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Federalism Rate of Return Project |
European Union Federalism Project The American Council is currently examining intergovernmental structures in the European Union to see what lessons America might learn from, and might be able to teach to that emerging trans-national federal system. Below is a paper which compares European and American transportation policies. Ultimately, this research effort will look at various aspects of public policy formulation and implementation in Europe, and compare them to corresponding areas in America. DECENTRALIZED GOVERNMENT AND INFRASTRUCTURE PROVISION: THE EUROPEAN AND AMERICAN UNIONS COMPARED, WITH A FOCUS ON TRANSPORTATION by Cameron Gordon February 23, 2000
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DECENTRALIZED GOVERNMENT AND INFRASTRUCTURE PROVISION: THE EUROPEAN AND AMERICAN UNIONS COMPARED, WITH A FOCUS ON TRANSPORTATION |
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by Cameron Gordon |
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SCOPE OF PAPER |
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This is a paper about two intertwined topics: federalism and infrastructure. It is also a paper about two intertwined subcontinents (in a political, economic and cultural sense at least): Europe and the United States of America. The basic question to be considered here is whether there is an “optimal” level of centralization in government delivery of infrastructure goods and services. The European and American Union approaches to certain categories of infrastructure will be compared in terms of their governmental centralization (and its opposite, decentralization). |
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WHY INFRASTRUCTURE AND WHY EUROPE AND AMERICA? |
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The USA is said to be the longest-lived constitutional government on earth (Bowman & Kearney 1999) and is held up as a model of the workings of federalism. While that claim might be disputed (for example, one of the bloodiest civil wars in history was fought in the US, and although the Union survived, one might argue that its occurrence is an indication of a flawed system), there is little question that the country has a great deal of experience in matters of intergovernmentalism. The European Union is, on the other hand, a much newer creation with a lot less experience in federalism, at least collectively. As a young person can learn a lot from an older person, so perhaps Europe can learn something from the US experience. On the other hand, just as youth can bring a fresh perspective to age, the US might learn some lessons from Europe which is reinventing itself as a federal union drawing on the experience of those who have gone before. |
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As for infrastructure, provision of public facilities of various sorts has long been recognized as a key government function, coequal with one other recognized state function which is national defense. While anarchists and extreme libertarians might argue with this contention, there is broad agreement that government needs to provide basic infrastructure for the well-ordered functioning of society. So rather than look at a governmental function which many might argue should not be a government function in the first place, it seems that infrastructure is a useful topic for examination because it is likely to remain a governmental function, at least in a general sense, for the foreseeable future. Since transportation is the single largest component of public infrastructure programs in both Europe and America, this category will be the focus of this paper. |
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WHAT IS FEDERALISM AND A FEDERAL SYSTEM? |
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One might say that this discussion is getting ahead of itself, and so it is. The terms federalism and infrastructure need to be defined before proceeding. |
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A most recent textbook on American government defines federalism as “a system of government in which powers are shared between a central (national) government and regional (state) governments” (Bowman and Kearney, 5). This same book defines a federal system as “a means of dividing the power and functions of government between a central government and a specified number of geographically defined regional jurisdictions” (ibid, 24). This is to be distinguished from a confederacy (“a league of sovereign states in which a limited central government exercises few independent powers” and a unitary system (“one in which all authority is derived from a central authority”) (ibid, 24). |
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A definition of federalism with a bit more historical resonance is found in an encyclopedia: “system of government in which two or more separate states unite under a common central government while retaining a considerable degree of local autonomy. A federation should be distinguished from a confederation, a looser union of states for mutual assistance.” (Webster’s New Universal Encyclopedia, entry under “federalism”). |
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This definition is particularly relevant to both US history and the more recent experience of the European Union. When the various colonies of England in North America (excepting Canada) declared their independence from their former master, they came into the world as separate sovereign states. Divided they might fall, so they joined together in a common cause, first under the Articles of Confederation, in which they retained their individual powers acting together as sovereign and independent states when they could agree to do so, and then, when this arrangement failed in its efficacy, under the Constitution, its present arrangement, in which these individual States actually ceded some of their authority to a new central government. |
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The history of the European Union has some of the same flavor, with independent states first coming together in relatively loose confederation and then joining in a tighter union in which a central authority — the Union itself, represented by various authoritative bodies — has some considerable power, including the issuance of a transnational currency, the regulation of monetary and to a lesser extent fiscal policy, and the management, through elimination of barriers, of movement of goods and people within the union. |
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The concept of sovereignty requires some discussion at this point. Sovereignty is defined in one encyclopedia as “absolute authority within a given territory (Webster’s New Universal Encyclopedia, entry under “sovereignty”). The concept is considerably more complicated than this, but suffice it to say that one way of characterizing the degree of centralization in a federal system is to describe which level of government has final authority over which issues and how conflicts between levels can be resolved. One tendency in federal systems, as shall be seen below, is for power to drain away over time from the local levels and to collect, as it were, with the central authority. Thus there are movements periodically to adjust the distribution of power within federal systems and many arguments have been made recently that more autonomy should rest with local rather than central infrastructure decision-making levels. Incidentally, and not unimportantly, there is also a need to determine the balance within levels of government between authoritative bodies such as legislative, executive and judicial authorities. |
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WHAT IS INFRASTRUCTURE? |
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The concept of infrastructure cannot be so easily disposed of by looking for its definition in some source book. A dictionary definition is quite broad— “an underlying base or supporting structure” or, alternatively, “the basic facilities, equipment, services, and installations needed for the growth and functioning of a country, community, or organization” (American Heritage Dictionary, New College Edition, “infrastructure”). |
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Actually, what this paper will discuss is more precisely, and often synonymously referred to as “public works.” One definition refers to this as “the physical structures and facilities developed or acquired by public agencies to house governmental functions and provide water, waste disposal, power, transportation, and similar services to facilitate the achievement of common social and economic objectives” (American Public Works Association, 1) |
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Even this definition has its limitations and ambiguities. Some functions are left out, for example, and it focuses on public provision, whereas a “public” work might be private but have a public dimension to it, in that it affects the general welfare of a society. Nonetheless, this statement is closer to the topic of interest in this paper, which are physical investments with a specific public objective or set of objectives attached to them. |
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Rather than get caught up in what can be a very complicated etymological debate (see, for example National Research Council 1987, 1993, 1994, and 1995 ), it might be well to focus on the specific public objectives which are of concern here and the specific categories of physical facilities which are of interest. The recent custom is to focus on “economic infrastructure,” that is physical facilities which directly or indirectly achieve economic growth and development in a nation. This paper will follow that custom. |
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In addition, economic theory suggests that it is not just nor even primarily the facilities themselves which are important in achieving this aim, but the services which the facilities provide. Of course, without the facilities, there are no services, but just having a facility means little if it is mismanaged or improperly designed so that it can provide little or no useful service. |
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The World Bank uses a definition of economic infrastructure and a specific list of facilities which is useful. That institution classifies “economic infrastructure” into the following categories: |
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Public utilities: power, telecommunications, public water supply, sanitation and sewage, solid waste collection and disposal, piped gas. | |
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Public works: road and major dam and canal works for irrigation and drainage. | |
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Other transport sectors: urban and interurban railways, urban transport, ports and waterways, airports (World Bank, 1994, 2) | |
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A related definition is found in a report, commissioned by the U.S. Congress and which has had a great deal of influence in that country. It refers to (1) transportation, including highways, mass transit and aviation; (2) water, including water resources and water supply; (3) wastewater (both sanitary sewage and stormwater runoff; and (4) municipal waste, both solid and hazardous (National Council on Public Works Improvement, Introduction). This list is a bit more precise in certain respects and leaves more out (for example, energy distribution and telecommunications). Both lists ignore things such as public parks and open space and government buildings. Given an elastic term such as “economic”, these could arguably fit the definition (for example, parks increase tourism), and some might say that “environmental” infrastructure such as waste management is its own category, but there is general agreement that these types of facilities and the services they produce are necessary elements of and quite often augmenters of economic growth. |
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Conceptually, this paper will follow something of a hybrid of the World Bank and National Council definitions, focusing on transportation. Infrastructure here is thought of as physical facilities within the categories of transportation (i.e. focused on improving mobility of goods, people and services), environment (i.e. focused on managing the impacts of industrial society on the physical environment) and water resources (i.e. focused on marshaling the hydrological cycle for economic ends). In terms of facilities, this framework is narrower than the World Bank definition. Table 1 provides a crosswalk between the National Council and World Bank definitions. |
