Thursday, September 24, 2009

Why the feds should stay out of high-speed rail (and most transportation)

Set aside for a minute whether high-speed rail (HSR) makes sense or not on a cost-benefit basis. Regardless of whether it does or not (and some smart people are arguing not), I'd like to make the argument that federal funding has no place in HSR. Instead, it should be left to individual states or regional state coalitions.

The federally-funded interstate system was originally conceived for defense purposes - rapid mobilization - after Ike saw the German autobahns. Freight and people movement were obvious beneficiaries, over short, medium, and long distances. It is a comprehensive network that crosses state lines, which argues for federal involvement. The government made the minimal investment it had to make - road beds - and people/companies paid for vehicles and fuel. Fuel was taxed to pay for it all. If EZ-tag technology had been available at the time, I suspect they would have tolled it all instead to pay for it.

Airports followed a similar arrangement: government provides the landing strips and terminals while private companies provide the vehicles and fuel. Passenger ticket taxes pay for the infrastructure. As airports are a local decision, they are (mostly) paid for locally, although regulated federally for standardization and safety.

HSR is targeted at medium distances only, making it more of a state/regional decision (i.e. a small collection of states). It also requires huge subsidies, as the government provides the track, cars, and energy. There is nothing directly related that can be taxed to pay for it (like fuel taxes for roads and passenger ticket taxes for airports). You could try to tax the rail tickets, but if they were fully priced they would not attract nearly enough riders. So no matter how you slice it, in the end the government (i.e. taxpayers) will be paying the majority of the cost of moving each passenger. The infrastructure cost cannot be covered by direct user fees, as demonstrated in other countries.

Rather than compare HSR to the interstate highway system, the better analogy would be airports. Imagine if California said, "Feds, give us money to build a few airports in key CA cities and provide a subsidized government-run airline to provide frequent intra-state service where tickets are priced way below cost." Put that way, people would recognize the idea as absurd, and tell California to do it themselves if they think it's such a good idea.

The problem is that a simple program that made sense at the time - a federal gas tax to build an interstate highway system - has evolved into a Frankenstein monster of massive federal involvement in enlarged urban freeways, local rail transit, and now high-speed rail - areas where they simply do not belong. Local transportation planners have shifted decision making from "What are the best cost-benefit investments we can make to move people in our area?" to "How to do we grab our 'fair' share of the federal pie, regardless of whether or not the project is something we would consider with our own money?" And that is leading to a lot of boondoggles being built around the country, culminating recently in the famous Bridge to Nowhere in Alaska.

The answer? The feds need to get out of the transportation business beyond minimal maintenance of the interstate highway system (the basic four lanes - not the expanded urban freeways). Let local entities make local decisions on transportation investments, including funding, and a whole lot of waste will magically disappear.

Update: This has been re-posted over at New Geography.

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37 Comments:

At 8:43 PM, September 24, 2009, Blogger Alon Levy said...

I'm going to say what I said in the previous post: the defense argument is spurious. Even in World War Two, when the US was a net oil exporter, national policy was to move everything by rail to conserve fuel for tanks and fighter planes. In the 1950s, when the US was a net oil importer that needed to mount military coups in oil-producing countries, the importance of conserving oil was even greater.

What actually happened was, the largest employer at the time was GM. The Secretary of Defense was an ex-CEO of GM, who said in his confirmation hearings, "I thought what was good for the country was good for General Motors and vice versa." Essentially, the government was subsidizing GM by constructing a transportation system that you needed to buy GM products to use.

Beyond that, the Interstate system wasn't much more interstate in nature than HSR proposals. The national HSR proposals I've seen don't go coast to coast, but they do cross state and regional lines. The NEC-Southeast spine goes through 13 states (MA through AL) and DC, and sometimes also Florida. The Midwest plan goes through either 7 or 9 states, and sometimes connects to the NEC and to the South through 2 more states (KY and TN).

 
At 10:15 PM, September 24, 2009, Blogger Tory Gattis said...

And there's nothing stopping those states from forming a coalition to self-fund high speed rail for their region - similar to the cross-state Port Authority of New York and New Jersey.

 
At 10:33 PM, September 24, 2009, Blogger Alon Levy said...

