Financing Infrastructure

Kevin Cox
5 min readFeb 11, 2024

In today’s economies, money for infrastructure, or capital, comes from those with money, a currency-issuing government, or personal savings. Infrastructure is artefacts like assets and knowledge available for reuse. If a person without money wishes to invest in infrastructure to use or obtain a return, they can:

  1. Borrow new money from the government via bank loans,
  2. Obtain grants from governments or contracts from governments to build assets.
  3. Borrow existing money from investors via loans.
  4. Sell shares to shareholders.
  5. Buy existing assets on credit.

The money (capital) is spent building assets and knowledge that produce goods and services to sell and generate profits, which makes more capital available for further investment.

Unfortunately, those without wealth can rarely access capital.

In most economic activities, the capital owners earn the profits, while those who provide the funds to purchase goods and services do not receive any profit share. History and modelling tell us that the distribution of wealth in such a system inevitably becomes a Zipf distribution. As a result, a small number of people hold the majority of capital, and a significant amount is invested in overpriced physical and financial assets.

Much money is held in expensive financial and physical assets, and most people have limited purchasing power, causing economies to slow down and become less productive. It happens because most people only have money to buy essentials and little or no capital to invest in new production, while those with wealth hold onto it and do not reinvest it. Investments are typically directed towards short-term gains in already established businesses by those with large amounts of unused capital. As a result, ownership becomes more concentrated, leading to the emergence of oligopolies and monopsonies and a further slowdown of economic activity.

As is so often the case, the workers and customers of companies are blamed for the lower productivity. At the same time, the owners of corporations cause the economic slowdown, inflation and mal-distribution of capital. The workers and customers are asked to correct the problem with “austerity” measures of higher unemployment, fewer government services, and increased inflation, creating the so-called business cycle.

A solution to these issues is for providers of capital to share the profits with customers who pay extra to create the profit. Capital circulates with goods and services, meaning everyone can participate in the infrastructure economy. It increases the rate of infrastructure development and reduces the financial cost and the cost of infrastructure itself.

Increasing Investment in New Capital

Buying old assets is an easy way for investors to invest. Many (most) retail share market investors follow the indices rather than seek out new investments. It is also the safest place for banks to provide loans, and bank loans have an advantage over loans of existing money as their costs are lower and their profits from each loan are higher. Unfortunately, in a developed economy, bank loans are mainly used for transferring assets rather than new investments. This means there is less investment available for innovations and new assets.

A way to address this problem is for investors to work with borrowers to remove the need for bank loans with mechanisms for investors to acquire shares in companies and assets without going through expensive secondary stock markets, housing and other asset markets.

One mechanism is the Permanent Asset Market (PAM). They operate continuously, and every month, investors receive new shares and must sell the same number of existing shares. They sell them to buyers who receive shares, goods, and services, as each payment includes purchasing company shares. The price of shares is fixed and is publicly available. Shares can be used to purchase goods and services or sold to other investors or buyers of products.

Permanent Asset Markets remove the need for loans for investment, which removes the need to pay interest and the need for businesses to acquire capital within an expensive secondary market. It reduces the cost of raising capital while making more capital available, as bank loans are uncompetitive with the returns and benefits of a PAM. The PAM savings to transfer assets are greater than 50% for long-lasting assets with few ongoing operational costs. The savings take the form of higher returns to investors and lower costs to buyers.

PAMs share the increase in capital by buyers paying to use the product, and the payment also buys a share in the asset that produced the profit.

Modelling and Building PAM Systems

PAM systems are modelled with Agent-Based modelling tools like NetLogo. The model is created and trialled and becomes the system when satisfactory. Every investor and every buyer gets an entry into the model and can see their information and the aggregate information. Hence, they are always fully aware of the company's state, can model possible actions, and make informed decisions. They cannot see other buyers' or investors’ private information, but they can check and suggest how changes in the company's operations.

Existing Systems

Any existing Company or cooperative can convert into a Permanent Asset Market to provide development and working capital without loans or special capital raising.

A Permanent Housing Market (PHM)

A Permanent Housing Market has houses, investors and occupiers. Every occupier is also an investor. Occupiers buy shares in the house they occupy. Every month, every occupier pays an agreed amount of their disposable income or a percentage of the house value they occupy.

Part of every occupier’s payment is a payment for occupation, part is a payment to purchase shares in the house they occupy, and part is a payment to maintain their house and operate the company. When an occupier owns all the shares in their house, the money they pay is an investment in the PHM.

Every investor makes 5% of their shares available for sale each year. The price of each share is always $1. Every investor receives 5% new shares each year. Investors can always sell more shares if there are buyers.

Every occupier must pay enough to buy the percentage of the shares investors receive for the unpaid part of a house. The minimum payment is 5% of the unpaid amount unless some investors are willing to leave their new shares in the PHM or some buyers wish to pay more than the minimum. The extra they pay becomes investments in the company and pays a share of the company's operating costs and their home’s costs.

Each year or when a new occupier comes into a house, it is independently valued, increasing or decreasing the shares in the company.

The service providers to a PHM are preferably Permanent Asset Markets themselves for the service or goods they supply.

Distributing Savings

Money savings become wealth in the hands of the receiver. A sharing distribution is one in which both parties share according to how much effort is involved. The sharing with PAMs is the amount of money paid by the occupier to the company. Without other factors, 50% goes to the occupier as capital and 50% to the company. The investors get 50% by receiving a net increase of 50% in shares.

Banks and Sharing Profits

Permanent Asset Markets can choose service providers who share profits. Banks are an important service provider, and their profit comes from interest. The simplest way for a bank to share profits is to reduce the capital amount owing by a share of the interest. When we do this, a surprising thing happens. Bank profits remain the same, but because the loan lasts longer, the total interest received is less over a shorter period.

However, Permanent Asset Markets eliminate all interest, and PAMs should only deal with Banks that share profits or, better still, are PAMs themselves and eliminate all interest.



Kevin Cox

Kevin works on empowering individuals within local communities to rid the economy of unearned income.