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TABLE 1: NATIONAL COUNCIL ON PUBLIC WORKS IMPROVEMENT AND WORLD BANK CATEGORIES OF INFRASTRUCTURE COMPARED |
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CURRENT EUROPEAN AND AMERICAN CONCEPTIONS OF THE ROLE OF GOVERNMENT IN PROVIDING INFRASTRUCTURE |
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It has been stated earlier that provision of public works is a basically agreed upon role for government. That is certainly true in current political philosophy, but it has not always been the case, particularly during the time in which the American union was founded, back with the ratification of the U.S. Constitution in 1789. Additionally, in a federal system, even if it is agreed that government should provide infrastructure, there is always the question of which level of government should be doing it. |
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As written, the Constitution recognizes only the legislature as the source of national authority; the executive branch, by the terms of this document, derives its authority from the actions, namely laws passed, undertaken by the U.S. Congress. In this sense, when one speaks of U.S. Federal “agencies”, the term refers to the fact that these are entities which are agents of the President who, in turn, is supposedly an agent of the people and of the Congress. In practice, and over time, much authority has resided with the President apart from the Congress. |
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The U.S. Constitution explicitly enumerates powers reserved to the central government. Only one of these powers directly deals with infrastructure — the legislature, i.e. Congress, has authority “to establish Post Offices and post roads” (U.S. Constitution, Article 1, Section 8). That same article allows for the US government to have “exclusive legislation” over what later became the District of Columbia, the seat of the national government, so within that area, the national government’s power extends over all infrastructure of any type, and indeed the government has built many public works within that district. However, from a national perspective, this is a mere footnote. |
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The central government’s power to provide public works and other infrastructure may be implied by two other provisions within that article: the so-called “commerce clause” (“to regulate Commerce with foreign nations, and among the several States, and with the Indian tribes.”) and the “general welfare clause” (“The Congress shall have Power to...provide for the common Defence and general welfare of the United States.”) Additionally, in the same article and section, Congress is allowed the power “to make all laws which shall be necessary and proper for carrying into execution the foregoing powers, and all other powers vested by this Constitution in the Government of the United States.” This, unsurprisingly, is referred to as the “necessary and proper clause.” These clauses are vague, but as it happens, much of the U.S. Federal government’s power to build infrastructure comes from them. |
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As the States were the original founding sovereign members of the union, it was assumed at the time of founding that they would continue to have most of the powers that they had before forming the union except for those powers expressly delegated to the national Congress. This is likely the reason that clauses mentioned above are so vague — many of the framers saw that they had to allow some “wiggle room” for the national government as it carried out its enumerated powers. The States were left with so-called unenumerated powers, namely all those not expressly given to the central authority. The Tenth Amendment to the Constitution codified this understanding by stating that “the powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the states respectively, or the people.” This would imply, given the times, that it would be States and not the federal government, that would be the prime movers in infrastructure policy. |
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This is not the place to trace the long and interesting history of the battle for supremacy between the States and the U.S. Federal government. Suffice it to say that the vagueness of the relevant Constitutional clauses set up a battle between States and the national government for supremacy in various fields. As far as infrastructure is concerned, those arguing for a strong federal role in the beginning of the Republic, put economic arguments at the center. Alexander Hamilton, first US Secretary of the Treasury, argued in his famous Report on Manufactures (1791) that “there is, perhaps, scarcely any thing, which has been better calculated to assist the manufactures of Great Britain, [the former colonial master of the new U.S. and its main trade competitor] than the melioration of the public roads of that kingdom, and the great progress which has been of late made in opening canals. Of the former, the United States stand much in need; for the latter, they present uncommon facilities” (Boorstin, 208, section excerpting the Report on Manufactures). Hamilton, a strong Federalist, as advocates for a strong central government were then known, argued that the Central government must make the necessary investments to improve those physical facilities whose lack put the United States at a competitive disadvantage. |
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Anti-Federalists, or Republicans (not the same as the party cemented and founded essentially with the election of Abraham Lincoln) believed strongly, on the other hand, that only States could make infrastructure investments, since infrastructure was not a power explicitly given to the Congress by the Constitution, nor explicitly prohibited to the states by it. Ultimately, over many years of U.S. Supreme Court decisions largely giving fairly unlimited power to the Congress to interpret the Constitution as it saw fit, and thus taking away many of the powers the States thought they had, it has come to pass that those advocating a strong central and national governmental role for infrastructure investment have won in the sense that it is now possible for federal authority in the U.S. to be quite active in the setting of such policy. As will be seen a little later on, the U.S. currently works with a fairly devolved model of public works provision, and States and localities (the latter having no power whatsoever except what the States choose to give them) do more directly that the national government does, but the national government does try to ensure, in various ways, that national policy objectives are met. |
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It is interesting to contrast the American infrastructure policy experience, which is largely based on historical evolution surrounding a rather vague document, with that of the European Union. There are parallels in that both the European Union and the American union started out as sovereign states joining together for mutual advantage. Additionally, both unions have expanded over time in geographic size and political scope. |
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The European Union is a much more recent creation than the United States, while at the same time many of its constituent states (such as France and Greece) have a much longer history than the current States of the United States. Also, the American colonies were all created by a single power -- England -- and gained their initial sovereignty all around the same time in revolt from that power. The European nations entered their union as nation-states with diverse and varied histories. Thus while the Americans formulated a Constitution, with a national government, the basis for the European Union remains a series of treaties between sovereign states which must be ratified by each nation individually. |
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A couple of points about the history of the European Union are interesting from an infrastructure policy point of view. The earliest economic predecessor to the European Union was the European Coal and Steel Community, which was founded in 1952 and had, as its first six members, West Germany, France, Italy, the Netherlands, Belgium, and Luxembourg. This community was inspired by a suggestion by Jean Monnet, (see Figure 1) |
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Commissioner-General of the French National Planning Board and referred to as the “father” of the European Union, who proposed that Franco-German coal and steel production be placed under a joint High Authority which could be joined by other nations. The idea was to forestall the sort of economic rivalry between France and Germany that had at least partly resulted in the just completed, and devastating, Second World War. The Treaty of Paris which founded this community established institutions to manage resources, production and trade in community coal and steel. (Cole and Cole, 12-13). In a real sense, then, the predecessor to the current Union was one with a very specific economic and energy infrastructure based focus. |
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FIGURE 1 |
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This community was seen as successful and led to new treaties, the most important of which was the Treaty of Rome signed in 1957 which established the European Economic Community (EEC). This treaty was later supplemented by the Single European Act (SEA) of 1987, which significantly expanded the scope of the EEC and basically established the European Union. The SEA established a timetable for completion of a single common market (the now-passed but famous in its time 1992 deadline), and, more importantly for this discussion, called for development of EC (i.e. transnational) policies of transportation and environmental protection. It also made ‘economic and social cohesion’ of the EC a central priority, something which could be seen as opening the door for community infrastructure investments (Cole and Cole, 14). The SEA was even further strengthened by the Treaty of European Union, signed at Maastricht, Netherlands, in 1992 and coming into force in 1993 (Cole and Cole, 36-37). |
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The U.S. Constitution, as has been seen, was a fairly vague document in many respects. It also was fairly short — 8,700 words. The various treaties of the European Union and, to be discussed later, EU law, are much wordier and much more specific about the general role of the Union in infrastructure. Article 2 of the EEC treaty of 1957 contains language that would never have been contemplated by most framers of the U.S. Constitution: “The Community shall have as its task...to promote throughout the Community a harmonious development of economic activities, a continuous and balanced expansion, an increase in stability, an accelerated raising of the standard of living, and closer relations between the States belonging to it.” Article 3 contains a very specific reference to the role of the community in “the adoption of a common policy in the sphere of transport.” And the Single European Act created a special title in the EC treaty on environmental protection which set as objectives: “to preserve, protect, and improve the quality of the environment; to contribute towards the protecting of human health; to ensure a prudent and rational utilization of natural resources” (Cole and Cole, 244). |
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These are just some of the specific and designated infrastructure policy areas which the European Union is given provenance over and there are many other such powers in other policy areas. Thinking about the role of the State has changed dramatically since the U.S. Constitution was ratified in 1789 — democracy has become a commonly accepted norm (if not universally practiced), while an activist state with multiple but delimited and defined roles is equally accepted. Thus the explicitness of the European treaties both carries the potential for a very powerful central authority, but also for a very limited one: the State is given many assignments but these are very specific ones, written into law, as it were, and bounded by the people who can change that law. There is thus a funny paradox in comparing the U.S. and Europe: the former has few explicit powers regarding infrastructure policy but many implicit and real powers while the latter has many explicit powers but, as it turns out for the moment, rather limited implicit powers. |
