Parag Khanna

Transcontinental Infrastructure

Air Date: July 23, 2016

Parag Khanna, author of Connectography: Mapping the Future of Globalization, talks about modernizing American infrastructure.

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HEFFNER: I’m Alexander Heffner, your host on The Open Mind. We’re accelerating into a future shaped less by countries than by connectivity. Mankind has a new maxim: connectivity is destiny.

This is the abridged thesis of my guest today, Parag Khanna, author of the new book Connectography: Mapping the Future of Globalization. A scholar of contemporary world affairs, Khanna is senior research fellow at the Center on Asia and Globalization at the National University of Singapore. He’s also the managing partner of the geostrategic advisory firm, Hybrid Reality.

Parag Khanna’s recent New York Times op-ed, “A New Map for America”, imagined a reorganization of regional infrastructure lines and metropolitan clusters, thus reconsidering political primaries and elections that ignore state boundaries.

Khanna envisions the Pacific Coast and Great Lakes, for example, as well as an Arizona sun belt and Atlantic corridor, contending that American policy makers and making is wedded to an antiquated political structure of 50 distinct states, which he argues must strategically consolidate to ensure that long-term economic viability. Parag, welcome.

KHANNA: Thanks very much, Alexander.

HEFFNER: Let’s start there.

KHANNA: Yes.

HEFFNER: Uh, Connectography is destiny. Um, connectivity is destiny. You, in this op-ed, which attracted me immediately, defined why we ought to think about efficiency through a regional lens. Why and, and why is it imperative to do that now?

KHANNA: Mm-hmm. First of all, that’s what America has always done. The expansion, the westward expansion of the United States is a 300-year story, and America would not be the great civilization, empire, nation, superpower that it is today, were it not for continental scale thinking, and that’s not only east to west, it’s also actually north to south, in terms of our strong relationships in North America and with Latin America.

We actually think hemispherically, and that’s what America has done well. Think about the Pacific Railroads, the Eerie Canal, the Louisiana Purchase before those, the Interstate highway system, the Tennessee Valley Authority, all of the things that have made America a united, a physically United States of America, have been these regional mega-infrastructures and plans.

We’ve lost our way on that in the last couple of decades, but infrastructure is something that has to be renewed every generation. So it’s not just one bridge collapsing here and one big traffic jam there because a highway is broken. We know all of that. But to fix those little things, you also have to fix the big thing, which is where do those roads and highways and freight trains and gas pipelines fit into the bigger picture of making America a more dynamic and efficient economy internally and definitely that will… Is what will make America more competitive economy globally.

So, yes, regional plans matter a great deal. I have found, since the publication of this op-ed, that the, the, the, a Council of Mayors, the National Governors’ Association, all of the infrastructure planning bodies, the Metropolitan Plans Association, have all been calling me and I’ve been consulting with them and talking to them about priority projects and how to, you know, how to, how to make this happen, how to make this map real. Everyone except Congress.

HEFFNER: [LAUGHS]

KHANNA: Not a single Congressman called me. You know, as I noticed. Uh, it was sort of this deafening silence, right? Because Congress doesn’t do this. Congress focuses on, you know, local pork barrel spending, or whatever the case may be.

So there’s a, you know, a punchline in one of the, uh, interviews I did recently where I said, you know, it’s a cliché to say that it’s all Congress’s fault, but it’s all Congress’s fault. [LAUGHS}

HEFFNER: Well, right. They’re not functioning. It’s, it’s a state of chaos and dysfunction, and inherent in that is the gridlocked political process in this country, and I, and I do want you to contrast that with efficiency and infrastructure that is not obsolete overseas and countries that are doing it right, but isn’t the dirty little secret that we don’t want to acknowledge in the corridors of, of power that is Congress, that is really empowered on a regional level to thrust itself into this debate and start funding major programs, this chasm between cities and rural America.

KHANNA: It should not be a chasm. The map that we created for the New York Times, that’s derived from the book, has multiple layers.