Port Authority was formed by a court order, after New York and New Jersey couldn't agree on anything on their own.

Besides, a 2-state authority controlling one shared river mouth is tractable. A 22-state authority controlling multiple interconnected rail lines isn't. You might as well make it a 50-state authority and call it "The federal government."

 
At 7:51 AM, September 25, 2009, Anonymous kjb434 said...

Alon,

So if evil GM and the oil industry are the primary (hidden) reason we built the interstate system (because it logical or anything), why is ALL of Europe and any country in the world attempting to modernize investing massive amounts of money into highways versus high speed rail?

Europe is connecting the final pieces to build an international expressway network. You can quickly move goods from Istanbul to London, Stockholm, or Madrid. Spain and Greece are under massive expansion programs. Eastern European nations are interlinking their cities going north of Greece to the Ukraine and Poland with 4 lane expressways.

China has moved quickly and is continuing to expand it's network connecting all of it's large cities. Add other Asian countries such as India, Pakistan, Malaysia, Thailand, Philippines, Korea, and Japan that either already have extensive expressway networks or are adding thousands of miles to them.

What about Africa? South Africa has a large well connected network. Algeria, Libya, and Morocco have new expressway networks also. Libya and Algeria are aggressively expanding theirs.

And don't forget about South America. Brazil has the most extensive network currently. Argentina has one in areas expanding from Buenos Aires. Chile is currently expanding theirs north and south from Santiago and are almost complete. Peru is expanding further from the capital Lima.

Yeah, so GM and evil oil companies are the primary reason we built these! Of course, why couldn't people see that an extensive freeway network isn't just for effective national defense and quickest way to move goods, but it was only to line the pockets of GM and big oil.

 
At 8:25 AM, September 25, 2009, Blogger Tory Gattis said...

This comment is from Christof Spieler over at CTC Intermodality. I'm reposting it from Facebook:

This would actually make sense. I'd take it further and get the government out of interstates altogether (but allow the states to toll them and create a nationwide toll tag standard), cover all air transportation costs with fairly applied user fees, raise user fees on inland waterways to cover those costs, and leave the feds only to regulate and ... Read Moreset standards (which should be national because local standards lead to market inefficiencies.) And then I'd replace the gas tax with a carbon tax to take externalities into account.

Our current system is riddled with subsidies to nearly every mode (exceptions: pipelines and freight rail) that lead to massive inefficiencies by favoring less efficient modes (i.e. trucks, suburban SOVs) over more efficient ones.

 
At 9:27 AM, September 25, 2009, Blogger Christopher said...

If the initial HSR plans are any indication of the value of the federal government's involvement, I don't want it (outside of maybe cutting a check). I don't see how, even in the early planning stages, you could not connect Houston with any other major Texas city. And I don't count Amtrak and its 7 hour commute from San Antonio to Houston.

 
At 2:33 PM, September 25, 2009, Blogger Alon Levy said...

So if evil GM and the oil industry are the primary (hidden) reason we built the interstate system (because it logical or anything), why is ALL of Europe and any country in the world attempting to modernize investing massive amounts of money into highways versus high speed rail?

They're building fewer highways than the US did. The US still has the longest highway network of any country. In Europe they have highways, but they're typically narrower, with none of the 12-lane monstrosities of the US Sunbelt, and don't go into city centers; in city centers they have arterials and/or boulevards instead.

 
At 2:51 PM, September 25, 2009, Blogger Alon Levy said...

By the way, I'm not making a value judgment when I talk about highway lobbies. Every powerful industry starts colluding with the government - it's just that since WW2, the relevant industries in the US have been auto and oil.

Before the 1950s veneration of GM, rail was in the same position. In the Gilded Age it was cheaper to ship goods from New York to San Francisco via London by boat than directly by rail. The rail barons bought and dismantled coastal ship lines, much like how GM and Chevron later bought and dismantled streetcar lines. California became an early adopter of car culture because the alternative to cars was Southern Pacific, which the local cartoons portrayed as an octopus.

 
At 4:16 PM, September 25, 2009, Anonymous Anonymous said...

"They're building fewer highways than the US did."