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EUROPEAN AND AMERICAN LEVERS FOR MANAGING THEIR RESPECTIVE FEDERAL SYSTEMS |
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1. THE UNITED STATES |
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On its face, the United States has an extraordinarily diverse range of governmental authorities: a unitary federal government; the 50 States and the District of Columbia; 38,000 local governments; and 36,000 special districts which are creations of the States and/or local governments and which are governmental units established for specific purposes. |
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Given this jurisdictional complexity, the challenge to the U.S. federal system is to achieve objectives good for the system as a whole (the nation) but also to provide for needs and wants that apply at the local level, usually only in some places but not in others. While complex, a federal system has an important potential advantage over centralized systems — it is centralized and decentralized at the same time, thereby offering the possibility of achieving economies and efficiencies offered by a large unit of government while also obtaining the nimbleness and responsiveness of small units. However, managed poorly, the federal system can end up being a melange which is neither fish nor fowl, a system which accomplishes the worst of both worlds — distant and unwieldy central government and backward, unsophisticated, parochial provincialism. |
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In the U.S. Federal system, one of the main mechanisms used currently for managing infrastructure policy across this patchwork or multiple jurisdictions is through financial and economic incentives and, to a lesser degree, direct regulation. One of the primary mechanisms used is the explicit transfer of funds from one level of government to another in the form of grants-in-aid or grants for short. Grants transfer spending power from one government to another, much as a check written by one party to another transfers funds from that party to the other. |
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Thus, in the U.S. Federal system one must make a distinction between direct and indirect government spending. Direct spending is the expenditure of funds by a government for a specific purpose. Indirect spending is the transfer of money by a government to another government in which the recipient then spends the money for a specific purpose. Taking 1994 as a base (using the 1994 fiscal year of the U.S. Federal government which runs from October 1 through September 30), around 18% of total U.S. government spending in FY 94 was in the form of transfers from one government to another, primarily Federal to State and State to local, for specified purposes. Most of this spending took the form on grants. (See Table 2). |
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There tends to be an inherent conflict of interest between the government which raises the grant from its own revenues and the government which receives the grant to spend. The grant funder, or grantor, is generally concerned with ensuring that the funds being given go to a purpose which the grantor would most like to accomplish. The grant recipient, or grantee, on the other hand, might have different ideas as to the best use of the money and, moreover, may be less careful about spending funds which it did not raise directly itself. For this reason grants tend to have a variety of conditions attached to them. The conditions run along a continuum from none to many. |
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On one end of the spectrum is something called “general revenue sharing.” Now defunct, revenue sharing was basically a blank check written by the U.S. Federal government to States and localities. States still have some of their own programs for localities. The main intent of general revenue sharing is to smooth over income disparities between different governments and to increase local spending power. General revenue sharing ended largely because it was expensive and did not seem to be achieving any particular goal including a flattening of intergovernmental income inequality (this and the following material on grants is drawn largely from Mikesell, 449-460). |
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Not quite as liberal but still fairly broad is something called a block grant. Block grants are distributed to general-purpose governments according to a specified formula to meet a broad public purpose such as health or crime prevention. While block grants are designed to meet a broad purpose, grantees have considerable leeway in spending that money. One argument for block grants is that they ensure that specific national policy goals are met but allow local recipients, who know conditions on the ground best, to determine the most efficient and effective delivery mechanisms for meeting those goals. |
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Finally there are categorical grants which provide assistance for narrowly defined program purposes which usually must be accomplished in very well-defined ways (e.g. building a sewage treatment plant to improve water quality instead of providing money to improve water quality without specifying the means for doing so). One type of categorical grant is called a project grant because prospective grantees submit proposals to be funded, with approval of funding coming from a grants administrator. Another type of categorical grant is called a formula grant and recipients are eligible for the grant if they meet the conditions specified in the formula which is set out either in legislation or in administrative code. There are also mixed formula/project grants. Categorical grants may have open-ended reimbursement, in which case all eligible grantees receive funds without limit, or there may be funding limits in which case not all eligible recipients will get a grant or receive all that they ask for. |
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Grants potentially allow for a division of labor between different levels of government, and an examination of purposes of spending by level of government in the U.S. show that such a division has come about (see Table 3). Direct comparisons are somewhat nettlesome, partly because the Federal government spends on certain purposes, such as highways and public welfare but only indirectly in the form of grants to States, but the table reveals some general trends. Two things that the U.S. Federal government spends its money on — defense and Social Security/Medicare entitlement spending — do not even show up at the other levels of government, and accounted for 40% of total FY94 Federal spending. On the other hand, States and localities were responsible for delivering many of the services that citizens most associate with government, such as elementary and secondary education (primarily a local responsibility), health and hospitals, highways, and public welfare. |
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In one sense then, the Federal government’s primary roles has been redistributive — from the national level of government to other levels and from one group of citizens to another (as with Social Security payments). The major direct service provided by the Federal government is national defense. State and local governments, on the other hand, are much more heavily involved in actual delivery of services (although States do have a somewhat significant redistributive role as well when it comes to their own residents and to local governments within their jurisdiction). One way of seeing this is to look at total government employment: although the Federal government spends more than the other two levels combined, the local government employs more people than the other two levels (see Table 4). Indeed with labor-intensive services such as police and fire protection and education, the local government does most of the heavy lifting governmentally, so to speak. Thus while the Federal government is the biggest of all U.S. governments in financial terms — of the almost $2.7 trillion spent by all levels of government in FY 1994, the Federal government accounted for almost 60% while the State and local governments each accounted for 20% — in some ways it is the least responsible for services, especially infrastructure services, that citizens are most affected by. |
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Grants are not the only way that the Federal government in the U.S. manages the transportation and other infrastructure sectors. Mandates and regulations are another method of managing the federal system. And, in fact, because the U.S. Federal government now has substantially greater power than the States in theory, direct orders from the central government to the States are often resorted to. Such mandates may be funded, i.e. Federal appropriations may be made to help States pay to meet the mandate, or they may be unfunded, in which case the State is told what to do and left to fend for itself. Such mandates are particularly significant in the environmental arena, which is discussed later on. All Federal mandates, which take the form of laws passed by the U.S. Congress, require states to take certain actions, such as making buildings wheel-chair accessible, or building effluent treatment plants, without making federal funding available. |
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Unfunded mandates are not necessarily bad. Indeed, if the mandate meets legitimate national interest and also delivers sufficient local net benefits, there is a sound economic justification for them. For example, everyone may be better off if strong air pollution control investments are made, and there may be positive net benefits at the local level for making such investments, but without a federal mandate such investments may not be made because no single State will see it as in its interest to do so unless other States join suit. Because of this until the single state is sure that other states will act, it will not act itself. A federal mandate breaks this strategic logjam and if indeed there are local net benefits, no federal funding is necessary. |
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However, unfunded mandates at the federal level can also lead to legislative excess. Because the federal government is not paying for the policy, there is a tendency to over-legislate, to make mandates that are not justified on a benefit-cost basis. There is also a tendency to shift policy implementation down to the “wrong” level of government. Thus some policies might be best carried out by the national government, but this government might not want to pay to implement the policy. If it still wants to carry the policy out, it will then likely resort to an unfunded mandate to the States, even though implementation at the State level may be neither efficient nor equitable. And once laid on the States, the States may then try to lay the responsibility on the localities. Indeed, although States and localities are often lumped together, they do not necessarily have the same interests. For example, State unfunded mandates are indeed often identified by major cities as a problem as great as or worse than Federal unfunded mandates. |
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2. THE EUROPEAN UNION |
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The European Union, as has been mentioned earlier, finds itself in a quite different context from the United States. Although power at the center is growing, the European Union is still much more akin to a league of nations, who each find it advantageous to stay in the league, than a unity of separate but largely dependent states. For example, there is little question as to whether a U.S. State can secede from the Union — the Civil War settled that matter against any State’s ability to do so — but European nations can choose, theoretically, to remove themselves from the European Union. The economic advantages of the Union are so powerful that the problem is more one of keeping the number of potential members to a manageable size than of forcing nations to stay in, but nonetheless, individual members retain considerable freedom of action and the ultimate threat of withdrawal. |
