Sunday, October 31, 2010

Your attention has been called to this paper previously. Here's a profile of one of the authors, Alain Enthoven, who, with William Grindley, produced this "White Paper." Some people say that they have been challenged by its length and the demand for such close attention. Very well. We'll see if we can get a less demanding summary version penned by one of these authors for those of you with a too-busy schedule.

It is a mark of credibility that this paper has been dismissed out of hand by Robert Cruickshank, the religious fanatic who tolerates less high-speed rail apostasy than the Taliban Mullahs. Over seventy finance and economics 'over-achievers' have signed their endorsement to this paper. But, when it comes to financial matters, what could they possibly know that Cruickshank doesn't and has already rejected?

(Note: Just being sarcastic here.)

Let's put it this way. If the CHSRA were to finally produce an honest business plan (don't hold your breath), they would have to acknowledge everything that this paper points out. They would, in all truthfulness, have to terminate this project as a vast, money-draining failure.



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Stanford management professor predicts high-speed rail will lose money

By Doug Ray | 30 Oct 2010

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Entering Alain Enthoven’s office can be a disorienting experience. His walls are adorned with an eclectic mix of mementos: A photograph of John F. Kennedy awarding him a medal for distinguished federal civilian service hangs next to a Nepalese flag he collected in the Himalayas. Piled on his desk is a seemingly chaotic mélange of economics papers, books and reports, often more than a foot thick.

“I wish I could read faster,” said the smiling octogenarian, whose subdued demeanor masks an intense passion for public policy research.

Enthoven, an emeritus professor of public and private management at Stanford University, is more than half a century removed from his first job at Santa Monica’s RAND Corporation. Yet he still maintains a high profile among peers and associates; his focus the past three decades has been on healthcare policy.

In Enthoven’s long career in the private and public sectors, he has often been an outspoken advocate for what he believes to be more sensible fiscal policies. He began that fight five decades ago, at the age of 30, when he was appointed deputy comptroller of the Department of Defense under then-President Kennedy.

Now, he’s taken on a contentious issue much closer to his Atherton home: the economics of high-speed rail.

In a recent report titled “The Financial Risks of California’s Proposed High-Speed Rail” – co-authored by William Grindley, a former analyst at the World Bank, and local finance consultant William Warren — he advances a case for why the project authorized by state voters most likely will never be able to turn a profit. The report has garnered both praise and criticism from across California, where he has lived since 1969.

The proposed high-speed rail line is planned to connect San Francisco and Los Angeles in less than two and a half hours. Much of the opposition has come from the San Francisco Peninsula region.

With California facing financial problems, it seemed odd to Enthoven that the state would want to spend taxpayer money building a transit apparatus that he believes will never live up to the potential ridership statistics published by the High Speed Rail Authority. He cited research by the Congressional Report Service that concluded: “With two possible exceptions, every high-speed rail line in the world has been a money loser.” (The two examples were the Paris-to-Lyon line in France and the Osaka-to-Tokyo line in Japan.)

Enthoven said he was initially motivated to study the project’s finances “because I could see it was just going to devastate our Peninsula communities.”

Noting his home address, supporters of high-speed rail have dismissed Enthoven’s report as a selfish effort. “He says quite openly he is a homeowner near the tracks and he’s worried about his property value, so I think that needs to be kept in mind when assessing that report,” said Robert Cruickshank, chairman of Californians for High Speed Rail.

“[This report] doesn’t break any new ground, and it doesn’t provide any real evidence that suggests the project costs are unsustainable,” Cruickshank said.

Enthoven countered: “I anticipate that at some point I will be testifying before some entity, and the first question would be, ‘Well, what do you know about trains? Have you been an expert on trains?’ And I would reply, ‘I’m the little boy who says the emperor has no clothes, except I have a Ph.D. in economics and I was Deputy Comptroller, then Assistant Secretary of Defense. I’ve got a certain amount of experience at this.’”

“We have 70 prominent local business leaders around here who read our report and said, ‘this is right; I endorse it.’ We could get a lot more,” he added.

Enthoven is an alumnus of Stanford, Oxford and MIT. After serving in the Defense Department during the Kennedy administration, he was promoted to Assistant Secretary of Defense for Systems Analysis by President Lyndon Johnson. More recently, he has made his name as a respected healthcare economist. “Health spending is doing huge damage to our economy and society,” he said. “It’s wrecking public finances from my little town of Atherton to the federal government of the United States.”

With his wife of 54 years, Rosemary, he has six children and seventeen grandchildren. He and his wife still enjoy the outdoors and are avid skiers. He has made numerous trips to pursue his passion for adventure, from Wyoming to Nepal. “We didn’t climb Mount Everest, but we got up to the base camp area,” he said.

It is unclear whether Enthoven’s report will slow down or alter the proposed high-speed rail project as currently proposed, but that doesn’t deter him. “I’ve never been scared away,” he said, “from fighting long odds.”