HEFFNER: Right.

KHANNA: You have the natural economic geographies of the United States, the areas traditionally dominated by agriculture, by industry, you know, by services, by manufacturing and so forth. Then you have these growing urban corridors, which you mentioned in the introduction, right? The new… Older ones, like the Boston to Washington corridor, right? Or New Orleans, like the Arizona Sun corridor, because the Southwestern United States is growing so quickly.

And then you have the connectivity between them. What I call the, the connectivity that creates the United City States of America, if you will, in which you not only have growing, uh, you know, sort of railways and transportation that works and energy corridors, between the major urban areas, but those go through the rural areas.

This is not a map to reinforce the dominance of cities in America and in other parts of the world. That’s already happening. When you live near these corridors, you are uplifted. This is a map that helps the people of Ohio, Ohio, that helps the people of Nebraska, that helps the people of Wyoming.

There is a corridor cutting from Seattle, Washington to Salt Lake City, Utah, right, that goes through western states that are rural and deprived, right? So, this connectivity is for everyone. This is about, about counteracting the inequality between our cities and our rural areas, not about reinforcing it.

HEFFNER: People will ask, watching this, what does that connectivity look like, in terms of providing resources to those deprived communities?

KHANNA: Right, so, if you just take the, again, the Boston-Washington Corridor, where we need a high-speed rail network, right? One million people ride Amtrak every single day, but it’s so hopelessly inadequate and inefficient and so forth.

HEFFNER: Well said. Well said.

KHANNA: If we were to build a new… Yeah, I’m sure you’ve been on it more than a few times. [LAUGHS] Um…

HEFFNER: My childhood and college.

KHANNA: [OVERLAP] Yeah, there you go. Um, and, uh, you know, if we were to, uh, refurbish, create a high-speed rail network, whatever the case may be, think about the jobs that would create in some of the most deprived communities along that corridor. And where do they happen to be? Quite a few of them are in Connecticut.

Connecticut is both one of the richest and one of the poorest states in the United States. Think about the number of jobs you would create, and that’s an example in what is w… The wealthiest region of the United States.

Now think about the Midwest, right? The areas where our agricultural supply is barely meeting agricultural demand in the state next-door, because our roads are so bad, right? And so everyone benefits.

Think about people who live in second tier cities, like maybe a Dayton, Ohio, if they had a faster rail network or better highways, they could more easily commute to cities, where they would earn higher wages, but come back home efficiently and live in a lower cost of living area, right? Their disposable income would go up, right?

So, this is a map for everyone, to benefit all Americas.

HEFFNER: Now, to what do you attribute, principally, the inaction, if it’s… If we’re not talking about the federal level, do you see the kind of growth opportunities that have been implemented by Dayton, by Tulsa, by Albuquerque? Are the mayors and governors in these localities at work on this?

KHANNA: Mm-hmm.

HEFFNER: Or not?

KHANNA: Mayors and governors are extraordinarily important in this equation. Again, every mayor and every governor gets this. This is a map of their vision, not mine. This is what they want to build. Governors, which live in and represent their states, right, they want nothing more than connectivity across their states.

Every major city in America, and even second-tier cities, now have their own investment promotion boards and trade promotion boards and their infrastructure planning authorities, and are trying to recruit investment from near and far, from companies, through municipal bonds, however they can, from foreign investors, to upgrade their infrastructure to be more connected. Every person, every city, every governor, every mayor wants this.

HEFFNER: Your point is that these regions, these states, these localities, have to coalesce, in order to produce the capital that would actually build what you are envisioning?

KHANNA: Right. So, very few cities are large enough and wealthy enough to, uh, to have the demographic base, the tax base, to raise the funds to finance their own infrastructure. Most places are dependent, to some degree, on financing from Congress, on various allocations, federally, uh, and from public-private structures, from municipal bonds, a whole host and layers of financial and, and, and fiscal structures that we have, all of which, if you add it all up, is terribly inadequate, because as you know, the Army Corps of Engineers says we need 3.6 trillion dollars in infrastructure investment by 2020. Congress is allocating about, you know, um, a small fraction, about a, a tenth, right, to be generous, of, of that, right?