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Because of this, the institutions of EU government are limited in what they can compel individual members to do. There are significant transfers to the EU from member nations and back from the EU to its members, and there is a growing body of EU law constraining the domestic policies of member nations. But the EU still has to rely more on the “carrot” than the stick in developing its policies and is limited largely to areas where there is significant agreement across nations. There is little current agreement on common defense policies for example, and the EU’s independent ability to make defense policy for Europe as a whole is notably lacking, a notable contrast to the U.S. national government. |
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The fact that nations make up the EU also affects what the Central government can devolve powers to. The EU can attempt to devolve and take powers from nations, but there is not much that it can do to make nations grant powers to the local units which make up the nation. Indeed, there is much less standardization of local government boundaries and practices within the European Union than there is in the American one. Because of the relatively common ancestry of the American colonies, as well as the fact that much of the current United States was established and settled under the jurisdiction of a single national government with a powerful Land Survey office drawing up local jurisdictional lines, a vast majority of those thousands of local governments mentioned before have fairly common characteristics (Cole and Cole, 29-32). There is a fairly wide range of population and area size by State — California, the largest, has a population of approximately 52 million, while North Dakota has the smallest population at just over 600,000 — but the patterns of local governance, with counties, townships and cities, is relatively uniform across those States. |
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The European Union, by contrast, actually has a wider population range from its largest to smallest member (the Federal Republic of Germany has a population of 82 million, while the smallest member, Luxembourg, has a population of less than 400,000) and the styles, policies, and even names of local government units vary within each country (Cole and Cole, 32). Most nations within the EU have been fairly centralized, but there has been a trend in many countries, especially in France, Italy, Spain, and the United Kingdom, to devolve authority to lower levels of government. However, there is little thus far that the EU can do to affect this subnational devolution (a complete list of member states is found in Table 5; a map of the Union with member nations and prospective members indicated is found in Figure 2). |
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TABLE 5: The Fifteen Member States of EU, 2000 |
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AUSTRIA |
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BELGIUM |
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DENMARK |
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FINLAND |
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FRANCE |
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GERMANY |
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GREECE |
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IRELAND |
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ITALY |
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LUXEMBOURG |
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THE NETHERLANDS |
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PORTUGAL |
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SPAIN |
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SWEDEN |
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UNITED KINGDOM |
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Source: The European Union (EU) in the US |
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European Union Delegation of the European Commission to the United States, |
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2300 M Street NW, Washington DC 20037 |
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Telephone: (202) 8629500 |
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"http://europa.eu.int/en/eu/states.htm" |
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FIGURE 2 |
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Interestingly, this patchwork nature of European federalism often means that more rapid change is possible within component parts of the Union than is the case within the States of America. National governments may, for example, make broad changes in response to EU directives and incentives if they so choose, whereas American States have less power to make such changes because State governments do not have the power within their domains that national governments within Europe do. So while the American government has more authority over States than the EU government has over its member nations, more change may be actually be possible at the local level within the EU construct than within the American framework. |
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Given the radically different nature of the European Nature and the American union, it is not easy to compare the two in terms of financial structure, particularly at a level below the central government. However, the figures for one of the most recent EU budgets is revealing (see Figure 3). Like the US Federal government, the EU government’s expenditures are largely redistributive in nature. However, while the US government has a significant role in making transfers of funds directly to individuals, the EU’s role is primarily in moving monies from one nation to another. |
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FIGURE 3 |
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In addition, the EU’s largest expenditure is for agricultural policies, under the rubric of the Common Agricultural Policy (CAP) of the Union. These expenditures consist largely of agricultural price supports and account for almost half of the EU budget. Reforms to the CAP have made this more of an agricultural income support rather than price support program and there has also been increasing expenditures to modernize backward sectors in European agriculture (Cole and Cole, 149-150). In addition, more than one-quarter of the remainder of the budget goes to redistribute wealth from the richer to the poorer countries via the so-called Structural Funds. A new cohesion fund, designed to accelerate this process, was agreed as part of the Maastricht Treaty. In this sense, the EU budget has more of an vertical equity bias than the US Federal budget, i.e. its focus is more on shifting funds from wealthy to needy sectors and nations (though many would dispute the neediness of much of the European agricultural sector) whereas many US funds transfers are programmatic in nature, designed to ensure that certain programs are carried out on a national level. |
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The EU budget is considerably smaller than its American counterpart. At a roughly $100 billion level for the past few years, it represents about 1.2 percent of the combined Gross Domestic Product of the member states, which is a good deal smaller, in both absolute and relative terms, that the US government spent in FY 1994 ($1.6 trillion, just under one-fifth of US GDP). This fact alone shows how different European federalism is from the American variety. With such relatively small funding, the EU needs to be especially strategic in its spending if it wishes to influence member countries, leveraging funds as much as possible. The US has more financial muscle with which to influence the States. Of course, with relatively little funding, there can be a bias in the EU towards using regulations to force members of the Union to meet common objectives. This is a corollary to the unfunded mandates issue in the US which was mentioned earlier, and many of the issues are the same. |
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As a transnational government, the EU is in many ways considerably more complex and decentralized than the American national government. Whereas the U.S. has an elected President, an elected legislature and a Supreme Court appointed by the President and confirmed by the upper house of the legislature, executive authority in the EU is concentrated in the European Commission and the Council of Ministers. The European Commission, consisting of 20 Commissioners, proposes policies and legislation, is responsible for administration, and ensures that the provisions of the Treaties and the decisions of the institutions are properly implemented. It has a President, but this officer has less power than the American President, being more of a presiding officer. Commissioners are appointed by common agreement among the member states and approved as a body by the European Parliament. Commissioners hold portfolios of responsibility and act in the interest of the Union, independently of national governments (this discussion and much of what follows below is taken from the webpages of the Delegation of the European Commission to the United States). |
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The Council of Ministers is composed of ministers from the national governments, with different ministers attending different meetings depending on the agenda at hand. The Council has something of a legislative function, something shared with the elected European Parliament, in that it enacts legislation binding throughout EU territory and directs intergovernmental cooperation. Many decisions are on a majority-vote basis, but some, including those dealing with taxation, and environmental issues still require unanimity. The Presidency of the Council rotates among the member states every six months. |
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The European Parliament (EP) is composed of 626 members, directly elected to fiveyear terms. The European Parliament’s legislative role has grown because of a rather complicated procedure known as codecision which was introduced by the Maastricht Treaty, but its primary role remains as one of a public forum, debating issues of public importance and questioning the Commission and the Council. The Parliament can amend or reject the EU budget, and also can veto the entire EU budget or dismiss the European Commission. These last powers appear to be quite powerful but they are so drastic that in practice they are not of much use in influencing policy. Finally, there is also a counterpart to the US Supreme Court in the Court of Justice which interprets EU law and whose rulings are binding. |
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Two other bodies have no real counterpart in American government. These are the Economic and Social Committee which has members representing employers, employees and numerous other groups such as farmers and consumers; and the Committee of the Regions, newly established by the Treaty on European Union, with members representing local and regional authorities. Both bodies must be consulted before Union action is taken on areas which relate to its jurisdiction and both may also offer opinions on their own initiative. These bodies definitely represent a rather modern trend in government, namely “places at the table” where specific interest groups may have a voice if not much more than that. |
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This decentralized central structure and the relatively scarce resources available to the central authority may imply a bias towards regulation. There are essentially two types of regulations in the EU: “regulations”, which are binding in their entirety, are selfexecuting and directly applicable and obligatory throughout the EU territory; and “directives”, which are binding in terms of the results to be achieved, and are addressed to the member states, which are free to choose the best forms and methods of implementation. Regulations are analogous to the types of prescriptiveness found in categorical grants, while directives are more like block grants in that they set broad objectives but allow for wide latitude in meeting those objectives. Actually, even this analogy is flawed because regulations and directives do not necessarily have money attached to them as grants do. The closer analogy is to mandates, with a regulation being very tight in defining both means and ends, and with a directive being tight only in the definition of ends. |
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The old saying goes that the proof of the pudding is in the eating. The discussion thus far has described how each federal system works in general, but much can be learned by looking at the specifics of the relevant infrastructure fields. |
