New York’s chattering classes have spent the past week mocking the city’s new $4 billion subway station. Meanwhile, across the country, California continues to pursue its own lofty transportation dreams. The LA Times reports that California’s bullet train proposal has once again been significantly revised:
The 2016 business plan, released last month, shows that the Los Angeles-to-San Francisco rail link has proved to be politically and technically more complicated to build than foreseen in 2008, when voters agreed to help finance the project with a $9-billion bond.The plan acknowledges the biggest of those problems: The costly and geologically complex crossing of the Southern California mountains cannot be completed by 2022, as the rail authority had long contended.
And that’s just the beginning. Although the new report lowers the final cost estimate to $64 billion, it does so mainly by proposing narrower tunnels that would need to be entered at lower speeds. The revised, more modest proposal still has no plan to fill a $25 billion funding gap beyond the quixotic hope that 49 other states will agree to foot the bill. Even if Congress somehow gets hoodwinked into allocating the funds, completing the rail system will require another $21 billion from private investors.With an eye toward attracting that money, the planners’ first step is to build a section which can demonstrate profitability. Yet the segment they’ve chosen is the one between San Jose and the Central Valley—not California’s most popular destinations. Given that the trains on the first segment are likely to be pretty empty, we suspect the planners are equating profitability with proof-of-concept.High speed rail enthusiasts figure the idea of super fast trains is itself so awesome, everyone will fall in love once they see the thing in action. Maybe. But will they love it so much they’ll pay huge amounts of money (through taxes and ticket prices) to expand the system and keep the trains running? Private investors aren’t holding back because they don’t realize how sexy high-speed rail can be—businessmen with billions of dollars can hop over to Tokyo and Beijing for a test ride. The problem is that no one wants to bet on Americans paying what will surely be very high ticket prices.California’s HSR project has always been about politics, not economics. Whatever its cost to taxpayers, it appeals to two big California interest groups: construction unions and environmentalists. It’s presented as a bold vision for a state that likes to think of itself as more advanced than the rest of the country. Yet it’s not clear that the idea is really so forward-thinking. Decades from now, when it’s scheduled to be completed, there will be new modes of transportation and telecommuting will be more widespread and attractive. In an economy that increasingly prizes flexibility, something that needs tracks might not be the most sensible people mover.Passenger rail enthusiasts often don’t know that America actually has a wonderful rail system—for cargo. America’s freight rail system is the best in the world. And the environmental benefits of replacing trucks and planes are pretty comparable to the benefits of replacing cars and planes. Freight does not need to be shipped at hundreds of miles per hour, nor does it require new tracks or signals. Of course, the idea of a crate of iron pipes lumbering through fields of golden wheat doesn’t inspire much enthusiasm. But as Warren Buffett, who is investing heavily in freight rail, will tell you, it has one big advantage over passenger rail: it makes money.The chairman of California’s rail authority, Dan Richard, admits that the bullet train isn’t exactly coming along as he had hoped. For one, he knows starting with the L.A. to San Diego segment would be more likely to prove the system’s profitability. But Richard has an explanation for the challenges he’s facing: “If we had started with all the money in the world, this program would have probably proceeded differently.” Even hard-nosed skeptics can’t disagree with that.