The infrastructure cartel trap
Photo Credit: Getty
At last week’s BlackRock US Infrastructure Summit in DC, federal and state policymakers, investors, and corporate leaders gathered to map out the next wave of large-scale infrastructure tied to AI, energy, and logistics.
The message was one of mobilizing private capital and labor as well as scaling up major projects. Several speakers noted the failure to build urgently needed electricity capacity and the bottlenecks created by permitting delays and NGO litigation.
But the framing was otherwise overly infatuated with coordinating private goals with federal priorities. Already, the federal government dominates many economic sectors, with infrastructure arguably the most affected.
The bipartisan public-private partnership (PPP) model on display was familiar: government sets priorities and “invests” taxpayer dollars; institutional investors finance projects alongside those federal appropriations; and corporations operate within a framework of regulatory certainty.
Regulatory certainty is a good thing. But the broader framework on display at the BlackRock summit and in the wider discourse is one of cartelization masquerading as infrastructure policy. And the regulatory certainty of PPPs is illusory, as regulatory strings remain attached.
Rather than enabling robust competition, today’s dominant approaches tend to channel investment into top-down, politically sanctioned lanes while inadvertently or otherwise locking out alternative, bottom-up models of infrastructure creation. It’s not an exaggeration to say that today’s politicized infrastructure regimes are incompatible with the emergence of new, large-scale networks.
True competition means not just buildout by incumbents, but rivalry in building original, non-politically sanctioned infrastructure itself. It means enabling the rise of interconnected and non-interconnected networks alike across sectors like transportation, communications, electricity, water, and more — not merely competition in the services that ride on top of those networks once they are built. Today’s model tolerates the latter while suppressing the former.
What does that mean in practice? In my recent article on the electricity needs of AI and crypto, I argued that the coming energy and compute demands will not be met by simply scaling existing grids and regulatory models. Tomorrow’s infrastructure needs require entirely new architectures — decentralized generation, private microgrids, self-contained smart cities, new emphasis on working with landowners, dismantling federal agencies that artificially keep network industries siloed from one another, and plenty more. Current institutional arrangements actively discourage the necessary evolution.
If one were to isolate its essential kernel, what was missing from the summit and most discussion of institutional reform for that matter is any serious discussion of property rights. At the BlackRock event, despite featuring participants from the highest levels, there was no call to dismantle regulatory silos so infrastructure sectors can merge, overlap, and evolve together; there was no exploration of tradable or flexible rights-of-way; no emphasis on engagement with landowners through user-ownership or perpetual access arrangements that could mitigate NIMBY barriers. Nowhere do we see articulated the necessary vision of bottom-up infrastructure and private network ecosystems that are the prerequisites for innovations like emergent AI-enabled and interconnected smart cities to be privately managed rather than steered by regulators.
Instead, we stand to get larger versions of the same centralized systems. BlackRock’s Larry Fink is right that America may need trillions in infrastructure investment to modernize and expand capacity. But without rethinking property rights frameworks, that capital will remain confined to rigid, legacy models, and as I sometimes fret, everything from local tap water to outer space commercialization will be steered by government and PPPs.
A genuine infrastructure renaissance will look very different. It would elevate property rights over public utility control, allow networks to evolve not just within but across sectors, and more readily enable entrepreneurs — not just incumbents — to jump into the fray. It would transform rights-of-way into tradable assets rather than political chokepoints and help render much of the current permitting apparatus (rooted in unpopular eminent domain seizures) obsolete by engaging property owners.
Today’s widespread and bipartisan emphasis on public-private coordination risks reinforcing infrastructure dysfunction rather than solving it.
Until property rights-based models replace the current alphabet agency, public utility, and PPP regimes, infrastructure policy will remain stuck in the same trap. Though mobilizing capital into dysfunctional cartelized systems may benefit incumbents and make for showy ribbon-cuttings, regulation prevents these systems from evolving in a robust manner. Indeed, current infrastructure is incapable of mere modernization, let alone evolution.
If we want to build the future, the priority cannot be more politically steered coordination. It must be to discover the freedom to really build, perhaps for the first time. The proper infrastructure summit the US needs is one that discards politicized utility models. So far, that’s not on the calendar.
For more, see:
“AI and the electricity blackout America needs,” Competitive Enterprise Institute
“Techno-Libertarianism: Building The Case For Separation Of Technology And State,” Forbes
What’s Yours is Mine: Open Access and the Rise of Infrastructure Socialism, Cato Institute
“Who’s The Biggest Monopolist Of All? (Hint: It’s Not A Corporation),” Issues & Insights