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TRANSPORTATION POLICY IN THE U.S. AND EUROPE |
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1. U.S. TRANSPORTATION POLICY |
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“The United States has the largest transportation system in the world. It serves 260 million people and 6 million business establishments spread over the fourth largest country (in land area) in the world” (USDOT-BTS, 1). So says the U.S. Department of Transportation in a 1997 review of that country’s transportation system. The various components of the system and statistics measuring some of their extent are presented in Table 6. |
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TABLE 6: Major elements of the U.S. transportation system, 1995 |
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Highways (a) |
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ELEMENTS: Public roads and streets; automobiles, vans, trucks, motorcycles, taxis, and buses (except local transit buses) operated by transportation companies, other businesses, governments, and households; garages, truck terminals, and other facilities for motor vehicles |
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STATISTICS |
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Roads |
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45,744 miles of Interstate highway |
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111,237 miles of other National Highway System roads |
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3,755,245 miles of other roads |
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Vehicles and use |
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136 million cars, driven 1.5 trillion miles |
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58 million light trucks, driven 0.7 trillion miles |
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6.9 million freight trucks, driven 0.2 trillion miles |
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686,000 buses, driven 6.4 billion miles |
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Air |
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ELEMENTS: Airways and airports; airplanes, helicopters, and other flying craft for carrying passengers and cargo |
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STATISTICS |
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Public use airports |
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5,415 airports |
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Airports serving large certificated carriers (b) |
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29 large hubs (67 airports), 393 million enplaned passengers |
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33 medium hubs (59 airports), 86 million enplaned passengers |
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58 small hubs (73 airports), 34 million enplaned passengers |
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561 nonhubs (593 airports), 14 million enplaned passengers |
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Aircraft |
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5,567 certificated air carrier aircraft, 4.6 billion miles flown* |
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Passenger and freight companies |
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86 carriers, 506 million domestic revenue passenger enplanements, |
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12.5 billion domestic tonmiles of freight* |
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General aviation |
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171,000 aircraft, 2.9 billion miles flown (c) |
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Rail (d) |
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ELEMENTS: Freight railroads and Amtrak |
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STATISTICS |
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Railroads |
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125,072 miles of major (Class I) |
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18,815 miles of regional |
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26,546 miles of local |
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Equipment |
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1.2 million freight cars |
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18,812 locomotives |
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Freight railroad firms |
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Class I: 11 companies, 188,215 employees, 1.3 trillion tonmiles of freight carried |
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Regional: 30 companies, 10,647 employees |
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Local: 500 companies, 13,269 employees |
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Passenger (Amtrak) |
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23,646 employees, 1,921 passenger cars, 356 locomotives, |
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20.7 million passengers carried |
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Vehicles |
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43,723 buses, 17.2 billion passengermiles |
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9,046 rapid rail and light rail, 11.5 billion passengermiles |
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4,349 commuter rail, 8.0 billion passengermiles |
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Transit (e) |
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Commuter trains, heavyrail (rapidrail) and lightrail (streetcar) transit systems, local |
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transit buses, vans and other demand response vehicles, and ferryboats |
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Water |
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ELEMENTS: Navigable rivers, canals, the Great Lakes, St. Lawrence Seaway, Intercoastal Waterway, ocean shipping channels; ports; commercial ships and barges, fishing vessels, and recreational boating |
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STATISTICS |
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86 ferries, 243 million passengermiles |
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12,828 demand response, 377 million passengermiles |
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U.S.flag domestic fleet (f) |
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Great Lakes: 698 vessels, 60 billion tonmiles |
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Inland: 31,910 vessels, 306 billion tonmiles |
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Ocean: 7,033 vessels, 440 billion tonmiles |
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Ports (g) |
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Great Lakes: 362 terminals, 507 berths |
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Inland: 1,811 terminals |
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Ocean: 1,578 terminals, 2,672 berths |
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Pipeline (h) |
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Crude oil, petroleum product, and natural gas lines |
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Oil |
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Crude lines: 114,000 miles of pipe, 323 billion tonmiles transported |
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Product lines: 86,500 miles of pipe, 269 billion tonmiles transported |
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161 companies, 14,900 employees |
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Gas |
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Transmission: 276,000 miles of pipe |
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Distribution: 919,000 miles of pipe |
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19.7 trillion cubic feet, 150 companies, 187,200 employees |
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NOTES: |
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a U.S. Department of Transportation, Federal Highway Administration, Highway Statistics 1995 (Washington, DC: 1996). |
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b U.S. Department of Transportation, Bureau of Transportation Statistics, Office of Airline Information, Airport Activity Statistics of Certificated Air Carriers, 12 Months Ending December |
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31, 1995(Washington DC: 1996). |
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c Data for 1994. |
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d All numbers are from Association of American Railroads, Railroad Facts (Washington, DC: 1996), except Amtrak figures from National Railroad Passenger Corporation, 1995 Annual |
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Report (Washington, DC: 1996). |
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e Data for 1994. U.S. Department of Transportation, Federal Transit Administration, National Transit Summaries and Trends for the 1994 National Transit Database, Section 15 Report |
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Year (Washington, DC: 1996). Figures exclude transit for nonurbanized areas (Section 18, Federal Transit Act). |
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f Vessel data from U.S. Army Corps of Engineers, Transportation Lines of the United States (New Orleans, LA: 1996); tonmiles data from U.S. Army Corps of Engineers, Waterborne |
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Commerce of the United States 1995 (New Orleans, LA: 1996). |
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g Ports data from U.S. Department of Transportation, Maritime Administration, A Report to Congress on the Status of the Public Ports of the United States 1994–1995 (Washington, DC: |
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October 1996). |
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h Data for 1994. |
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*Preliminary data. |
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SOURCE: Unless otherwise noted, U.S. Department of Transportation, Bureau of Transportation Statistics, National Transportation Statistics 1997 (Washington, DC: 1996). |
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[TABLE ADAPTED FROM USDOT-BTS, 7) |
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U.S. spending statistics reveal an even more varied division of labor across different governmental levels. State and local governments account for the lion’s share of public spending for transportation and that share has been rising with time (see Figure 4). From 1983 to 1993, the federal share of government transportation expenditures declined from 35 percent to 31 percent. In 1993, most government funds were spent on highways (about 60 percent), followed by transit (19 percent), and air (15 percent) and water transportation (5 percent). Between 1983 and 1993, the proportion of federal spending on transit, rail, and water transportation decreased, while spending on air transportation and highways increased (USDOT-BTS, 12). |
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FIGURE 4 |
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Both policy objectives and division of responsibilities come from laws passed by Congress and through regulations issued by Federal agencies designated to carry out those laws. In the U.S., federal responsibilities for transportation policy are still organized mostly along modal lines, although recent reforms in national transportation finance and administration are slowly changing this (note: most of the discussion of U.S. policy which follows is taken from Gordon). Transportation in the United States has become increasingly intermodal, with rail, road, air and water transportation becoming increasingly interdependent, particularly at certain nodes of the transportation system such as ports and harbors. Recognizing the intermodal aspect of the transportation system, a national piece of legislation, the Intermodal Surface Transportation Efficiency Act (ISTEA) of 1991, allowed Federal planning and management regimes more flexibility to shift resources across different modes. The "Declaration of Policy" section of the Act states: |