And remember, that with infrastructure, every year that you under-spend, the bill goes up the next year, right? Uh, it’s sort of like underpaying, uh, uh, interest payments for something on a, on a debt, because the infrastructure erodes and decays.

So, again, Congress is focused so much, obviously, on short-term thinking, then suddenly every… Everyone becomes a fiscal hawk, right? No one wants to be responsible for ballooning our deficit or anything like that. Meanwhile, as we know, going back to the Industrial Revolution, we know centuries of economics and enough Nobel prizes have been allocated… Have been rewarded for research that shows the catalytic impact of infrastructure connectivity, of supply chain connectivity, of all of those fundamentals that allow people to be more entrepreneurial and to more effectively conduct commerce with each other.

The Department of Commerce did a study at the 40th anniversary of the Interstate highway system, showing that at least 4 trillion dollars of GDP has been added to the U.S. Economy, you know, during that period, simply as a result of freeing the flows of commerce across the country. So, study after study, there’s just no, no doubt that long-term investment—and this is what it is; it’s not investment, it’s not consumption, right? It’s investment, because it’s a platform and a catalyst for growth, but Congress is not allocating the necessary funds.

HEFFNER: Do you see this as an absence of political will, frankly, a whatever you want to call the opposite of a profile in courage? I like to think about that a lot… But the absence of courage in imagining that the payback here would be far greater, would exceed the initial investments. I think that the conservative attitude is one that is fearful of deficits, is fearful that the connectivity that you envision would not yield that long-term economic gain that could sustain and then pay back all these investments. So, what do you say to the governors, like a Susana Martinez in New Mexico.

KHANNA: Mm-hmm.

HEFFNER: Who are deficit hawks? Or, as Elizabeth Warren says about Donald Trump, a money-grubbing little man?

KHANNA: Mm-hmm. Look, I don’t want to blame only conservatives for this. The proposals around what would rectify this problem, like a national infrastructure bank, have actually been around for ten years. Hillary Clinton has seized on that now and is making it part of her platform, which is a good thing, but Republicans and Democrats both have been proposing such an institution for ten years, and both parties, both sides, all politicians have failed to make it a reality.

HEFFNER: So, it’s a bipartisan problem.

KHANNA: Yeah.

HEFFNER: And there has not, no politician has summoned the courage as Ike, President Eisenhower did, uh, and later Nixon in continuing the highway system and… I wanted to ask you, because of your versatility and, and your background being Germany, United Arab Emirates, and Singapore, where do you see connectivity working seamlessly with investments that are not engaging in slave labor, communities that have a safety net for workers?

KHANNA: Right.

HEFFNER: Who are the ones involved in building…

KHANNA: Yeah. Mm-hmm.

HEFFNER: But are still emboldened and enabled to grow their airports, their bridges. Where do you see the most illuminating success stories?

KHANNA: Mm-hmm. Well, the countries that have the highest fixed-capital ratios, which is to say the quality of their infrastructure, are obviously western European societies, right? You have high quality public infrastructures for transportation. You have high-speed rail networks. You have good schools, good hospitals. Again, relatively egalitarian societies that have not been… that have been built, especially in the post-war years.

So, you know, we began our big infrastructure wave in the late 19th, early 20th centuries, uh, and now of course, it’s a hundred years on, naturally, the New York City subway that you and I ride is, is not running all that well.

In European countries, they’re constantly investing in renewing these things, and that’s why, you know, that creates a lot of jobs, and, you know, very efficient, efficient, dense urban environments.

HEFFNER: And… Right.

KHANNA: So, we do need to do that. Yeah.

HEFFNER: Because I really do imagine where the quality of life can meet the quality of efficiency, right?

KHANNA: Mm-hmm.