They continue building freeways. In Europe, the population is much more concentrated because of centuries of past history. In China, they will overtake us in the miles of expressway. See this (it's an editorial, but it gives a good idea about market forces): http://www.tollroadsnews.com/node/3417


...............

"In Europe they have highways, but they're typically narrower, with none of the 12-lane monstrosities of the US Sunbelt"

Semi-limited access, Moscow, 18 lanes: http://maps.google.com/?ie=UTF8&ll=55.738588,37.587179&spn=0.001845,0.00567&t=k&z=18

Netherlands, limited access, 10+ lanes: http://maps.google.com/?ie=UTF8&ll=52.257135,4.682751&spn=0.002006,0.00567&t=k&z=18

A collector-distributor arrangement north of Paris, 15 total lanes: http://maps.google.com/?ie=UTF8&ll=48.970411,2.482653&spn=0.001076,0.002835&t=k&z=19

True, we have a lot of freeways, but not really that much more when you consider how spread out our country is and our wealth compared to other countries (having enough money to build). For instance, only 40% expressway miles per capita than France has: http://en.wikipedia.org/wiki/List_of_OECD_countries_by_freeway_network_size

There is no conspiracy. There was no GM conspiracy to end the dominance of rail. There was no rail conspiracy to end the dominance of steamboats. There was no big oil conspiracy to end the dominance of whale oil. There was no conspiracy of car companies to end the dominance of equestrian travel. And there was no master conspiracy by farmers to end the million-year-old tradition of hunting and gathering.

It just happened. It's called history.

 
At 6:02 PM, September 25, 2009, Blogger Alon Levy said...

In China, they will overtake us in the miles of expressway. See this (it's an editorial, but it gives a good idea about market forces): http://www.tollroadsnews.com/node/3417

There's no free market in China. The local governments decide most things, and the national government decides the rest. In the big cities they're dominated by boosters, who measure their political success by how many monuments they've built: sterile central business districts that empty out after 7, gigantic Ferris wheels, elevated expressways, maglev. It's like Robert Moses's projects in New York - just because they weren't national doesn't make them a natural expression of market desires.

For instance, only 40% expressway miles per capita than France has

Check your link again. The US has 40% the expressway length per unit area of France. It has a higher expressway length per capita. In fact, it only trails Canada and Luxembourg, two of the most CO2-emitting, auto-dependent developed countries.

There was no GM conspiracy to end the dominance of rail.

National City Lines was as close to a conspiracy as you can get. And the Secretary of Defense in the 1950s really did say that what was good for GM was good for the USA.

The rail conspiracies were different in nature. There was no rail conspiracy against steamships, only individual acts. But there was a big rail conspiracy against shippers.

Oil was a particularly egregious example. Standard Oil heavily colluded with the railroads, using their rights of way (built with public funds) to prevent competitors from completing their oil pipelines. One group of independent oil producers built a pipeline in two segments on two sides of a railroad, and had workers carry the oil from one segment to the other across the rails. It was cheaper to do that than be bought off by Standard Oil. When Rockefeller found out, he got the railroad to park a long train on the line right between the two pipe segments. This isn't history; this is extortion.

 
At 11:09 PM, September 25, 2009, Anonymous Anonymous said...

One thing toll advocates never mention is the tremendously high transaction costs of collecting tolls, even with electronic tolling. The numbers I typically see are 20-33% of the tolls collected. I don't know about HCTRA - they may do better due to high volume. Here is one article on the subject
http://www.discovery.org/a/3140
If someone can prove me wrong, I would like to see the evidence.

So think about it - how many businesses could survive if they spent 20-33% of their revenue just on collecting their revenue? Very few, I think. Politicians like to say "tolls are not a tax", and they couldn't care less how inefficient toll collection is.

In contrast, collecting the gasoline tax costs less than 1% of the revenue generated. The numbers I have seen put Texas just below 1%, but other states are a few tenths of one percent.

 
At 10:40 AM, September 26, 2009, Blogger Michael said...

>>This would actually make sense. I'd take it further and get the government out of interstates altogether (but allow the states to toll them and create a nationwide toll tag standard), cover all air transportation costs with fairly applied user fees, raise user fees on inland waterways to cover those costs, and leave the feds only to regulate and ...