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It is the policy of the United States to develop a National Intermodal Transportation System that is economically efficient and environmentally sound, provides the foundation for the Nation to compete in the global economy, and will move people and goods in an energy efficient manner. | |
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The National Intermodal Transportation System shall consist of all forms of transportation in a unified, interconnected manner...to reduce energy consumption and air pollution while promoting economic development and supporting the Nation's preeminent position in international commerce. | |
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Thus ISTEA not only emphasizes intermodal tradeoffs and its relationship to enhanced mobility and economic productivity, but also speaks of two additional requirements to be met in achieving that mobility, namely environment-friendliness and energy efficiency. |
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Noble goals to be sure, but although there is a single U.S. Department of Transportation (USDOT), there are still modal administrations, with different policies, within the USDOT, namely the Federal Aviation Administration (FAA), Federal Transit Administration (FTA) and Federal Highway Administration (FHWA). There are changes taking place within that agency; for example, there is a relatively new Office of Intermodalism, created by the Transportation Efficiency Act of 1998 (TEA-21) and a new Bureau of Transportation Statistics (BTS) created by ISTEA. Still, different policies at the Federal level are formulated by mode-based administrations with quite different roles for the national government in each mode. |
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For example, the Federal role in the aviation system is important, but relatively small. The only direct service provided by the Federal government is the air traffic control system itself. Indirect services are provided in the form of construction, safety, expansion, noise reduction and planning grants for airports. Finally, there is some regulatory oversight over airports and the operation of aircraft. Of course financing for the Federal share of the system is at least partly provided by the federal taxes collected as part of the Airport and Airway Trust Fund. Much of the national aviation system is privately owned and run, and even that portion which is controlled by the Federal government, namely the air traffic control system, relies heavily on user-fees and user taxes. |
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There was a recent push to loosen government control of the air traffic system, either by "corporatizing" it (i.e. by spinning it off into a separate quasi-public corporation which would be free of many of the restrictions which apply to public sector activities) or by privatizing it completely. The main stumbling block against these efforts thus far has been a concern about the safety of the system. There is a perception that a completely privately run aviation system might be less safe for fliers because of a desire to maximize profits or pressure exerted by the financially weak position of many carriers might lead to cutting corners on such safety-enhancing measures as better employee training, rigorous equipment maintenance and reasonable scheduling for pilots and other key personnel. |
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The biggest Federal program in transport, and indeed within most governments in the U.S., is the highway program. The outlines of the current Federal-aid highway system were drawn with the passage of the Highway Act of 1956 (PL 84627) which was comprised of the FederalAid Highway Act of 1956 (Title I) and HighwayRevenue Act of 1956 (Title II). The Act Authorized the biggest roadbuilding program in U.S. History $31 billion in federalstate funds over a 13year period, and the biggest authorization for the National System of Interstate Highways, initiated in 1944. The Act also firmly established the use of highway user fees and taxes, particularly the gasoline tax, for financing national highway improvements through a Highway Trust Fund. The stated purpose of the two Acts, and the justification offered for Federal involvement in what had been more of a purely State and local affair, was to build a network of highways which would enhance the nation's ability to mobilize for national defense. |
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The Federal highways program provides infrastructure services primarily indirectly through grants to State and local governments for highway construction, operations and maintenance. The Federal Highway Administration also regulates highways in terms of standards for operations and maintenance, and in many of its environmental ramifications (a role it shares jointly with the U.S. Army Corps of Engineers in regards to wetlands and with the U.S. Environmental Protection Agency more generally). |
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Otherwise, the national highway system is primarily a state and local affair. For example, state and local governments are the actual owners and operators of the various types of roads (subject to applicable regulations and grant conditions) and also oversee many other aspects of the highway operators, such as registration of motor vehicle drivers. Of course most of the traffic which runs on those roads is privately operated. |
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In concept, the Federal highway system is a model of "steering rather than rowing," where the central government provides signals and incentives to other actors to achieve common goals. In actual practice, the multiplicity of actors and the rigidities and time-lags inherent in Congressional decisionmaking can create difficulties. To pass ISTEA, many compromises had to be made, compromises which advanced the reform of national transportation funding and management but also left room for improvement in areas such as funding formulas for distributing monies across States. In addition, highway projects in one state are not necessarily evaluated using the same criteria in another state, although these criteria may be similar. Putting evaluations of system increments and decrements on an equal footing is a challenge which remains. |
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Within urban areas, mass transit can be a significant mode of passenger travel. However, within the U.S., its role is more limited because of the spread-out layout of many American cities. Indeed, half of all mass transit when measured in terms of passenger-miles traveled is in the City of New York. The landmark act in the mass transit arena was the Urban Mass Transportation Act of 1964 (PL 88365) which stated that the Federal government should extend financial assistance to urban mass transportation systems because "the predominant part" of the nation's population was located in rapidly expanding metropolitan and other urban areas which often crossed the boundaries of state and local jurisdictions, and because the welfare of these areas, the satisfactory movement of people and goods, and "the effectiveness of housing, urban renewal, highway and other federally aided programs" was being jeopardized by "the deterioration or inadequate provision" of urban transportation services, "the intensification of traffic congestion, and the lack of coordinated transportation and other development planning on a comprehensive and continuing basis." |
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As with aviation and highways, the Federal government primarily provides mass transit services indirectly through State and local governments and independent operating authorities. Grants for capital spending and operations and maintenance are provided and the Federal government plays a major role in the start-up of new subway and mass transit systems. Operations and ownership of mass transit systems and assets rests primarily with non-Federal governmental authorities. Unlike aviation and highways, relatively few private parties operate transit systems, and those that do usually receive significant public subsidies from area governments. |
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Because of its reliance on grants, one big issue in mass transit performance has been the incentives contained in those grants. Much attention has been focused on local maintenance of current investments. As with other transportation grant programs, past biases had been towards new construction with little Federal support for O&M afterwards. During the 1970's and 1980's, tighter controls were placed on money for new capital with a greater emphasis on cost-sharing by State and local interests. |
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There is also the U.S. railway system. Interestingly, the Federal role in this area is limited mainly to overseeing and subsidizing a national passenger rail system known as AMTRAK. This rail system has cut back its routes sharply in recent years and technically is separate quasi-public corporation. The U.S. Federal government has been trying, with some limited success, to cut the operating subsidies provided from the Federal treasury, but outside of a couple of high-density routes, mainly the Boston to Washington corridor, fares cannot support operating expenses. In addition, the U.S. Federal Rail Administration regulates rail safety, mainly at grade crossings. Rail freight carriage is mostly a private sector affair, with rail routes and traffic being managed by private companies. States and localities have relatively little to do with rail traffic except for urban commuter rail systems which fall more under the category of mass transit. |
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As for water transportation, there are basically two types: inland waterway navigation and international ports and harbors. The Federal government builds, maintains and manages physical structures designed to facilitate inland navigation, and also to protect against floods (discussed further below under water resources). History has devolved responsibility for inland navigation on The US Army Corps of Engineers, which has invested in the whole system of locks, canals and dams which make up the Inland Waterways Navigation System and does the same for the system of dams and levees which make up the nation's flood control network. It is important to note that the facilities which the Federal government provides are almost entirely within the channels themselves. That is, locks and dams, and dredging to deepen navigable depth are Federal responsibilities but landside facilities — loading cranes, docks, storage facilities, intermodal terminals and the like — are generally privately provided or invested in by the port authorities. |
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In this sense, the national water resources program is unique in Federal infrastructure policy because of its heavy reliance on the direct provision of services, rather than indirect provision through grants or regulation. However, this Federal program is a partnership with State and local governments in that new investments must have local sponsors and those sponsors must provide significant cost-sharing. In the case of the Inland Waterways system, users provide significant input to the management of facilities through the Inland Waterways Users Board. |
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International ports and harbors are a different matter. These are largely State and local affairs, and often fall under the jurisdiction of regional Port Authorities, which have their own charters, fairly independent operations and their own finances. There is, however, a wide variety across port authorities because they are creatures of the States, often compacts between States. |
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Two general points must be made about the US intergovernmental role in transportation. First, regional entities, particularly Metropolitan Planning Organizations (MPOs) are becoming increasingly important in American transportation policy. MPOs are regional planning bodies based in Metropolitan areas. In most American cities, transportation systems span many jurisdictional boundaries outside the city and often across more than one State. Thus MPOs have been established to coordinate and plan transportation policies for metropolitan areas. Until the passage of ISTEA, they had not had much power, but ISTEA gave them a larger role in determining the use of Federal transportation grants and also funneled some money to those bodies for their own use. States still have significantly more power in programming transportation funds, especially in highways, but MPOs are attempting to garner more authority for themselves. |
