Monday, March 14, 2011

If we don't need it, why privatize high-speed rail?

Believers in the free and unfettered (unregulated) market-place support  privatization of most government functions.  The assumption is that profit motivated competition will give consumers the best product, best service and itself a favorable return. It therefore becomes self-sustaining.  

If that's true, the American railroads would still be operating passenger rail as they did during the early part of the 20th century.  And, by the same token, if American passenger rail declined until there is now only federally subsidized Amtrak, then the market-place has spoken, so to speak. So why should the free market place shove high-speed rail down America's throat?  Right now, the only justifications appear to be for jobs and the economy.  That's doing the wrong thing for the right reason and that's not good enough.  

As a Democrat, I'm not saying that all the Democrats are wrong and that all the Republicans are right about high-speed rail. Republicans also make many wrong assumptions about this program.

John Mica and Bill Shuster, Republican Congressmen with key responsibilities for transportation and railroads, believe that one of the solutions to passenger rail is privatization.  If that's true, why hasn't that been taking place?  

The United States is world-famous for its collective business acumen, start-up innovation and energy, and aggressive seizing of every opportunity to create new industries and businesses.  What are they waiting for? Why aren't we having a "Silicon Valley" for rail transportation? What is the reason that the US has lost a major railroad manufacturing capacity? Why is it that freight rail is flourishing, but inter-city passenger rail is nothing more than an Amtrak subsidy operation?

Mr. Mica says that, "There’s no reason we shouldn’t be attracting private sector capital and expertise to operate inter-city passenger rail in the United States."  In that case, where is it?  Why aren't private investors stepping forward to lend money to create the rail system the high-speed rail promoters so ardently desire?

Are they, perhaps, waiting for the tax-payers to build this inter-city rail system first?  And then they will appear, ready to invest in the operation and collect all the profits in the form of interest on their loans?  Or, are they waiting for government guarantees that will cover those anticipated interest payments if the trains lose money?   That doesn't sound like the "free market" to me. 

Let's say it again; contrary to what the potential train builders want you to believe, Europe and Asia do not have private high-speed trains that are profitable. They all require subsidies from their governments.  Where there have been private investments, there have been loan restructuring, defaults and bankruptcies.  However, those nations are railroad cultures; their economies depend upon passenger rail as the primary transit mode.  Nonetheless, as we saw on this blog recently, rail transit accounts for only 7% of all transit in Europe.

John Mica is quite right in castigating the government's mis-management of this high-speed rail program. But, that misses the point of the program at even the conceptual level.  While the United States desperately needs massive improvements in its urban and regional public mass rail and other transit systems, inter-city rail is actually very low on the priority list. The government has not thought through what a high-speed rail program, such as they propose, entails.  And, that's most true about the actual costs of construction and operation. They don't really know how much it will cost, and more importantly, where to get the money.

One of the reasons that the government has done such a poor job promoting its high-speed rail agenda is that while it certainly looks highly desirable from the outside (like candy in a candy store window), HSR is really only desired by the well to do "suits" who are promoting it.  

To be absolutely clear about this:  High-Speed Rail is NOT public mass transit.  It is elite, exclusive (rather than inclusive), expensive to ride, luxury transportation. That's the way it is everywhere on this planet, including "Communist" China.

High-Speed Rail is not going to solve our energy problems; it is not going to solve our water problem; it is not going to solve our deteriorating infrastructure problems.  And, it certainly won't solve our problems of an ever growing "rich" class at the top and an expanding "poor" class at the bottom of our economic ladder, with the middle class slowly sliding toward the bottom in that major economic shift. Economic polarization is recognized pretty much from the bottom up; never, with very few exceptions, from the top down.  High-speed inter-city rail won't do a damn thing to mitigate any of those problems.

Even if high-speed rail is a good idea for, say, the Northeast Corridor, of all the problems the United States currently faces, inter-city rail is nowhere at the top of anybody's list, except, of course, the high-speed rail promoters who stand to personally gain for the promised vast government expenditures.

Yes, stimulate the economy.  Yes, invest in critical needs, like urban and regional transit, energy production, water generation and delivery, infrastructure repair and upkeep.  Bring back, from overseas, industrial manufacturing.  Improve, through R&D,  all transportation modalities. Yes, reduce unemployment with permanent job creation in all those domains. Yes, improve our national rail network.

But, just because Europe and Asia have high-speed trains, does not mean that we need them in the US as well.  We do not need to borrow a solution from elsewhere for a problem we don't have.  At the same time, we do have many major problems that we must solve. Building and operating trillion dollar super-fast luxury train systems is not a solution.  It's a trillion dollar problem. 
Reps. Mica and Shuster: Private rail is the way to go

By Keith Laing - 03/14/11 11:23 AM ET

Two key Republicans said Monday the federal government should not be in the business of building more railways — because that’s the private sector’s job. 

“Amtrak’s plan doesn’t cut it," House Transportation and Infrastructure Chairman John Mica (R-Fla.) said in a statement. "Amtrak operates a Soviet-style passenger rail service, with a high rate of subsidization by the taxpayers. Last year, every single Amtrak ticket was underwritten by $54.48."

He and Rep. Bill Shuster (R-Pa.), chairman of the Railroads, Pipelines and Hazardous Materials supanel, say that new railways are needed but that private businesses are better suited to build and operate them. 

“Chairman Shuster and I have proposed letting the private sector compete with Amtrak on its money-losing routes, but this has yet to happen," Mica said. "Internationally, the private sector successfully operates passenger rail and can turn a profit. There’s no reason we shouldn’t be attracting private sector capital and expertise to operate intercity passenger rail in the United States." 

Shuster's committee held a hearing last week to find ways to increase private investment in rail, measures he and Mica touted Monday. Their stance comes as a transportation advocacy group, the American Public Transportation Association, called Monday for more public transit to be built to combat rising gas prices. 

However, Mica and Shuster blamed President Obama for the fate of proposed high-speed rail projects in Wisconsin, Ohio and now Florida that have been canceled by conservative Republican governors who say the projects are too expensive, even with federal help. Conservative activists in Florida have begun referring to proposed railways as ObamaRail, much like some derisively refer to his healthcare reform law as ObamaCare. 

“With Ohio, Wisconsin and Florida rejecting funds, and the California project also looking troubled, I don’t think the Administration’s so-called high-speed and expanded passenger rail program could have had a worse launch,” Mica said. “The only chance of success for high-speed rail is to rely on the private sector and focus on a project that makes sense, particularly the Northeast Corridor.  

"The questions now are how do we regain our credibility after so much damage has been done, and how can we find a better opportunity to bring true high-speed rail to the congested Northeast Corridor with significant private sector involvement?” he concluded.