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Smart Ways to Spend Infrastructure Dollars

Yesterday I had the opportunity to attend a presentation hosted jointly by the Ontario Centre for Engineering and Public Policy (OCEPP) and the Martin Prosperity Institute at the Rotman School of Management of the University of Toronto.

The presenter Chris Kennedy spoke about how Ontario, namely the Golden-Horseshoe, should develop infrastructure over the next 10- to 20-year horizon. Along with his colleagues Bryan Karney, Eric Miller and Marianne Hatzopolous they wrote a paper for the working paper series, Ontario in the Creative Age.

Here is a summary of the interesting Facts of Kennedy’s presentation:

Energy and Moving People are the key to success for a city
But how do you do this? In order to mitigate the effects of a recession city building is key in a deep recession. Additional ‘clean’ energy is key to a green and prosperous future. We should always progress for greater connectivity of people and places.

The Economic Lenses to Look at Infrastructure

  1. Construction Jobs: in an economic decline the private sector can no longer support a mass working force. Therefore the public sector must step in and support these skilled labourers and offer them jobs through additional projects.
  2. Multiplier Effect: These workers that just had new jobs created in the public sector then spend their wages which in turn generates economic stimulus. As construction increases there is a demand on the materials side, another economic stimulus.
  3. Increased Productivity: infrastructure increases the size of markets, which enables firms to increase productivity through economies of scale
  4. Changes to Consumption: Instead of thinking about economic stimulus to grow the economy, Kennedy challenges that it is economic investment that is needed to grow the economy.
  5. Quality of Place: Good places to live attract knowledgeable workers. This really has to do with Richard Florida‘s notion of the creative class, which he discusses in his book Who’s your City?

Other highlights
Long-Wave Theory (Kondratiev waves)
This was popularized by Schumpeter who coined creative destruction, which is ‘economies grow by destroying the previous eras to create a new ones.’

Green House Gas (GHG) Emissions
We MUST decrease these. Weather it be by the introduction of the electric car, mass high-speed, electric rail, etc… we must decrease our dependence on resources that create mass amounts of GHGs. Kennedy advocates a high-speed, electric rail system for the golden horseshoe (in the article he and his colleagues wrote it shows the number of people that drive in from the suburbs of Toronto). He also believes that radial cities are necessary for a reduction in GHG emisions. What Kennedy didn’t mention here is that there needs to be a media campaign to shift social attitudes.

It was a privilege to get to see this presentation. Donald Wallace, the director for OCEPP has a taken under a huge project to try to meld the technical (the engineers) with softer talents. Thus far Wallace has recruited a number of brilliant engineers to work in conjunction with him. I look forward to seeing more work come out of the OCEPP.