Might make some sense, but never going to happen in the US (the existing system does make some sense as well, after all). Moot point. Nor is the federal government going to get out of high-speed rail. They're just getting started! And I for one think that's a great thing - I just want more involvement, dollars, speed (of the trains and the projects moving forward), and more emphasis on Texas.

 
At 9:12 PM, September 26, 2009, Anonymous Anonymous said...

"For instance, only 40% expressway miles per capita than France has

Check your link again. The US has 40% the expressway length per unit area of France. It has a higher expressway length per capita."

253.05/176.2 = 1.436, so about 44% higher. And yes, this is per capita, not by area.

The point is that while the U.S. has more freeways, it's really not THAT much more than other countries - even countries lauded for their great public transportation systems.

Even Germany, which is smaller than France and has about a third more people has a lot of freeways per capita. About half of the U.S. amount per capita, but geez, this is with 82,000,000 people in an area smaller than Montana. Would you really expect them to have the same freeway miles per capita as the U.S.?????

Look at the Netherlands even. One of the densest country in the world that isn't a city-state. Frequently mentioned for their public transportation system and the ability to bike "anywhere". Would expect them to have very little need for freeways, right? Guess what, they still do.

And there's no conspiracy theory I know of to explain why all of these countries decided to have a freeway system.

 
At 9:24 PM, September 26, 2009, Anonymous Anonymous said...

>>>>... http://www.tollroadsnews.com/node/3417

>>"There's no free market in China. The local governments decide most things, and the national government decides the rest. In the big cities they're dominated by boosters, who measure their political success by how many monuments they've built: ......."

--------
Yes, yes, that's the assumption. Soviet-built subway systems are beautiful but centrally planned. Roads came later when people could actually afford cars (and food).

BUT, if you look in the article, it looks like the exact opposite is happening.

" "The audit report complains that many provinces engaged in "road building sprees in violation of national guidelines." "
That is, building more than the national government allows, because the localities need these roads - badly.

Also, "...Virtually all expressways are fully funded by investors under toll concessions bid by provincial level governments."
So, even at the local level, it's not command and control. It's private investors putting their own money into the project because there is a high demand for roads.

 
At 9:47 PM, September 26, 2009, Anonymous Anonymous said...

>>And the Secretary of Defense in the 1950s really did say that what was good for GM was good for the USA.

... And??? What's groundbreaking about that? Obama said some variation of this 50 times in the past year. It's an American company which employs Americans and strengthens the American economy. And it is(/was) a very large one, so it naturally follows that if large U.S. companies do well, the U.S. economy will too.

I fail to follow the oil example. If it was to prove they ended the whale oil industry, I missed any mention of that. If it was to prove that transportation looks the way it does in 2009 (or why we have federal control of tax dollars), I missed that proof.


>>National City Lines was as close to a conspiracy as you can get.

It wasn't just 'close', they were a REAL conspiracy ... theory. I wouldn't go around touting that one. It does not help convince people that public transportation is the best option for Houston; it just scares them away.

I would love to hear more about the original topic - wresting control from the federal government and giving it to localities. I don't think I've seen it put this succinctly and coherently before, Tory. One of your best posts, IMO.

 
At 9:57 PM, September 26, 2009, Anonymous Anonymous said...

...http://www.discovery.org/a/3140

Here they have both cash and electronic collection.

I would like to see a comparison between an all electronic toll road like Westpark vs. mixed cash and electronic (at varying percentages) vs. all cash toll roads if there are any left.

The San Francisco example is interesting though. Electronic tolls account for 70% of all tolls but only 33% of the total cost of collection.

This brings the GG bridges costs of collection to only 9% of revenue. I wonder if you could bring it down to 5% with electronic-only collection, fewer toll points, and where feasible, tolls in only one direction.

I could live with 5%, especially when you compare it to:
-the massive inefficiencies of the federal government
-costs of lobbying for federal dollars
-wasted money on bad projects.

 
At 9:18 PM, September 27, 2009, Blogger Alon Levy said...

Even Germany, which is smaller than France and has about a third more people has a lot of freeways per capita.

