One reason why I’m still skeptical about high-speed rail

by on September 7, 2010 at 7:51 am in Economics | Permalink

There should be a betting market in how many of these projects actually end up being finished within, say, the next thirty years:  

But the biggest question mark hovering over the future of high-speed rail in the United States is funding. The $8 billion allocated in the stimulus package is not nearly enough, particularly because it is spread across a range of projects around the country. California’s new system alone could cost $40 billion. State governments will shoulder a substantial share of the costs, and they are grappling with budget deficits.

These days, many states are cutting or limiting spending on K-12 education.  You can argue "State and local taxes should be higher" (I don't agree), or "We should make drivers bear the full social costs of auto transport" (I do agree), but as they say "You've got to go to war with the army you've got."  So far the HSR expenditures are looking like a big white elephant.  It's very important to have a theory of public choice which consists of more than simply criticizing the politicians, parties, and voters you do not agree with.

The full story is here.

anonymous September 7, 2010 at 8:32 am

The environmental impact studies and NIMBY lawsuits won’t even be finished in thirty years, let alone the actual projects.

Andrew September 7, 2010 at 9:02 am

$40B is about 2M Priusi.

Floccina September 7, 2010 at 9:16 am

I think that if you added a lot more cost to driving individual cars people would still drive almost as much because it is clearly better than the alternatives. I think that they would drive less and smaller and lighter cars but not switch much to mass transit.

And I think that cars that drive themselves on interstate highways are coming which will further improve cars advantages.

john haskell September 7, 2010 at 9:45 am

@ Ris – hopefully we can allocate some funds to a California version of Neuschwanstein? You are crazier than Mad King Ludwig if you think a high speed rail between London and China will be completed at any time, ever, forget about the next ten years.

Ed September 7, 2010 at 9:58 am

I’m a big rail fan, but not necessarily of high speed rail. The most “bang for the buck” with spending on infrastructure in this country is commuter rail lines, and to a lesser extent, mass transit in cities. If you can get more people to commute primarily by train (using the car if necessarily to get to and from their local commuter station), then you have a big environmental impact and also reduce traffic for the remaining motorists. Plus commuter rail gives people another way to do something -getting to and from work- that they are being forced to do anyway, at least give them a choice between driving, taking a train, or even biking.

The fact is that something like over two thirds of the nation’s population are in metropolitan areas, and the vast majority of journeys are between places within the same metropolitan area, the daily commute being a big part of that. In the Northeast, and a few other places, the cities are close enough together that commuter rail can provide some intercity rail capability.

Intercity rail essentially competes against airplanes. We probably will want an alternative to airplanes or driving long distances to move between cities, but this is a lower priority to providing an alternative commute. If intercity rail is to provide an alternative to the airplanes, the first lines to be upgrade should mirror the most congested airplane routes.

There is also alot of work that needs to be done if we are just to maintain the capacity that we already have. The New York and Chicago mass transit systems are, to be blunt, a mess. The San Francisco Bay area transit systems could be integrated. Intercity passenger rail should be moved to its own lines, off the freight rail system, and completely electrified.

The only real justification I can think of for high speed rail in the US is that it has become a prestige project, and politicians seem more willing to fund prestige projects than practical things.

Hall Pycroft September 7, 2010 at 10:01 am

HSR has of course many implementation issues and any class of infrastructure project which perennially has to be signed off by that good ol’ lender of last resort The Taxpayer rightly attracts some suspicion.

But for the US there are two other issues: 1) physical geography; and 2) human geography. Point-to-point distances tend to be longer in the States than in Europe or Japan, making it harder for HSR to compete with airlines. And cities are famously more sprawling in the States than in Europe (the “exburbs” phenomenon), making the route inflexibility of “chemins de fer” a bigger problem.

Re the current crop of US HSR ideas…I’ll believe them when I see them.

