in infrastructure is investment that largely stays in the state and in the region. It's an investment we profit from three times: first, when the money is spent in our region to do the work; second, when the improved infrastructure brings us better transportation options; and third when we attract greater investment from out of state.
What's to lose with that? So please, Republicans and Democrats, stop the quibbling and raise the revenue - fairly - for diverse transportation infrastructure!