I probably won’t make any friends today, but now I’ve read one too many urbanist (many who’s ideas I usually respect) use unsound logic to support high speed rail. This argument often includes something like this: “…and furthermore, highways and airports don’t come close to paying for themselves, therefore high speed rail need not meet that hurdle either.”
Here’s some examples of the typical contradiction many usually-reasonable urbanists are making when arguing for high speed rail-
Ryan Avent in an article plagued with this pseudo-logic:
Government is going to build more capacity. Given that, what is likely to be the best investment, all things considered?
Available alternatives, as it turns out, are not all that attractive. Roads do not appear to pay for themselves any more than railways do. Receipts from the federal gas tax come close to covering federal highway expenditures, but gas is used on highways and non-highways alike, indicating that at the federal level, highways are subsidized.
I respect Mr Cowen very much, but I think it’s long past time we stopped listening to libertarians on the issue of whether or not to build high-speed rail. Who will ask whether road construction remotely passes any of the tests they’re so prepared to push on rail? And if we begin charging an appropriate fee on drivers to maintain existing roads and reduce congestion, what do they all think will happen to land use patterns and transportation mode share?
Some have emailed to ask me why I dislike Randal O’Toole so much. The main reason is because people like Avent will always be able to point to the government highway-lover from CATO and rashly proclaim all libertarians have forever lost credibility when it comes to transportation and land use. Of course, Avent’s narrow-mindedness on this topic deserves contempt too.
And Infrastructurist’s take seems to be favored by Avent, Yglesias, and others:
The construction of a high-speed rail line would require a large environmental sacrifice – construction crews would need to shape the land, poor concrete, lay the tracks, and build the stations. This work would release millions of tons of carbon dioxide into the atmosphere. But building a new highway such as Texas’ planned I-69 would require similar work and would almost certainly be just as ecologically damaging. On a somewhat smaller scale, the same can be said for new terminals or runways at airports.
In a rapidly growing state like Texas, though, a serious need for a transportation capacity upgrade is bound to arise over the next decades – especially between the state’s two biggest cities. The construction of this infrastructure would require carbon emissions on a large scale–but since we don’t yet have competing plans for highway or airport capacity expansions if the high-speed system is not built, the most meaningful question for us is the rail system’s environmental effects in operations rather than construction.
So, in other words, building either of the options, roads or rail both require “a large environmental sacrifice”, but all other options must be kept off the table, so let’s just sweep that under the rug. Yet, there is an other option to consider for those who really think something should be done about carbon: STOP WASTING MATERIAL AND ENERGY ON CONSTRUCTION OF INFRASTRUCTURE BOONDOGGLES THAT SUBSIDIZE TRANSPORTATION! That still goes double for roads and airports, where congestion and carbon emissions could be reduced through revenue-generating measures such as congestion tolling.
To me, the high-speed rail logic just doesn’t sound much different from what O’Toole might say (just interchange some words and continue to ignore facts):
Not only did the Interstate Highway System cost much less and move much more than our visionary rail network is likely to do, interstate highways have the virtue of being 100 percent paid for out of user fees. The rail system would require subsidies for pretty much all of the capital costs, most or all of the periodic rehabilitation costs, and at least some of the operating costs.
In the Infrastructurist article quoted above, Yonah Freemark smear’s Ed Gaeser’s back of the envelope critique of high speed rail (I admit, a little sloppy) with a hand-waving claim sounding eerily similar to the type Mr. O’Toole is so often criticized for making, “High Speed Rail Pays For Itself”.
He backs this bold claim with a calculation that shows how a hypothetical Dallas-Houston high speed corridor would cost $810M annually for construction and maintenance, while providing $840M in benefit. Surely, we will see many more people use this analysis as evidence to back claims that high speed rail is good without proper scrutiny. However, this analysis doesn’t even pass the O’Toole-level test of credibility, because it claims it pays for itself with 150M annually in carbon savings. I can understand making the case for analyzing carbon savings as a “benefit” to society, but one must compare against all other options for use of cash to reduce carbon emissions – at least against a no-build + congestion toll option. Just think of all the alternatives one might consider with a $810M annual budget for carbon reduction. At say $20/ton, that comes to 40 million tons a year.
On top of that, Freemark ignores all the other opportunity costs Randal O’Toole conveniently omits when claiming roads pay for themselves. These omissions include: opportunity cost of investment capital,
opportunity cost of right of way land used, legal costs of eminent domain and related delays, inevitable cost overruns, accounting for optimism bias, and interest on bonds. In my opinion, the largest of these is the opportunity costs of investment capital, which I would guess at over 15 percent compounding annually (vs a non-compounding 5% generously assumed by Glaeser and Freemark) for all costs during the 10 years (just a little optimistic?) of construction, and 8-10 percent once ridership is stabilized. Responding to Matthew Yglesias’ hasty endorsement of Freemark’s analysis as “A real cost-benefit analysis of HSR”, Tyler Cowen similarly noted:
I’m not sure what discount rates he is using but even if we put that problem aside this screams out: don’t do it. Given irreversible investment, lock-in effects, and required hurdle rates of return, this still falls into the "no" category. And that’s an estimate from an advocate writing a polemic on behalf of the idea. I’m not even considering the likelihood of inflation on the cost side or the public choice problems with getting a good rather than a bad version of the project. How well has the Northeast corridor been run?
The urbanist in me would love a vast high speed rail network – it would centralize density at rail nodes and aid agglomeration. But it just won’t be viable until government first stops wasting money subsidizing automobile and air travel. In the meantime, HSR advocates commit an intellectual fraud similar to ones Randal O’Toole and his ilk make regarding roads when they make claims that HSR can pay for itself.
If Ryan Avent is expecting to keep any credibility on infrastructure spending using these words:
In this country, we do not build transportation infrastructure for profit. Perhaps this is upsetting to the libertarians among us, but that’s how it is and how it should be.
Then, perhaps he should think twice next time he thinks of laying into Randal O’Toole for attempting to reconcile infrastructure spending using similarly shoddy arguments. Otherwise, similar to O’Toole, all the HSR advocates are saying is, “Never mind billions of dollars that must be appropriated from people of future generations. Never mind that most of those footing the bill will never ride high speed rail if they’re not fortunate enough to afford a ticket or don’t live in one of the chosen cities. Never mind the drastic effects of the construction on the environment. High speed rail would be a pretty neat thing for some cities, so ‘build baby build’.”