Corcoran Cadet September 7, 2010 at 10:04 am

I suppose I could see a combination of private funds and public funds working in terms of creating high speed rail in this country. It would have to be restricted to specific corridors of course, but who wouldn’t like to be able to hop on a train and ride quickly between New York, Boston, and Atlanta.

The hangup for me is that I haven’t really seen a rail system that had a tremendous amount of cost benefit to the customer. I spent a good deal of time in Japan with daily use of the rail system in and around Tokyo, Yokohama, and Kyoto. The amount I was spending on train rides each day was at least equal to the amount I spend on gasoline each day here in the United States. I’m not quite sure if I would have been gaining once you factor auto insurance in. Lengthy trips (say between Tokyo and Kyoto) on the shinkansen were quite nice. Very easy to get on and off, very relaxing rides, and nice service. However, the cost was still fairly close to that of a plane ticket between two similar cities in the U.S. I did save time not having to go through security and park at the airport though.

I’ve not researched it much, but it is my understanding that the majority of the large Japanese rail lines are privately owned (Keikyu Corp. etc). If this is the case, then maybe some credence should be given to the idea that we simply have not reached a stage here in the U.S. where large scale rail is necessary.

Andrew September 7, 2010 at 10:33 am

“is there any reason, at all, to think that if HSR made sense in the US, private companies wouldn’t already be rushing to do it without subsidies?”

Because the competition is subsidized. That’s a possible reason.

Tony September 7, 2010 at 10:50 am

I’ll second schnietzj — am I the only one who remembers $4 gas?

And on a personal note, I support rail because I’m kind of a country boy. I live in the city now, because if everyone lives in the country, it’s no longer the country. Every time I go home there’s some new suburb flattening out where there used to be trees.

akatsuki September 7, 2010 at 11:00 am

The real comparison should be short-hop flights rather than cars. SF to LA by plane takes me 5 hours door-to-door. If the rail is competitive with that, meaning no insane security lines, etc, then I’d prefer rail preferentially. Especially since you will end up in relevant parts of the town, etc.

Also it is impossible to do a project like HSR in the private market for obvious reasons including hold-out problems, large externalities, etc.

@Corcoran Cadet- In Japan, it is more of semi-private utility rather than a true market. Also, you are ignoring the value of your own time since if you had driven, you would, by necessity, be unable to do much else driving from Tokyo to Kyoto. So whatever your hourly value is, add that to the side of rail (and flights, although flying ends up having lots of downtime while you wait in lines and are forbidden to use electronics).

If we copied the Japanese model, I’d be fine with it. Excellent service and the prices are reasonable (especially last minute where flights are often pricey for a flight). I can think of numerous corridors that would benefit.

Lynnehs September 7, 2010 at 11:29 am

Funding might not be as big a problem as people think. The upfront costs are supposed to come from closing tax loopholes. I don’t know all the details about which loopholes are being closed, but I’ve read elsewhere that we lose billions of dollars in US revenue from multinationals in the US that use overseas tax havens.

But that’s not why I think funding might not be as big a problem as people think. This plan will create jobs, especially in construction, which has been hit especially hard by the recession. More people being put to work means more tax revenue can be collected from people who right now are collecting unemployment benefits and probably won’t pay much in federal income taxes until they can get a job.

Six Ounces September 7, 2010 at 11:38 am

Throughout history there has been a flip-flop between fixed infrastructure and flexible infrastructure in both transportation and communications.

For communications we went from verbal (flexible) to wire (fixed) to radio (flexible) to internet (fixed) to satellite/cell/wifi (flexible)

For transportation we went from foot (flexible) to roads (fixed) to sea (flexible) to rail (fixed) to air (flexible).

Flexible systems can have carrying capacity vary with output while fixed systems have a permanent infrastructure which must be maintained. Fixed systems are generally more secure but, in the modern age, fixed systems are like medieval fortifications – vulnerable to attack.

I do not think the proponents of HSR are figuring in the enormous costs of environmental impacts, monopolization, inflexible capacity, and maintenance. Concrete roads would last far longer than asphalt, but there’s a reason we don’t have concrete roads everywhere. For the same reason we won’t maintain HSR as well as we should – Amtrak is your model.