Yes, Germany, where beginning in the 1930s the government tore up streetcar lines and built the first freeway network in the world to replace it, invested in a state-supported auto maker (VW) to provide people with the cars to travel on them, and marketed car trips as vacations as part of a program called Strength as Joy.

The Autobahn network is a lot of things, but an expression of market desires it ain't. (Well, the market supported the government that built it, but that's not the same thing).

Obama said some variation of this 50 times in the past year.

No, he didn't. He's talked about how GM is a vital company, but he's never said that what's good for GM is good for the US.

 
At 10:43 PM, September 27, 2009, Blogger Feral Writers' Project said...

"By the late 1930s, when the low-pressure tire replaced the high-pressure ones so likely to blow out, the expression /going like sixty/ entered American vernacular English as meaning going so fast that control began to lessen and lessen. In 1941, when the Pennsylvania Turnpike opened as one of the first limited-access divided highways that presaged the post-World War II interstate highway system, motorists discovered it lacked any speed limit at all. Along some stretches the average speed hit ninety miles an hour, and half-wondering, half-terrified motorists gripped their steering wheels and marveled at speeds undreamed of twenty years earlier. Once the United States entered the war, gasoline shortages reduced speeds dramatically, but long after the federal government built the Military and Interstate Highway System—to use its real name, which designates it as a weapon and so able to be built by a Congress forbidden by the Constitution to build highways—American motorists remembered the thrilling years of going far faster than sixty."

John Stilgoe, Orchard Professor of the History of Landscape, Harvard

"Roads, Highways, and Ecosystems"
http://nationalhumanitiescenter.org/tserve/nattrans/ntuseland/essays/roads.htm

 
At 10:54 PM, September 27, 2009, Blogger Alon Levy said...

By the way: whale oil is a red herring. It was never an important fuel. The primary fuel in the 19th century was coal, just like today. Oil mostly replaced coal in transportation, but coal found a new use in power generation.

However, even then, there was industry lobbying involved. The coal industry on the one hand lobbies for myths like clean coal and against nuclear and renewable energy. And the oil industry has supported greater automobile use - National City Lines was jointly owned by GM, Firestone Tire, Chevron, Mack, and Phillips. Nowadays big oil engages in rearguard action by contributing to the Reason Foundation, which churns position papers arguing for more highways and less transit.

 
At 7:42 AM, September 28, 2009, Anonymous Anonymous said...

"Nowadays big oil engages in rearguard action by contributing to the Reason Foundation, which churns position papers arguing for more highways and less transit."

Who argues for less transit? I know people that argue for no additional transit, or additional transit, but no so much, but who argues for less?

 
At 7:46 AM, September 28, 2009, Anonymous Anonymous said...

"Yes, Germany, where beginning in the 1930s the government tore up streetcar lines and built the first freeway network in the world to replace it, invested in a state-supported auto maker (VW) to provide people with the cars to travel on them, "

So, the reason for freeways in Germany is a government coercion? And a conspiracy is the reason for the multitude of freeways in the U.S.?

Then what about the other examples noted: France, the Netherlands, and China?

What's the explanation there? (Other than market forces of course.)

 
At 7:49 AM, September 28, 2009, Anonymous Anonymous said...

Okay, then what about coal too? If they were such a large industry, how was the petroleum industry able to subvert them? A conspiracy of a small industry over a large one?

The explanation couldn't be that it is easier to extract and transport. Or that you can refine it into 100 different products for all kinds of uses.

 
At 7:50 AM, September 28, 2009, Blogger Tory Gattis said...

I don't think Reason takes money from big oil (it's almost all individual contributors), but even if they do, it's no different than all of the pro-transit/pro-HSR think tanks and groups that take money from the big train/rail contractors.

Arguments should be made based on reason and facts, not simply dismissed because there may or may not be some biased money somewhere in the background (which would eliminate pretty much all arguments in the country, including from academia).

 
At 1:21 PM, September 28, 2009, Blogger Alon Levy said...

Who argues for less transit? I know people that argue for no additional transit, or additional transit, but no so much, but who argues for less?

Here's Randall O'Toole on the New York City Subway:

"It sounds to me like getting rid of the subway might benefit everyone except, of course, downtown property owners."

