Thursday, September 22, 2011

When it comes to High-Speed Rail, don't do as China does

The first reason we are presenting this article is that it's from the HuffingtonPost, a liberal online newspaper that favors the Democratic Party position on issues like high-speed rail. When Republican biased media such as the Wall Street Journal criticize the high-speed rail program, it comes as no surprise.  But, if the HuffingtonPost does so, that's news in itself.

While not outright critical, the article takes pains to make comparisons between China's high-speed rail ambitions and ours in the US. This is of major importance since China has been racing ahead, and as we now know, far too quickly, with their HSR expansion.  They have made egregious errors and bad decisions, culminating in the horrific crash last July that led to the death of at least 40 people and the injury of nearly 200 more.

While the author, Matt Sledge, implies that for us in the US, HSR is "necessary," he acknowledges that it "may be years away from shovel-ready."  We obviously reject his claim of "necessity", but certainly agree with the fact that HSR is far from shovel-ready, and are puzzled by the Administration's obsession with this program as a jobs program, since construction in California cannot begin prior to September of next year.  There are a vast array of transit infrastructure projects in California, such as highways, airports, bridges and even existing rail lines that are in desperate need of repair and improvement, and are "shovel-ready" now.

The more we read that the purpose of HSR is the creation of jobs opportunities for the unemployed, the more convinced we become that HSR is not a transportation project that can stand on its own as a necessary component of a deficient multi-modal transit network in the US. 

The President's new Jobs program and proposed legislation included $4 billion for HSR.  Why would he propose yet another $4 billion for jobs not available for another year?  Whatever happened to those $8 billion from the ARRA stimulus funds?  How many jobs did those $8 billion create?

And, if his intention is for this to be a continuation of his "seed-money" strategy for creating a national high-speed rail network (in 11 HSR corridors), the President should realize that the cost for that is as much as two trillion dollars. ($2,000,000,000,000.) The States are certainly in no condition to provide that much funding.  Neither is the private sector, especially since it is clear that there will be no ROI, return on investment.  All such projects require permanent government subsidies.  

Doesn't this raise the central, keystone question, who pays for this so-called jobs program?  Several billion in federal HSR seed-funding will not produce the Administration's goal of either creating jobs in consequential enough numbers to alter the national unemployment picture. Nor will it -- ever -- create anything other than a not very useful demonstration HSR system in California, much less a comprehensive national high-speed rail network. As Matt Sledge understates it, "job creation from high-speed rail may be elusive."

Besides a few dramatic political gestures, just what, exactly is going on here?  The justifications for this high-speed rail obsession are not self-evident.

We've discussed the Chinese HSR situation extensively in these blog entries.  Their goal has been world-wide prestige.  Too few people -- the oligarchic central committee that makes all their decisions -- committed major mis-judgements in throwing too much funding at something that was obvious fuel for a major corruption fire, with too little consideration about quality, safety or even risk analysis.  They took foreign equipment, with stringent warning constraints, and pushed them well beyond their limits.

They made inappropriate (and patent stealing) modifications.  Their HSR development was reckless, indifferent to any failure considerations.  The rest is painful, unnecessary, history, much of which they continue to cover up.

Is this a cautionary model for us not to emulate here in the US?  Of course.  But it is more than that. And Sledge explains the difference between the cultures and historical moment for China and the US.  China is both pre- and intra-Industrial.  We in the US are post-industrial.  China seeks to rush its cultural evolution (to catch up with the West) through industrialization and urbanization with vast and hasty infrastructure development.  They are creating, from scratch, enormous, empty cities and then moving huge populations to fill them.

We in the US are well beyond such a moment in time.  We already have advanced transit and transportation systems in place.  Tragically, we have neglected them shamelessly.  We are in desperate need to upgrade our aviation capacity and quality, our highway capacity and our existing rail network.  We have the world's best freight rail system, yet it too can stand major overhaul. We don't have enough financing capacity to invest in these ignored necessities.  We certainly don't have enough to pour vast funds into a luxury train for the affluent.  Even if it did create some jobs.