They also forget that terminal nodes of fixed systems always require flexible systems.

Rail is more efficient than air and car ONLY when the train is full. Start running those trains empty, and the average fixed cost soars (when properly amortizing fixed costs over the useful life).

Bear in mind that when you think about fixed vs. Flexible, it’s all relative, and that the current environment of economy and security by and large determine which systems are en vogue.

“Why do I have to pay exact fare when you’re not going to take me exactly where I want to go?”

If we’re so worried about keeping bombs and guns off airliners, how in the world will we protect our trains between L.A. and Sacramento? One derailer at almost any point on the line is sufficient to kill hundreds of people.

I agree that HSR is not scalable, and Andrew’s witty math is correct. We could issue everyone a Smart Car. :)

I’d prefer individual cars that travel along electromagnetic “rails” at high speed with computer control on the highways and avenues and manual control on streets.

DK September 7, 2010 at 11:49 am

Airport and road subsidies do not affect my point. The reason we have airport and road subsidies is that existing businesses are lobbying for them. Even nonexistent businesses lobby for funds too — people start lobbying groups all the time to push for new NFL teams and stadiums, and plenty of people have started electric car, solar power, and wind companies in hopes of enough government subsidies to someday reach profitability.

If anyone in business thought HSR could ever be profitable in the US, then someone would be organizing HSR-train-running companies now, spending lobbying and marketing dollars to build political support, and trying to get the government to pay the entire startup cost. And if European and Asian companies are better positioned for HSR, they’d be starting US HSR affiliates already with US partners to build political support.

My conclusion is that no one thinks HSR will either be profitable to operate day-to-day or be politically possible to build. if you disagree, please, start an HSR company and start spending money on it. I love Europe too and I would love to pay to ride in your cool, fast, c02-friendly trains.

prior_approval September 7, 2010 at 12:34 pm

‘The Seville-Madrid line was a political gift, and I’m not sure how profitable it is.’
I know this is going to sound strange, but many things aren’t profitable – at least when measured by a single standard such as how much money is flowing into offshore banking haven corporate P.O. boxes.

The TGV isn’t especially profitable either – but it is stunningly effective at moving large quantities of people at high speed from city center to city center – but then, cities are considered essential in Europe, whereas in the U.S., they have been pretty much written off as being unworkable. It is really a matter of perspective, or priority if you prefer.

But one wonders – how much does America’s prison system cost? After all, European countries seem strangely unable to be as dedicated to locking away people at high expense. while seemingly being able to afford less than profitable HSR sytems.

Cyrus September 7, 2010 at 1:17 pm

The main risk of commuter rail is that you build expensive infrastrucutre today, but you don’t know where people are going to want to go in 30 years. If you had built commuter rail in the Detroit metro area 30 years ago, no amount of prescience could have put the stops at the correct destinations, because the correct destinations were in other metropolitan areas entirely.

MPO September 7, 2010 at 1:43 pm

“But the U.S.? Nope. Which says a lot more about the U.S. than it does HSR, which continues to grow globally.”

Yes, it says HSR doesn’t make enough sense in the United States, and that few if any countries share the massive geography and population distribution issues found in the United States. I’m sure that’s what you meant, right?

Chris September 7, 2010 at 2:06 pm

I am a bit mystified that people believe HSR would save them the time they spend in airport security lines. There’s no reason to believe that HSR wouldn’t come with the same security hassles. Or even more likely, that it would start out fairly open until the first train was blown up killing all 500 passengers, then would be overlaid with an ungainly security structure that turned picture-perfect efficiency-optimized train stations into nightmares.

