Wednesday, February 2, 2011

High-Speed Rail off the Tracks

January 27, 2011
by: Luke Gelber

Wastewatcher, January, 2011

When stumping for Rep. Tim Bishop (D-N.Y.) in October 2010, Vice President Joe Biden made a telling statement regarding the government’s role in investments. He credited the government with “every single great idea that has marked the 21st century, the 20th century and the 19th century,” adding that “in the middle of the Civil War you had a guy named Lincoln paying people $16,000 for every 40 miles of track they laid across the continental United States. … No private enterprise would have done that for another 35 years.”

Ignoring the insult to all non-government workers of the past three centuries, one may presume that the government has a similar explanation for its own, more modern focus on railways. The President’s stimulus package contained $8 billion for high-speed rail (HSR) projects, including $2.3 billion for a line linking San Francisco to Los Angeles and $1.25 billion for a line extending from Tampa Bay to Orlando. In October 2010, Secretary of Transportation Ray LaHood announced an additional $2.4 billion for HSR projects across the country. Almost $2 billion of that amount was redirected from projects in Wisconsin and Ohio when local officials refused to accept the money due to costs to the states that they could not afford. In his January 25, 2010 State of the Union address, President Obama promised 80 percent of Americans access to high-speed rail in 25 years.

The Federal Railroad Administration claims that HSR will “serve as a catalyst to promote economic expansion (including new manufacturing jobs), create new choices for travelers in addition to flying or driving, reduce national dependence on oil, and foster livable urban and rural communities.” These justifications, taken at face value, do nothing to explain why billions of taxpayer dollars are necessary. Federal funding of HSR projects forces taxpayers across the country to foot the bill for someone else’s enormously expensive product.

HSR projects do not constitute a public good as defined by economists. Their delivery by the private sector is not prevented by threats of free ridership or other market failures. Those who benefit pay, the same way as passengers on airplanes or in taxis. Instead, the problem with HSR is the inherent ultra-high cost, ranging anywhere from $22 million to $132 million per mile, according to a Government Accountability Office report. California originally estimated that its HSR project would cost roughly $45 billion, but a 2008 study by the Reason Foundation, Citizens Against Government Waste, and the Howard Jarvis Taxpayers Foundation called that number low by as much as $26 billion. Even California’s “official” estimates have been rising, prompting State Sen. Doug LaMalfa (R-Richvale) to renege on his previous support.

Even on the environmental front, experts are far from a consensus on whether HSR makes sense. Many estimates of reduced emissions and congestion on highways rely on very high ridership rates, which are far from certain. Further, approximations of cost on light rail projects in Arizona, Oregon, and Virginia have proven consistently low. As Warren Meyer observed in Forbes on September 22, 2010, Phoenix could have purchased a Toyota Prius for each daily rider of its light rail system and still had a billion dollars to spare. California, showing typical thrift, spent $250 million on HSR before it laid a single mile of track.

No doubt it would be lovely to have mass transit “whisking through towns at speeds over 100 miles an hour,” as President Obama said. High-speed rail lines are incredible feats of engineering that make for glorious photography and impressive ribbon-cutting ceremonies. As a result, federal spending on HSR enjoys bipartisan favor. But to support federally-subsidized high-speed rail is to suffer from a politician’s typical lack of vision. It is to fawn and obsess over what is tangible, obvious, and shiny while ignoring the massive opportunity costs of such politically-advantageous projects. Money spent on high-speed rail could have gone toward paying down the national debt, education, poverty relief, law enforcement, or, best of all, the individual free spending choices of taxpayers.

Indeed, Vice President Biden would do well to brush up on his history. While the federally-subsidized Union Pacific Overland Route was America’s first transcontinental rail line, it went bankrupt by 1897. Each of its competitors that received land grants and subsidies failed similarly. Only the Great Northern, financed privately by individuals trading peacefully and voluntarily, managed to escape conservatorship. The United States should heed this lesson and pull any federal funding for high-speed rail.

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