Infrastructure Institutions: Democracy, Dictatorship, and Corporation

This paper investigates three models for subway building: New York City, Shanghai City, and Hong Kong. It argues that the NYC subway suffers from too much democracy, allowing for contestation between the NY city and state governments, different interest groups, and other stakeholders. In the Shanghai model, the city government centralizes power and resources and can extend its subway system at a very rapid pace. But it also runs the risk of overstretching the city’s finances. In the Hong Kong model, the Hong Kong Metro operates as a market-oriented corporation with a centralized decision-making process. Importantly, the Hong Kong government grants Hong Kong Metro the rights over land above and below the ground, which enables the corporation to capture the value added by a succesful subway system. The match of power and responsibility and the internalization of costs and benefits to decision-makers holds major lessons for democracy and capitalism in infrastructure-building.