Trains don’t need security in the US today because they move slowly enough that a big bomb is needed to cause really serious damage, and because except for the Acela they are mostly for poor people. If HSR replaces planes as a primary means of intercity travel, it will also replace planes as a primary terror target, and be burdened with all the associated security apparatus.

prior_approval September 7, 2010 at 2:16 pm

‘Yes, it says HSR doesn’t make enough sense in the United States, and that few if any countries share the massive geography and population distribution issues found in the United States. I’m sure that’s what you meant, right?’
Well, if I was ignorant, I might think that the entire Northeast corridor, in the shape of a very rough triangle with its points at DC, Boston, and Chicago didn’t actually resemble Europe in terms of size and population density – or historical development involving cities with very roughly the same development patterns, that is, cities built before the car became a dominant form of transportation sometime in the middle of the 20th century.

Further, I would have to ignore the fact that other areas, such as Florida or the coastal Pacific Northwest also tend to have the sort of size and population density which Europeans consider completely acceptable in terms of HSR links.

And strangely, the Chinese seem to be thinking on a truly continental scale for their HSR plans (the EU is planning its own links deep into Eastern Europe, which are likely to become part of a rail network covering a landmass which dwarfs the U.S.). Probably because unlike most people living in the U.S., the Chinese (and the EU) aren’t restricted to a suburban vision of transportation. The rest of the world isn’t really paying much attention to the U.S. and its inability to actually master (well, re-master – a couple of generations ago, the U.S. had the world’s best passenger rail system) a functional system of HSR.

But there is no question that the U.S. has mastered the skill of explaining why Americans are incapable of doing things that other societies consider routine.

prior_approval September 7, 2010 at 2:22 pm

‘Or even more likely, that it would start out fairly open until the first train was blown up killing all 500 passengers, then would be overlaid with an ungainly security structure that turned picture-perfect efficiency-optimized train stations into nightmares.’
Almost as if no one ever bombed a bus – or used poison gas in a subway. Or used cooking gas containers rigged with nails as bombs in a subway. Or used a purpose built bomb. Or ….

Or maybe, some societies accept that the occasional terrorist will occasionally be able to perform a terrorist act – then those societies clean up, and keep on living pretty much the same way, almost as if they were proving to such terrorist scum that they weren’t going to change their whole way of life at a terrorist’s whim.

Other places? Well ….

anonymous September 7, 2010 at 3:13 pm

The long-term reason why HSR is a bad investment is because human activity, economic and otherwise, will inexorably shift almost entirely to the online and the virtual over the next half century.

Yes, I’m serious. Remember that we always overhype the short-term impact of any new technology but simultaneously seriously underestimate its immensely transformative long-term effects. It will always be cheaper to move electrons or photons than atoms.

A lot of non-freight transportation infrastructure will become superfluous and will go unmaintained or decommissioned. One day the interstates will go the way of the Erie Canal.

Sigivald September 7, 2010 at 3:55 pm

We should make drivers bear the full social costs of auto transport

Well, if that includes trucking, how about compensating them for the social benefits that accrue to everyone as well?

And if it’s just non-truck car transport, what social costs might those be, and how will they be calculated?

Sam Penrose September 7, 2010 at 4:25 pm

@prior_approval: thanks for the great contributions.

Tyler: “It’s very important to have a theory of public choice which consists of more than simply criticizing the politicians, parties, and voters you do not agree with.”

Two, perhaps mutually contradicting replies:

(1) Nah, I can just outsource it to you.

(2) Why? It sometimes feels as if your m.o. is “pass over in silence the many public issues in which there is a clear party at fault, unless the issue is simply too prominent, in which case strain to find some complexity which lets me avoiding saying we should support one side against the other.” In particular, it feels like you often conflate the messiness and imperfection of Democratic governance with uselessness. It’s as if your heart is given to the conservative/right-libertarian intellectual model, but your intellect can’t ignore various ways in which the left has its heart in the right place.

ziel September 7, 2010 at 7:50 pm

Putting in high speed rail in the Northeast corridor is for all practical purposes an impossibility. The existing train lines and rights-of-ways are useless for HSR due to all the twists and turns. An entirely new route would have to be laid out, resulting in the bulldozing of countless residential and commercial structures and the defacing of countless acres of empty land (a/k/a “wildlife refuges”, “waterways” and “ecologically sensitive marshlands”) – in other words, impossible. If not impossible, it would surely cost in excess of $1 trillion in today’s dollars.

hix September 7, 2010 at 10:36 pm

Lol. Way to go, make sure your market fundamentalist credentials dont get questioned by things like facts. If you dont like the facts, just make up your own numbers! Cas is as always great comedy. HSR has exactly zero to do with education budget both have to stand and fall on their own merits.