The Chinese are at that point in their history where they are obliged to build all this from scratch, and for a population over four times the size of ours.  "China is not a motorized country yet," as a Chinese economist put it. 

We don't have China's population of nearly 1.5 billion people. It is stupid to consider that we are in some kind of race with them.  So, we have to be smarter.  So far, we aren't.

China High-Speed Rail Offers Few Lessons For U.S. Beyond Growth Potential

First Posted: 9/22/11 03:30 PM ET Updated: 9/22/11 03:30 PM ET
President Obama's trip to the Brent Spence Bridge on Thursday points to the difficulties inherent in getting specific about infrastructure spending: no single project is without its drawbacks, and even some of the most necessary may be years away from shovel-ready.

Perhaps nowhere are those political liabilities more apparent than in the president's ongoing push for high-speed rail, for which he has proposed budgeting an additional $4 billion in the American Jobs Act.

In his State of the Union address at the beginning of this year, President Obama called for America to realize the "Sputnik moment," noting that "China is building faster trains and newer airports."

At the time Obama gave that speech, China's high-speed rail network was the envy of the world. Then, on July 23, a horrifying collision between two high-speed trains near the city of Wenzhou killed 40 people and injured scores more. The country cracked down on public criticism of the crash, but investors are fleeing from the $330 million China's rail ministry racked up in debt while building the system.

"The only mystery," the Washington Post editorialized in response, "is why people in the West who should have known better looked at high-speed rail in China and saw a model for the United States -- instead of an accident waiting to happen."

But China's problems haven't stopped the president from using its rail network as an example of what a country -- even one with 16 percent of the U.S.'s GDP per capita -- can accomplish with enough political will. Speaking in support of his American Jobs Act on Sept. 14, the president said,"At a time when countries like China are building high-speed rail lines and gleaming new airports, we've got over a million unemployed construction workers."

That comparison, said Phineas Baxandall of the U.S. Public Interest Research Group, has its "upsides and downsides."
"The upside is that China continues to have much faster economic growth than we do, partly because they're spending much more aggressively on 21st century transportation like high-speed rail," Baxandall noted.

The president has presented high-speed rail as a vision of what the United States could accomplish, on both technological and economic levels, if it dreamed big. The International Monetary Fund projects that China will grow at a rate of 9.5 percent in 2011, far more than the U.S.'s paltry 1.5 percent.

At the same time, Baxandall added, "there's a lot that China does in a way where it sometimes thinks about the human consequences second and the rapid development first -- we shouldn't follow that path."

For better or worse, similar rapid development seems nowhere near on the horizon in the U.S. In part because of the U.S.'s much more stringent planning process, and in part because of congressional hurdles, progress on high-speed rail here has been much slower. California's project, the centerpiece of Obama's high-speed rail push thus far, has yet to break ground.

Moreover, China and America face very different transportation problems. China is, of course, still an emerging economic power -- which gives the president's references to its leapfrogging network of bullet trains their rhetorical force. But it also makes a more detailed comparison between the pluses and minuses of fast trains for the two countries difficult. China's middle class is growing, and most people in the country haven't yet adopted cars. The U.S.'s freight rail network is arguably the best in the world, but China's is lacking, and the high-speed trains are being built in part to open up capacity for freight trains on legacy lines.

"There is really not much to compare the pair," said Xianfang Ren, a Beijing-based economic analyst with business information service IHS. "China is not a motorized country yet."

Another area where comparisons don't make much sense: there's little chance in the immediate future that the U.S. will create anywhere the debt China has on high-speed tracks. By the same token, job creation from high-speed rail may be elusive.

Since the federal Department of Transportation started handing out high-speed rail funds from the Recovery Act in January 2010, about $5 billion has been awarded to projects going more than 125 mph, 1/60th of what China has spent so far. In Fiscal Year 2012, similar projects may get $100 million at best -- more or less a placeholder to encourage further planning.

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