HEFFNER: You want that synergy.

KHANNA: Yeah.

HEFFNER: You’re striving for that synergy.

KHANNA: Well, these are not opposites. They’re totally reinforcing. [LAUGHS]

HEFFNER: But, but, but when you look and you marvel at the Emirates or Qatar, you know the practices underway there are not suitable to provide an upstanding, um, source of living for the workers.

KHANNA: Right, but I mean, we’re talking about our context in the United States of America. President Obama was elected in the midst of a financial crisis and promised shovel-ready jobs, uh, in infrastructure.

HEFFNER: That’s true.

KHANNA: For American citizens, and eight different high-speed rail networks in eight different parts of the country. He’s about to leave office and we have 0.0 miles of high-speed rail in this country and we have done v… Created very few shovel-ready jobs.

So, that’s a failure of us. This is not the point in the conversation about what Dubai or the United Arab Emirates did. I mean, they did, they, their circumstances are different. We should not be comparing ourselves to anyone, quite frankly.

HEFFNER: Mm-hmm.

KHANNA: We should just have the best quality infrastructure. [LAUGHS] As a great empire and civilization.

HEFFNER: And, and we’re the country that ought to have a minimum wage for those construction workers, whether it’s 12 dollars or 15 dollars, but a livable wage.

KHANNA: Of course. There’s no question that we should. We I mean, there, there’s a very important economic debate that, that you’re raising, which, again, is really about us. We don’t need to look… The only yardstick we should be looking at is similarly advanced, developed liberal demo… Democratic societies. Uh, like the, the, the Germanys and the Japans of the world.

How come they have such great infrastructure? It’s not built on the back of slave labor, by any stretch, right?

HEFFNER: Right. Right.

KHANNA: So, we need to do that. Those countries are, uh, have lower inequality, uh, and a higher quality of life than we have, and we need to really get on the ball and, and wake up to that.

HEFFNER: When you think of the United Nations or other multilateral entities.

KHANNA: Mm-hmm.

HEFFNER: You think of the idea that, as you say, the outdated model.

KHANNA: Right.

HEFFNER: That these borders or boundaries govern how we do business.

KHANNA: Right.

HEFFNER: So, I w… I was hoping you could extrapolate for us on how you take that regional model and make it work efficiently in a global scheme.

KHANNA: Mm-hmm. Well, that is actually where the world is going. There’s nothing hypothetical or theoretical or futuristic about this book, even though it has a neologism for a title. I mean, it’s about what, the world that we are building today.

I simply point out that functional geography, which is the infrastructure of, again, transportation, energy, communications, that we’re building that’s wrapping around the world, is far greater in length and volume and durability even than rigid political boundaries. That is already true. It’s not science fiction, right?

But our maps, of course, are very antiquated, right? They focus mostly on political borders, as if they’re really fixed and rigid, but that’s not really true. If that were true, United Nations would still have 51 members, the way it did when it was founded. Today, it has 200, right? So, borders are changing all the time.

What long outlasts rising and falling states and nations are these fixed and durable—I call them the iron silk roads of the 21st century. Now, in every region of the world, you have this consolidation and integration going on. You have not… We’re… Our relations with Canada and Mexico are actually a lot more like a North American Union. If you look at the volume of resource transfers and investment flows and trade and migration of peoples across them, it’s not just we are this and you are that and we’re these three different entities and we just trade with each other. We are actually like a North American Union.

In South America, they talk about a union of South American nations. In the East African nations, they’re creating an East African community of about seven or eight countries that are becoming more densely integrated with each other. The European Union needs very little explanation. We know how deeply integrated they are, even though they’ve having their troubles today, and in Southeast Asia.

HEFFNER: But why do you think they’re having their troubles today?