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Second, in certain limited areas, States are joining together of their own accord to address certain subnational but cross-state transportation issues. One notable effort underway in the midwestern U.S. is being undertaken by a coalition of States which are planning and funding the building of a limited high-speed rail system to serve intercity passenger traffic in the area. There has been growing concern in the U.S., as there has been in Europe, that rapid growth in air traffic will soon outstrip the existing air traffic management system and that alternatives in medium-haul passenger markets needs to be found. Unlike Europe, there is almost no high-speed rail in the U.S., unless one counts a new service that AMTRAK is initiating in its Northeast Corridor (Washington to Boston) called Acela, in which electrification and grade straightening together with new powerful, though still basic steel wheel on steel track chassis, locomotives will allow for maximum speeds of in excess of 120 miles an hour. Otherwise, AMTRAK has cut service and the Federal government has been cutting funding to AMTRAK. A number of States have found this lack of rail service troubling, particularly since urban areas are already under intense strain as far as automobile traffic is concerned and there is a desire to divert passenger traffic to and from airports to trains which generally run from downtown to downtown. The midwestern coalition has not built any high speed links yet, but if they do they may indicate a new type of power nexus emerging in the US Federal system. |
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Federal, state-local and private sector roles in the various transportation sectors are summarized in Table 7. |
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2. EUROPEAN TRANSPORTATION POLICY |
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The problems of the European transportation system are well described in a recent EU report: |
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[A]n efficient European transport network cannot be developed without a fully European perspective. Up until recently, this perspective did not really exist, with transport infrastructure being planned from purely national priorities. To make matters worse, the different transport modes were developed separately, rather than as the different elements of an integrated system. | |
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The result is a patchwork of road networks, railway systems, waterways, ports and airports which neither interface well nor, in many cases, even use the same technical standards. This poorly built jigsaw puzzle simply cannot satisfy the needs of a continentalsized economy and society. (ECIP) | |
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The description is apt: the member nations of the EU, having evolved as independent, and sometimes antagonistic, entities, have developed some superior transportation systems within national borders, but Continentally these same countries are struggling with the fact the national systems were not developed in a coordinated fashion and hence are sometimes incompatible with one another in characteristics ranging from train gauges to air traffic control systems. |
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For this reason in particular, the EU has attempted to articulate a continental transportation strategy. On this subject, the European Commission has launched the TransEuropean Transport Network project (TEN), to connect and interoperate national networks. The plan, first outlined in early 1994, takes the form of guidelines. The objectives of TEN are summarized by the European Commission as follows: |
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a road network system totalling 56,000 kilometres of motorways and highquality roads, equipped with traffic management systems, providing access to all European regions; | |
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a rail network of around 70,000 kilometres, parts of which would comprise the HighSpeed Train Network and corridors devoted to combined transport, giving access to regions and ports; | |
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a combined transport network based on specific rail, road, inland waterway and maritime shipping corridors, together with transshipment facilities for switching freight from one form to another; | |
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an inland waterway network of 12,000 navigable kilometres; | |
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a transEuropean airport network of 267 designated airports; | |
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efficient and competitive sea ports through projects emphasising improved access and infrastructure; | |
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a European maritime traffic management system to increase safety and efficiency and reduce environmental impact in sensitive areas; | |
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an air traffic management network integrating existing surveillance and communications systems together with air traffic control centres; | |
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an information and management system employing modern IT and communications technologies, including satellites, to achieve as smooth a flow of traffic as possible. (ECIP) | |
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There are also a number of very specific projects which it has identified as key investments. The projects identified by these guidelines will cost an estimated 220 billion ECU by 1999 and 400 billion ECU by 2010. Only around 90 billion ECU of the finance required by 1999 will be met from public sources, so the Commission and national governments are seeking a partnership with private finance to develop the network. |
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The EU’s broad plan and its specific components are far more ambitious and far-reaching than anything currently being used in the United States. The US does not lack broad transportation policy statements, but the decentralized nature of transportation policy in that country makes it difficult for even the Federal government to come up with a definitive and cross-modal national plan. Decentralization in the US is not only from Federal to State and local, but also within the U.S. Congress itself, which is the ultimate source of policy authority. Congressional representatives tend to be very constituent-oriented. The largest unit represented in Congress is to be found in the Senate, where each of the 100 Senators represents a State. In the House, the Congressional District is the largest unit, and these can be quite small in densely populated areas. Thus Congress is very good at generating “wish lists” which respond to constituent demands, but not particularly good at generated consensus recommendations for national strategic investments. Even if these were produced, it is not clear that many people would favor a strong Federal role in implementing these suggestions. |
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Because the EU’s primary legislative body is really the Commission and not the Parliament, the TEN plan has a broad focus, much as one might expect from what is in many ways an executive planning body with legislative functions. But there is a paradox here: there is a readily available central plan, but little money to implement it. In addition, much of the perceived problem in the European transport system revolves around national specifications and these are particularly hard for the Union authority to change. |
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So it is perhaps no surprise that a great deal of the EU’s agenda is focused on research and development, more so than in the United States. And, once again, the focus is, of necessity, on providing leverage to make others, including the private sector, take on some of the EU agenda. 300 million ECU is available for financing preinvestment feasibility studies, interest subsidies on loan finance and guarantees. The aim is to use this fund to leverage access in capital markets to very much larger sums and to encourage other forms of private sector involvement. Additionally, there is also the Cohesion Fund, the European Regional Development Fund, the European Investment Bank and the European Investment Fund, all of which can provide financial support to developing transport infrastructure. |
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The EU transportation policy implementation mechanisms is, in many respects, reads more like a project management regime than a political decisionmaking process. The European Commission has established a Committee on the TransEuropean Transport Network. Guidelines for projects eligible for EU funding have been issued. Proposals are to come in and be evaluated, and the Commission reports every two years on the implementation of the guidelines described in this decision. And every five years and for the first time before 1 July 1999, the Commission will evaluate progress made in setting up the network and state whether the guidelines need to be adapted (TEN, 1996). |
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The contrast with this process and that used in the United States is rather striking. In the U.S., the legislature is the paramount authority. The President has considerable powers, but ultimately, anything that he does must go through the national legislative process and be embodied in public laws. In the EU, the Commission is essentially the paramount authority and it has a bias towards technocratic planning. In addition, the US Federal government has a fair degree authority over the States and localities; while local governments actually make and carry out most transportation decisions on the ground, the US has wide latitude over setting standards and national goals to which those decisions must conform. The EU, by contrast, has considerably less power than the Federal government over national governments. It also has considerably less money to throw around. But there is a real need for standardization across the region. So the EU thus far has focused on detailed plans and seed money to drive the process and tied that into a what, at least superficially, is a competitive bidding process for plans and projects. |
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On 3 June 1998 the Commission adopted a communication entitled TransEuropean Transport Network: Report on progress and implementation of 14 key projects. Of the 14 projects, three are nearing completion and all the others are being constructed or are in an advanced stage of preparation. Most should be completed by about 2005. The biggest of these projects are airport projects, particularly the Malpensa Airport project in Italy and the Terminal 5 expansion in Heathrow, UK. This is perhaps no accident for two reasons. First, the air traffic system in Europe is sorely overtaxed and in need of expansion. Second, airlines, whose bread and butter is threatened by capacity limits, are willing to work with governments on making changes and, more importantly, to put up some capital to do so. |
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However, money spent on the ground thus far is more dominated by rail and road. Total investment in the TENT in 19967 is estimated at ECU 38.4 billion. More than threequarters of this went on rail and road. The majority of the projects relating to the transEuropean road network concern the upgrading of existing roads. However, 46% involve the construction of completely new road infrastructure. Finally, some projects involve improving transport conditions, including safety. In 199697, total investment in TENT roads amounted to ECU 14.6 billion. |
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As regards the transEuropean rail network, investments during 199697 totalled ECU 15.1 billion, 68% of which was devoted to the high speed network. During this period, the projects were in the construction or startup phase. However, it is expected that 865 km of lines will be constructed and 2000 km upgraded for highspeed trains by 2003. |
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Work is also being undertaken on the inland waterway network and inland ports with a view to upgrading waterways, increasing their depth in order to improve reliability of navigation and enlarging locks. While the total cost of projects up to 2010 is estimated at ECU 14 billion, expenditure committed in 199697 amounted to ECU 1.028 billion. |
