Sunday, June 19, 2011

Government and "High-Speed" Rail

In my last post, I mentioned that politicians keep spending vast quantities of money on things they don't understand. Commuter trains are yet another costly thing that politicians don't understand. It seems that one of their most recent obsessions is with "high-speed" rail projects. Even President Obama has been pushing these pork-barrel projects in the past couple years.

A few years ago the voters in a number of states were duped into approving the installation of high-speed rail systems between certain major cities. However, as costs spiral out of control in a bad economy, it is slowly coming to light that many of the assumptions made to justify the projects were unrealistic. The trains are likely to carry fewer passengers than was predicted for a lot more than was expected. For example, California's proposed new rail system has approximately doubled in price while the early ridership estimates used to determine whether or not the train could operate without additional subsidies are new believed to be too high.

According to this article, Iowa has a similar problem:
The Federal government is again offering money it does not have to entice a state (Iowa) to spend money that it does not have on something it does not need. The state of Iowa is being asked to provide funds to match federal funding for a so-called "high speed rail" line from Chicago to Iowa City. The new rail line would simply duplicate service that is already available. Luxury intercity bus service is provided between Iowa City and Chicago twice daily. The luxury buses are equipped with plugs for laptop computers and with free wireless high-speed internet service. Perhaps most surprisingly, the luxury buses make the trip faster than the so-called high speed rail line, at 3:50 hours. The trains would take more than an hour longer (5:00 hours). No one would be able to get to Chicago quicker than now. Only in America does anyone call a train that averages 45 miles per hour "high speed rail."
It gets even better:
The state would be required to provide $20 million in subsidies to buy trains and then more to operate the trains, making up the substantial difference between costs and passenger fares. This is despite a fare much higher than the bus fare, likely to be at least $50 (based upon current fares for similar distances). By contrast, the luxury bus service charges a fare of $18.00, and does not require a penny of taxpayer subsidy.
I have a coworker who insists that Keynesian economics works because he believes that government planners can more efficiently manage the economy than the free market. To my coworker I would ask: does this all too typical situation affect your faith in government planning at all? If it doesn't, please refrain from voting during the next election.

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