Day to day hsr operations are usually very profitable even when one ignores all the great positive externalities. Thats however a bug, not a feature, since overall societal gains get limited by gready for profit thinking managment. The upfront capital costs, not operation costs hinder hsr development in countries with an underdeveloped public sector.

TGGP September 8, 2010 at 12:36 am

Steve, Randal O’Toole of Cato (though he enjoys playing with train sets) favors more busses instead of rail. I think he makes some good points but seems to be absorbed in a culture war with liberals over automobiles.

prior_approval September 8, 2010 at 12:54 am

‘But it isn’t. Not at all. That is, the TGV carries quite a small fraction of the inter-city passenger traffic in France:’
Well, yes – but the TGV from Stuttgart to Paris tends to be sold out any time I have been interested in booking it over the last couple of years. The same happened when trying to book a TGV from Germany to Bayonne in August (for a beach holiday).

To note that the TGV carries a fraction of French intercity passengers, and a declining fraction at that, is sort of like saying that JFK carries a decreasing number of total passengers from NYC, or noting how many miles the average person in NYC uses for air travel – JFK is essentially at capacity, and most New Yorkers don’t fly that much. The TGV (it would seem from my admittedly limited personal experience) seems to be near its capacity much of the time, or the German ICE system, which is definitely often at capacity during the work week, holidays, and weekends – but apart from then, the ICEs often have a few free seats.

a September 8, 2010 at 5:10 am

“If HSR replaces planes as a primary means of intercity travel, it will also replace planes as a primary terror target, and be burdened with all the associated security apparatus.”

The Eurostar (train between Paris and London) has air-like security. It’s fine and the Eurostar beats airplanes easily.

babar September 8, 2010 at 8:38 am

One more post about movin’ along the railway
Don’t say much of anything that’s new
If I could only work this life out my way
I’d rather not spend much money getting close to you

Darren September 8, 2010 at 9:23 am

The task for transit is not moving small numbers of people a long distance. It’s moving large numbers of people a short distance. Similarly, high speeds are really beside the point: Under most circumstances, the standard for transit speed is a gridlocked freeway, not a jet airplane. A system that could carry a lot of riders at average speeds of, say, 35 mph, drop them off within a half-mile of where they live, work and play, and do so at a cost that wouldn’t exceed that of driving a car would be a success.

This is why, if you’re an advocate of transit, buses are definitely the way to go (at least in the U.S., where low densities usually make train stations impossibly far homes and offices). With devoted “tracks,” buses can match typical train speeds. But because buses also travel on normal roads, they can, unlike trains, carry riders closer to where they want to go. Bus operators can also, over time, experiment with routes, allowing them to better match rider preferences. With trains, though, you get only one chance to get the route right. Buses are also much cheaper than trains, and they don’t generally require much additional use of eminent domain–the needed roads, for the most part, already exist.

autolycus September 8, 2010 at 9:53 am

prior_approval: I think what you’re missing in people’s response to you is that they don’t really see HSR as some sort of technological accomplishment worth pursuing. It has nothing to do with the capability of the US but everything to do with the priorities. That’s where you’re off base so much with your attacks of US society. We aren’t backwards because we prefer flexibility to inflexibility. We just have a different preference. And to act like it’s some failing of the US to have a different preference to you? Well, that’s just being silly. YOU love rail and the idea of rail. Most Americans don’t. So it certainly isn’t that the US “can’t do what a fairly second rate European society can.” It’s that we don’t want to.

