Let’s talk about President Biden’s American Jobs Plan. The Biden administration presented a $2 trillion infrastructure plan to get Americans back to work while fixing our crumbling roads, bridges and public transportation. But there could be a couple of issues. Matt Stoller, author of the book “Goliath,” joined me to unpack this issue. Below, check out a few excerpts from this Q & A. For the full discussion, watch the full interview.
Q. How have big companies like the consulting firm McKinsey gotten in the way of fulfilling big government promises in the past?
A. The best example of building infrastructure we have is Puerto Rico in 2017. Hurricane Maria destroyed a bunch of Puerto Rico’s electric grid. The government hired McKinsey (a consulting firm) to say, “Okay, what are we going to do about it?”
McKinsey spent a lot of time making sure that McKinsey got paid and not a lot of time making sure that everything got repaired. People threw the government out of office in 2019, and they’re frustrated.
The worry with this infrastructure plan is that it’ll be like a supersized version of what happened in Puerto Rico, where the government will deputize a private firm to say how to spend the money, but a lot of it will be stolen or misused. That’s what we’ve seen for the last 20 or 30 years.
Q. How can Biden avoid these pitfalls and actually build this new infrastructure?
A. In the 1990s, Bill Clinton loosened a lot of the contracting rules and said you can be a monopoly supplier of contracting, and we want all the contractors to merge. Because he loosened a lot of those rules, a lot of contractors – led by firms – started ripping everything off.
So the way that Biden can address it is by tightening contracting rules, breaking up big firms so that there’s competition and having the government act like what is called a “power buyer.” This is using its buying power to drive good value for their money.
Q. Are tax dollars the only way to get infrastructure built, or do we need private partners as well?
A. Public-private partnership is this catch-all term. It can mean the government puts a little money in the private sector, or it could be the government is hiring private firms to do things. What we want to do is want to make sure that the public interest is taken care of. If you’re going to have private entities involved, you need to make sure that the government can look at their accounting books to make sure there aren’t excess profits, which we did from World War II until the 1970s.
Or you need to make sure that there’s competition. You have multiple contractors bidding to drive down the price to make sure the quality is good. It’s basically moving power back from Wall Street, private actors and institutions like McKinsey that are pillaging and stealing money. It’s moving this power back to the public sector itself.
Q. What about people who are skeptical of the public sector? I’m a small government person. How do we find an appropriate solution that has buy-in from both the left and the right?
A. The question isn’t whether you’re going to have a big government or a small government. When we talk about large corporations that have market power, they are effectively governments. They’re just making political decisions in the boardroom, where the public has no access …
What we really need to do is restore capacity to the public sector. That means making things a lot more equal … effectively making it so if the government is going to bail out or give political favors to institutions, those institutions have a public obligation.
It’s really about decentralizing power. It’s not about whether you have a big government or not because governance is what we all do. Blurring the line between the public and private sector is pretty artificial in some ways.
Q. So you don’t see this as a left or a right issue. You see this just as a general issue?
A. It’s not a left or right issue. Bill Clinton is a Democrat, but Republicans helped him at the time. Obama did a lot of really problematic things. He said he wanted to spend $11 billion on a high-speed rail in California, which evaporated into consultants’ hands. The Republicans love to loosen regulation rules on contractors, and now both parties are changing back.
So Biden is a throwback. He says he wants to be more like FDR, not Obama. Then the Republicans, for their own reasons, are starting to get mad at big business. You’re starting to see a change in our political culture. The people themselves are angry at Wall Street and big business … I think we can accelerate that and get people in Congress, our elected officials and our citizens to be more aggressive about wanting a more democratic society. I think we can get back to how we used to do things when we used to go to the moon and build the computer industry.
For a refresher on Trump’s 2018 infrastructure plan, check this out.