KHANNA: Well, they’re not having their troubles because they’ve become a region of geopolitical peace and stability due to that integration. So, a lot of people believe that, uh, that you wanna blame the European Monetary Union and the process of integration for the fact that there is, uh, inst…

Financial, economic instability in southern European countries, but we know that their banking crises have origins as much or more perhaps in local corruption, in their exposure and, and over-indebtedness and some of their cheating around their national accounting and reporting, than it does with the fact that they became members of the European Monetary Union. I find it preposterous that people believe that integration into Europe for Greece, which is the force that basically made Greece an actually a modern country, which it really wasn’t as much, uh, through its, uh, the post-war period and its dictatorship, that that is somehow to blame for the fact that they’re in a financial crisis today, uh…

HEFFNER: How do you think, and I know this is a bit of a diversion, but how do you think the EU…

KHANNA: Mm-hmm.

HEFFNER: If it stays united, is accountable for those local governments that have gone awry? Because that really is the dilemma that you’re describing.

KHANNA: Well, I mean…

HEFFNER: And if their, if their own houses… If these countries’ own houses are not in order, then the EU can’t possibly function.

KHANNA: Well, the EU helps to get those countries’ houses in order. When a country, if you think about when the Berlin Wall fell and the, and the, and the Warsaw Pact collapsed and the Soviet Union crumbled and… Think about all the Eastern European countries that have joined the EU today, places that we think of as emerging market champions and stalwarts and high-growth economies like Poland and so forth, and the future bread baskets, uh, like Romania and the countries that are already fully integrated into the EU, like the Czech Republic and Slovakia, in a way in which the EU membership spreading now into the Balkans.

The EU has absolutely been the driving force and uplifting every one of these countries. Along the way, yes, there is, there is political, uh, you know, um, some kinds of unrest or backlash or populism, like we’re seeing in some countries. There’s anti-immigrant movements. There’s the, the financial crisis. Of course these countries have problems. They’re very small, uh, countries, but imagine… If you can only imagine, I spent the, the mid-1990s as a high school student in Germany, backpacking around, so I saw what, you know, broken post-communist, uh, you know, sort of, uh, uh, countries look like, and then you go back to these countries where you and all of your and my friends have been backpackers after graduating college. Do you really think you’d want to be backpacking there if it weren’t for the EU?

So, take these things in context.

HEFFNER: Sure.

KHANNA: The EU is easily the most civilizing force in the history of the world and we need to appreciate that.

HEFFNER: Even more so than the Declaration of Independence? I, I kid.

KHANNA: [LAUGHS]

HEFFNER: But… But…

KHANNA: International, uh, scale. Yeah.

HEFFNER: On the international scale. But, but, but I really meant, uh, do you think that that corruption that persists… Did that pre-date the EU?

KHANNA: Of course.

HEFFNER: You know, the source… So, but does it continue within the EU confines? Within the EU mandate?

KHANNA: Look, the… Yeah, the EU doesn’t suffer from what a lot of people call a democratic deficit. It has many, many layers of, um, of sort of democratic procedures. It’s the only region of the world where you actually have elections from a local district in country X to a European parliament that’s located somewhere else, in a multinational con… Multilateral context.

There’s no place in the world that has that. it… Obviously, there’s a lot of misunderstandings at the citizen level, about the EU and how it works and how it functions and so forth, and there could… They could do a lot more with communication and public education. It’s a very complex beast, right? Uh, it’s like Washington Beltway.

HEFFNER: Right.

KHANNA: [LAUGHS]

HEFFNER: Right.

KHANNA: Right. They have their problems, but what they also have, though, is again a, a decent quality of life. They have the welfare state. All of the things that we wanna do with more infrastructure spending. With Obamacare, you know, is just to get, get us up to the minimum level that most Europeans, uh, enjoy.

HEFFNER: Right. I guess what I’m getting at is this idea that those countries, do they engage in behavior that backfires and, and, besides threatening to pull out of the EU, but that’s a large portion of it.

KHANNA: Right.

HEFFNER: That negates the unifying economic functionality of the EU. Are… Do you think countries that are part of the formation, the founding nations of the EU, do… Behave on their own in a way that is inconsistent with…

KHANNA: Right.