I don't think Reason takes money from big oil

It does.

it's no different than all of the pro-transit/pro-HSR think tanks and groups that take money from the big train/rail contractors.

Which think tanks are you talking about? Brookings doesn't get money from the rolling stock industry. Neither does DMI, or any other pro-transit think tank I've heard of. I don't think even NARP gets money from the rolling stock industry. The rolling stock industry doesn't have the money for this - Bombardier has about one tenth the revenues of Toyota; about the best it can do with its lobbying money is get no-bid contracts in Canada.

Arguments should be made based on reason and facts, not simply dismissed because there may or may not be some biased money somewhere in the background (which would eliminate pretty much all arguments in the country, including from academia).

True. But sometimes people say wrong things, over and over, and the only reason is that they get paid to be wrong. If I know someone's a paid lobbyist for tobacco, I'm not going to bother checking out his arguments that second-hand smoke doesn't kill; I'm going to ignore him and read the government- or nonprofit-funded academics who publish in peer-reviewed journals, who say it does.

If they were such a large industry, how was the petroleum industry able to subvert them? A conspiracy of a small industry over a large one?

Coal was never controlled by big business the way oil was. In turn-of-the-century America, 90% of oil was controlled by Rockefeller. Coal was never so centralized.

In addition, coal had little to fear from oil. It had a near-monopoly on power generation, due to its lower price; oil did a better job powering transportation due to its higher energy density, but the booming construction of power plants ensured coal wasn't threatened by the decline of steam power.

Nowadays it's different. The coal industry is trying to fight back - it's contributed money to key Democratic Senators, such as Byrd, who then preach clean coal as an energy solution.

This sort of corruption doesn't mean that some fuels aren't better than others. Oil is better than coal for transportation - companies given the choice (such as railroads) went for oil. What this history means is simply that just because something's won out doesn't mean it's better. For every case of oil beating coal, there's a case of QWERTY beating Dvorak.

 
At 4:16 PM, September 28, 2009, Anonymous Mike said...

"They're building fewer highways than the US did. The US still has the longest highway network of any country. In Europe they have highways, but they're typically narrower, with none of the 12-lane monstrosities of the US Sunbelt, and don't go into city centers"

You say all this like it's a bad thing.

 
At 10:33 AM, September 29, 2009, Anonymous Anonymous said...

A long read:

http://www.reason.com/news/show/29944.html

 
At 2:51 PM, September 29, 2009, Blogger Alon Levy said...

Anon: the Reason article you link to about Dvorak has been criticized before for fudging the facts. The people writing it forgot to mention that the one study they quote as showing no advantage for Dvorak over QWERTY was authored by someone with a personal grudge against Dvorak.

 
At 6:15 PM, October 03, 2009, Blogger whysideas said...

Can HSR be viable without federal government funding? Can auto or air transit be viable without federal government funding? I think the answer to both questions are no. Neither air nor auto transit would survive without heavy government funding and cheap labor from other countries. If the government did not build the interstate highway system (for whatever reason one wants to argue for, it makes no difference) most likely the car would not be the most dominate form of transportation. Even if there was no conspiracy, and the government believed that an interstate highway system was important for national defense, they still inadvertently provided a large subsidy to the auto industry (FACT). Why should HSR be any different? I think there are arguments for personal vehicles, but also for public transit. We need to stop seeing things as evil or good and start understanding how best to use them. We need to understand what each form of transportation is best equipped to address which challenge.

Let the government build a HSR infrastructure, create a ticket tax for upkeep and maintainence, and let state or regional governments handle the operations.

As fare as what other countries are doing, least we not forget American has been king of the road for decades. Countries all over the world have been desiring for reach what we have. Their road systems are created with baggage of trying to be like the US, to have individuality, to have personal freedom, it has nothing to do with auto transit being the more superior form of transportation.

Air, auto, and HSR can all be a part of the American transportation system and all of them will and do require federal government funding.

 
At 6:47 PM, October 03, 2009, Blogger Tory Gattis said...

> Why should HSR be any different?

Because interstates and air can cover most or all of their costs with direct user fees/taxes, and HSR comes nowhere close to doing the same.