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Investment in seaports accounted for 5% of total TENT infrastructure expenditure, or ECU 1.7 billion. These funds were invested in the construction of new port infrastructure (35%), improvement of connections with the transEuropean land networks (40%), transshipment facilities and multimodal connections within the port area and improvement of sea access to ports. |
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Some ECU 6 billion were invested in the airport network in 199697. At the major airports, particular attention was given to connections to the rail, especially highspeed rail, network. Report SEC(1998)1993 |
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This is all well and good, but the EU has had a continuing problem in that national transportation investment policies are very much affected by national economic cycles which have traditionally been more out of sync with one another than State and regional cycles in the US. This is changing as the EU becomes more economically integrated, and as a common currency and central bank take hold. But since national authorities still hold primary sway over transportation investment and management, this has presented some problems for coordinating a transnational transportation scheme. |
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An ECIS report on European Infrastructure Investment from 19801994 details some of the issues in this regard. As that report makes clear, it is difficult to generalize the respective roles of central and national authority with respect to infrastructure because institutional arrangements and local conditions in each country are often so different and thus the policies followed are often quite different as well (Table 8 summarizes the national differences in road and rail investment within the EU and in a couple of nations outside of it). |
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Table 8: Transport Infrastructure Investment by Country in 1993 (m Ecu, 1994 prices) |
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For example, highway investment took most of the impact of budget cuts in the mid1980s while rail investment remained steady. But cuts in the road budgets were pronounced in Belgium, Germany, and Switzerland, all of whom had invested heavily in motorways and/or which were running out of suitable land. In fact, after the mid1980s, the motorway network grew most strongly in the less developed parts of the Union, including East Germany. By contrast rail investment was partially insulated from shortterm budget constraints through a certain autonomy of the railway companies. But here the exception is quite telling: investment suffered most in Italy during this period, where investment was halved (at the time, Ferrovie dello Stato was very much run as a directorate of the Ministry). |
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Where motorways enjoyed a degree of institutional autonomy similar to the railways, as did the concession companies in France and Italy, motorway investment was also insulated from budget cuts. There are clearly lessons here which are being applied in an increasing number of countries. |
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Transportation investment turned up after the mid1980s and again, there were significant national differences. Portugal tripled total spending since 1985 and more than quadrupled road spending and significantly has sought private involvement in that system in a very big way (Fernandes and Viegas). By contrast, in Germany, the decline of investment in the 1980s would probably have continued into the 1990s had it not been for the effects of reunification. In some countries, the "ring fencing" of infrastructure expenditures through special funds (e.g., in Belgium) and recourse to offbudget financing (France, Italy, Denmark, the United Kingdom) helped to reverse the trend. In the Netherlands, however, "ring fencing" infrastructure expenditure through a special fund was abandoned because revenues proved no more reliable than budget allocations. In France, Italy and Sweden (and Germany), the highspeed train programmes helped to reverse the decline in investment. |
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In air travel particularly, as with some train connections, there is a bottleneck due to the existence of 22 different national air control systems. Apart from requiring large safety distances between aircraft, one of the consequences is to force planes to fly in corridors, making distances up to 40% longer than necessary and imposing costs on operators, users and the environment. An integrated, automated air traffic control system for Europe, now part of TENS, is probably the investment with the highest benefitcost ratio of any transport investment project. Nationalist and bureaucratic resistance hamper its implementation. |
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Overall, EU transportation policy has more of a “split personality” than American transportation policy. On the one hand, there is a strong central planning process, at least on paper, and a focus on transnational objectives. On the other hand, actual policy making and expenditures in transport are still largely out of direct EU control. Thus the EU focuses on moral suasion and financial incentives to both tie the national transportation systems closer to together and to keep them from developing in contrary ways. In a very real sense, the EU experiment in this regard is just beginning and its success cannot be judged yet. |
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CONCLUSIONS AND FUTURE DIRECTIONS FOR RESEARCH |
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There are many similarities between the European and American federal systems as far as infrastructure provision is concerned. Both systems are decentralized, with the highest level of government responsible for formulating overarching strategy and lower levels responsible for carrying that strategy out and directly providing services. Both systems have central governments which use regulations and financial incentives, mainly in the form of governmental transfers, to guide lower level governments towards certain types of policy actions. Both systems also have mechanisms which allow for the higher levels of government to hear, and hopefully by influenced by, the lower levels. |
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The main differences between Europe and America, at least as far as infrastructure policy is concerned, are in degree of centralization and institutional detail. The American system is more decentralized in that, apart from setting some very broad national policy goals, formulation of actual policies tends to be very much a partnership, or at least informal collaboration, between local powers and national agencies. The Federal government holds many financial levers, but States and localities have their own sources of financing which give them some independence from Federal policies. On paper, Federal power over States is largely unlimited (though the Supreme Court has recently been restoring some marginal constraints on that power); in practice, however, States and localities retain considerable freedom of action to design programs that they desire so long as they adhere to national laws. This arrangement is very different from the EU where the European Commission sets very detailed transnational plans for infrastructure and has identified and is trying to complete a number of very specific transportation projects. |
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REFERENCES |
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American Public Works Association, 1976. History of Public Works in the United States, 1776-1976, (Chicago, IL: American Public Works Association) |
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Boorstin, Daniel J., (ed.), 1966. An American Primer, (New York, NY: Mentor Books) |
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The Declaration of Independence and the Constitution of the United States, (New York, NY: Penguin Books) |
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S. Bukold, W. Hager, H. Olsen, W. van Bodegom, The State of European Infrastructure 1996, European Centre for Infrastructure Studies, Rotterdam 1996 |
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European Commission Innovation Programme, (ECIP) Brussels, July 1996. "Trends in Transport Technology", in "Innovation & Technology Transfer", n. 4/96, |
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U.S. Department of Transportation, Bureau of Transportation Statistics (USDOT-BTS), 1997. Transportation in the United States: A Review, Washington, DC |
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World Bank, 1994. World Development Report 1994: Infrastructure for Development (Oxford, UK: Oxford University Press)J. Delors, Growth, Competitiveness and Employment, White Paper of the European Commission, Brussels, 1994 |
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L. Girard, in The Cambrige Economic History of Europe, Cambridge University Press, Cambridge 1965,Volume VI: The Industrial Revolution and after, Chapter 4: "Transport" |
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N. Kinnock, Foreword to Task Force, Transport Intermodality, European Commission DG VIIE, Brussels, November 1995 |
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D.S. Landes, in The Cambrige Economic History of Europe, Cambridge University Press, Cambridge 1965, Volume VI: The Industrial Revolution and after, Chapter 5: "Technology Change and Development in Western Europe, 17501914" |
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C. Marchetti, Space, Time, and Movement, paper for the "Infrastructure, Environment and Growth" Conference, Milan, October 3, 1996 (unpublished) |
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A. Schäfer, Trends in Global Motorized Mobility. The Past 30 Years and Implications for the Next Century, Working Paper 9549, IIASA, Laxenburg, June 1995 |
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L. Tissot, "Tourisme et chemin de fer" in M. Merger, A. Carreras e A. Giuntini, Les Réseaux européens transnationaux xixexxe siècles, quels enjeux? Ouest Éditions, Nantes 1995 |
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"Trends in Transport Technology", in "Innovation & Technology Transfer", n. 4/96, European Commission Innovation Programme, Brussels, July 1996 |
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"Delays can be expected", in "The Economist", July 27, 1996 |
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"Base Delphi: Transport", on the French Ministry for Education, Science and Research's Internet site: |
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TRANSEUROPEAN NETWORKS, 1996. Community guidelines for the development of the transEuropean transport network. Decision No 1692/96/EC of the European Parliament and the Council of 23 July 1996 on Community guidelines for the development of the transEuropean transport network. |
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http://www.mesr.fr/ |
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"Heathrow Airport Terminal 5", on BAA's Internet site: |
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http://www.baa.com/T5 |
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Further material on the "Malpensa 2000" project can be required to: |
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SEA (Società Esercizi Aeroportuali) Public Relations Department Aeroporto di Linate I 20090 Linate (Milano) tel +39 2 74852440 fax +39 2 70200323 |
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Further material on the European Commission transport policies is available at EC Task Forces: |
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Intermodal Transport Task Force EC DG VIIE Mr. M. Dudding fax +32 2 2968350 |
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Trains and Railway Systems Task Force EC DG VIIE3 Mr. A. Colaço fax +32 2 2968350 |
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Car of Tomorrow Task Force EC DG XIIF2 Mr. D. Miles fax +32 2 2950656 |
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New Generation Aircraft Task Force EC DG IIID4 Mr. D. Bunch fax +32 2 2956851 |
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Maritime Systems Task Force EC DG IIID4 Ms P. Anaboli fax +32 2 2956851 |
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