A lost cause: The high-speed rail race

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Thursday, February 17, 2011

PRESIDENT OBAMA'S fiscal 2012 budget includes $8 billion for high-speed rail next year and $53 billion over six years. In the president's view, the United States needs to spend big on high-speed rail so that we can catch up with Europe, Japan - and you-know-who. "China is building faster trains and newer airports," the president warned in his State of the Union address. But of all the reasons to build high-speed rail in the United States, keeping up with the international Joneses may be one of the worst. In fact, experience abroad has repeatedly raised questions about the cost-effectiveness of high-speed rail.

China would seem to be an especially dubious role model, given the problems its high-speed rail system has been going through of late. Beijing just fired its railway minister amid corruption allegations; this is the sort of thing that can happen when a government suddenly starts throwing $100 billion at a gargantuan public works project, as China did with rail in 2008. Sleek as they may be, China's new fast trains are too expensive for ordinary workers to ride, so they are not achieving their ostensible goal of moving passengers from the roads to the rails. Last year, the Chinese Academy of Sciences asked the government to reconsider its high-speed rail plans because of the system's huge debts.

Of course, if the Chinese do finish their system, it is likely to require operating subsidies for many years - possibly forever. A recent World Bank report on high-speed rail systems around the world noted that ridership forecasts rarely materialize and warned that "governments contemplating the benefits of a new high-speed railway, whether procured by public or private or combined public-private project structures, should also contemplate the near-certainty of copious and continuing budget support for the debt."

That's certainly what happened in Japan, where only a single bullet-train line, between Japan and Osaka, breaks even; it's what happened in France, where only the Paris-Lyon line is in the black. Taiwan tried a privately financed system, but it ended up losing so much money that the government had to bail it out in 2009.

When it comes to high-speed rail, Europe, Japan and Taiwan have two natural advantages over every region of the United States, with the possible exception of the Northeast Corridor - high gas taxes and high population density. If high-speed rail turned into a money pit under relatively favorable circumstances, imagine the subsidies it would require here. Every dollar spent to subsidize high-speed rail is a dollar that cannot be spent modernizing highways, expanding the freight rail system or creating private-sector jobs. The Obama administration insists we dare not lag the rest of the world in high-speed rail. Actually, this is a race everyone loses.


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