 
At 10:49 PM, October 03, 2009, Blogger Alon Levy said...

Because interstates and air can cover most or all of their costs with direct user fees/taxes, and HSR comes nowhere close to doing the same.

The Shinkansen and TGV are so profitable that their parent companies are profitable on the whole. For the first line in each system, the government didn't even need to spend the initial money for construction: Japan got a loan from the World Bank, and SNCF floated bonds on Wall Street.

 
At 11:26 PM, October 03, 2009, Blogger Michael said...

SNCF thinks they can make money on HSR in the I-35 corridor in Texas.

From the article:
"The SNCF filing suggests the venture can operate profitably but would rely on some level of public financing to build infrastructure. Some will question a public stake in a private venture, but it's premature to pick sides before all the arguments can be made. "

I think high speed rail is definitely coming to Texas - the question is when, not if. And I personally do not care if it is heavily subsidized - the question is whether the overall benefits of the system justify the costs - and to me the answer CAN clearly be yes for some alignments of HSR in Texas. Who bears those costs - be they public or private - I don't really care.

 
At 11:35 PM, October 03, 2009, Blogger Michael said...

More details on the SNCF proposal for HSR on the I-35 corridor, inlcuding a link to their filing.

According to this article:
"At $13.8 billion in construction costs, SNCF expects benefits to outweigh public infrastructure costs by 170% over a period of 15 years. This project would have the highest rate of return of any of the corridors profiled in the studies presented here."

and

"The interest in Texas runs counter to thinking that service here would be unprofitable."

 
At 9:08 AM, October 04, 2009, Blogger Tory Gattis said...

Great, if they can cover the costs as a private enterprise, more power to them. Go for it. I'm even ok with a little eminent domain (with full compensation to land owners, of course). If the benefits are that high, they should have no trouble raising private financing for construction and charging fares to cover their costs.

 
At 3:13 PM, October 04, 2009, Blogger Alon Levy said...

If the benefits are that high, they should have no trouble raising private financing for construction and charging fares to cover their costs.

That's not how the Interstates were built, or how most airports were built. Do you believe it was a mistake for the federal government to spend so much of its own money on roads instead of raising private financing?

 
At 4:24 PM, October 04, 2009, Blogger Tory Gattis said...

Actually, I do think airports were built from bond issues. If ez tag tech had been around, I think interstates would have been privately built, like the pre-interstate toll roads of the northeast. But since it was gas tax driven, it made sense for the public to build them and then recover funds via the gas tax.

I could be ok with a public partnership on HSR to get them access to tax-free bond issues with low rates. Maybe even some public guarantees.

 
At 8:23 PM, October 04, 2009, Blogger Alon Levy said...

I could be ok with a public partnership on HSR to get them access to tax-free bond issues with low rates. Maybe even some public guarantees.

This is exactly how they're trying to build it in California. How much private money they'll get depends on how soon the economy recovers.

In the Northeast it's weirder - the private sector won't touch it because Amtrak owns the infrastructure, Amtrak doesn't have the money for real HSR, and the state governments don't care because the line goes through 8 states plus DC. The people in the federal government who care, like John Mica, do try to build a PPP, but that still requires a federal commitment, which requires matching pork for the other 42 states.

 
At 8:47 PM, October 19, 2009, Anonymous Keep Houston Houston said...

Man, how did I miss this post?

Tory, you gotta read the book "Divided Highways" by Tom Lewis. (I have the hardcover, so shoot me an email if you want to borrow it).

Fact is, Ike never anticipated freeways running *through* cities; they were to end on the outskirts, as they do in France or Eastern Europe. The documents he signed (the "yellow book") weren't developed by him.

The Interstate system was being planned at least 10 years before Ike went to Germany. There actually was a comprehensive paper from the late 30's called "Toll Roads and Free Roads" which outlined plans for either (i) a system of free highways which looked almost exactly like the interstates of today, or (ii) a system of toll roads, which would have been a more skeletal system, coupled with targeted improvements to the U.S. highway network (i.e. four lane divided with at-grade intersections).

That paper recommended the skeletal toll network; it was politics that created the modern interstate.

 

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