Dan H. September 8, 2010 at 12:35 pm

Here are my issues with HSR:

– There’s little evidence that HSR saves energy. In fact, in Europe the focus on passenger transport has caused a reduction in rail freight, which has been offloaded into vans and truck trailers. In addition, actual measured energy consumption per passenger mile only beats large cars with a single passenger. Any medium or small sized car with two or more people in it will deliver those people for a lower energy cost per mile. A Prius with one person in it will also beat trains.

- HSR is inflexible. This is actually a big deal. Have a look at the change in aircraft movement patterns over the years at any one airport. You’ll find that some routes wane in popularity, and others add flights. The patterns of movement of people out of cities are quite dynamic. HSR locks you into a system that must run at high capacity factors between two fixed destinations, and maintain that high capacity for decades. There are only a handful of corridors where this is possible. New York to Washington might work. But in the end, a web of roads is a much better fit to the kind of dynamic societies we’re likely to have in the 21st century than are train routes with fixed endpoints and no ability to be changed.

- Rail changes land use patterns. If a business is currently located in an optimal location because of access to power or other requirements, it may lose competitive advantage to businesses located closer to rail stations. This will eventually result in businesses located in suboptimal locations when rail is not factored in. Again, a web of roads allows businesses to be more flexible in where they locate, allowing overall higher efficiency.

- HSR will not solve traffic congestion. Roads are congestion-limited because there is no usage fee. Offload 20% of the cars from a road, and it will become more desirable and pick up new vehicles until it is again congested. Congestion pricing is a much more efficient way to solve this problem.

- HSR is risky and expensive. The history of HSR contains a lot of failed projects and a lot of trains that lose money.

- HSR only makes sense over a fairly narrow range of distances. If cities are too close, it’s faster to drive. If they’re too far, it’s faster to fly. Again, this limits the number of places where HSR makes sense.

hix September 9, 2010 at 5:46 am

Holland, the place where everyone drives a car, France the place where trains are empty. Love it! Getting funnier and funnier.

autolycus September 9, 2010 at 1:19 pm

prior_approval: What “intellectual content” have you added? You’ve taken random pot shots at the US for not being even as advanced as some third-rate European country like Spain. Only, you base that on a priority that YOU have rather than one that almost everyone else in the US has. You are the one who is advocating spending BILLIONS or TRILLIONS of dollars on projects. The burden is on YOU to show why HSR is economically feasible and economically desirable. If your only evidence to those is that “Even Spaaaaiin can do it!” then you might consider backing off of your position. If you’d like to present some actual analysis of why HSR makes sense in the US, by all means, convince me that I should support HSR. So far your intellectual content has been fairly standard and generic Euro-elitism.

For the record, I like the concept of HSR. I just don’t think it’s politically or economically feasible given every relevant dynamic that I can think of in the US–environmental, financial, practical, etc.

Oh, and so what if Siemens is loving the fact that no US is competing against it for R&D or manufacturing of HSR cars and tech? For one thing, the last time I noticed, Siemens employs thousands in the US and anyone in the world can invest in the company. I just don’t get the obsession with “American” companies in this day and age.

Secondly, your continued lament over the loss of the manufacturing prowess of the US makes me imagine someone in the late 19th Century lamenting the move away from agriculture. We are, afterall, in the midst of the Computer/Information Technology Revolution. Many of us, especially youngins, believe that it is every bit as real and transformational as the Industrial Revolution. If we’re right, manufacturing is going to quickly become the 21st Century’s agrilculture, if it hasn’t already.

Tangurena September 13, 2010 at 10:07 am

Only $8 Billion for high speed rail? That is no where near enough to build a single HSR line anywhere in the US. Commuter rail for a single city will consume most of that $8B.

If you want to calculate urban rail prices, a reasonable rule of thumb is $30Million/mile (of track) for commuter/light rail, and $120Million/mile for high speed rail. This covers land acquisition and construction of the tracks. Building stations is rounding error – unless you are trying to build one of those stupid cathedral-type monuments to previous centuries.

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