HEFFNER: The EU’s mandate?

KHANNA: In some ways, yes. In some ways, no. You know, each country has a certain amount of room to maneuver, if you will. I mean, you know, some of them are, are definitely fudging on maintaining their fiscal, uh, balance the way they’re supposed to, for example. That’s called the convergence criteria, some of these things.

You obviously have countries that pursue their own separate foreign policies, even though they’re supposed to be coordinating them. These kinds of things happen all the time within alliances, basically. It’s a super-national institution, but it’s not a, a hegemonic yolk, uh, on these, on these countries.

But, you know, if it weren’t for the financial crisis there, they wouldn’t be talking about things like the banking union and, uh, and the, uh, fiscal union and these kinds of things that they’re starting to try and negotiate now, after the fact of the financial crisis. So, it actually shows that, even though our headlines are nominated by the Brexit and so … So forth, and Grexit. The Grexit didn’t happen and isn’t gonna happen. The Brexit probably won’t happen, although they’re entitled to make their own mistakes, if that’s what they choose to do.

That said, you know, there are signs of more integration, rather than less, in Europe. And, and the point of this book was to say that that’s actually happening around the world, because most of the world’s population are these small, weak, frail, often land-locked, post-colonial countries, that are realizing, three generations after independence, that they need to overcome their narrow political borders. They need to focus on functional geography of infrastructure and connectivity with their neighbors, if they ever wanna be visible in the world economy and marketplace, and that’s why the East African countries are coming together. The Southeast Asia countries are coming together.

HEFFNER: It occurs to me that the only way we might be able to pull off what you imagined, which is ambitious but true, truly important, is if we have regional primaries and caucuses, as opposed to state by state. This whole 2016 campaign reveals that the folks in Wisconsin totally disapprove of the behavior and temperament of Donald Trump, but on the other hand, Florida admires what Trump brings to the international scene. So, do you think really, in effect, the only way to guarantee the kind of spending on the regional level that will bring the connectivity to America in these regions is to hold regional primaries rather than an Iowa caucus and a New Hampshire primary in the 2020 presidential context?

KHANNA: Look, it’s a great question, but I want to completely separate the conversation about how we elect our president and whether we have state level or regional primaries and caucuses to determine who’s the president of the United States from what is a national conversation and national priority, a federal, state, and local vision, integrated vision, of how we build our future economy, right?

Our 50-state structure is great for winning delegates and campaigning and getting elected, uh, to, to the White House or to Congress. That’s what it’s for. It is simply not useful, and whether you are talking about regional caucuses and primaries, those are not funding mechanisms. Those are not institutions, right? Those are just political practices, and there is a huge gap in importance, right, between just the political practices we use to get someone elected to the White House, and what needs to be a national long-term strategy of institutions and, and fiscal outlays and actual construction projects of the future of the United States, and in that conversation, our utilities and our port authorities and our railroads and our telecoms become way more important than a local versus a, a regional caucus.

HEFFNER: So, you don’t see those practices, those procedures, as being consequential in determining whether or not we can forge those regional alliances?

KHANNA: Well, remember that just because you would have a regional caucus, it doesn’t mean that, uh, that all those people in the region… [LAUGHS]

HEFFNER: That’s true.

KHANNA: You know, neighboring states don’t even elect the
same… Obviously don’t… They’re not the same, uh, people across different states. So, you can’t actually assume that just because you would regionalize things that you would have consensus within them. That’s actually not going to happen.

HEFFNER: Well, the alternative is concession and succession.

KHANNA: [LAUGHS]

HEFFNER: And, uh, I certainly hope that we can stay united as a union.

KHANNA: We have to build that map if we want to stay united.

HEFFNER: Parag, thank you.

KHANNA: Thank you.

HEFFNER: And thanks to you in the audience. I hope you join us again next time for a thoughtful excursion into the world of ideas. Until then, keep an open mind.

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