High Speed Rail and the "free market"

All forms of transporation are subsidized, and most forms of transporation should be subsidized.  This is because transporation networks are public goods, whose benefits (and some costs) spill well beyond their borders, and cannot be captured by their users or owners.  Transportation networks enable our defense and disaster response capabilities, boost our economy and dramatically property values.  On the downside, they result in physical separation (thus making human-powered transporation difficult or impossible), pollution, noise, and congestion.  On balance, their spill-over effects are hugely positive, and because of this, "free markets" would significantly under-supply them.  Additionally, "free markets" would even fail to properly manage the networks they did build, as in far too many cases, much of the network would be a natural monopoly.

One popular myth is that because we have gasoline taxes, roads "pay for themselves" and are not subsidized.  This is not true and has never been true.  The gas tax is far too low to pay for all of our road spending.  Depending on how one does the figures, user fees such as gas taxes now only cover 50-70% of the money spent on roads in the US.  Compare this to Amtrak, which only received $562 million in subsidies in 2011 out of a budget of over $3.7 billion.  Yes, Amtrak is less subsidized than the typical American road.  Yet one of the first first complaints about HSR that most detractors bring is that it requires subsidies, while they ignore the fact that the competition is subsidized as well!  Also note that most of the HSR systems in the world are profitable, despite the subsidies for their competitors.  Even our beloved Acela, the closet thing the US has to HSR, is profitable. 

Subsidies, however, extend far beyond simple cash transfers or targeted tax breaks.  The biggest subsidies most industries possess is the right to externalize costs - to pollute, make noise, or otherwise inconvenience their fellow citizens without a reasonable mechanism for compensation.  All transporation systems have some negative externalities such as pollution, noise, congestion, accidents involving non-users, security requirements, and physical separation.  However, HSR has much lower externalities than its primary competitors, driving and flying.  Drivers externalize a lot of danger (some 5000 pedestrians and cyclists are killed by drivers each year), a lot of noise, consume a disproportionate share of our police enforcement, and pollute about four times as much as HSR per passenger mile, while concentrating that pollution in our highly populated areas.  Airplanes pollute about as much as cars per passenger mile, devalue the land around airports for miles with their noise, and again consume a lot of law enforcement dollars.  Both of these systems are critically dependant on oil, which is a major national security concern and is a likely driver of a fair portion of our military spending.  Add it all in, and you would need a gas tax something like $2.00/gallon (vs less than $0.50 in most states) in order to appropriately incorporate all these costs into the price of gasoline.  Certainly, $5.00/gallon gas would make driving and flying look a lot less viable.

HSR, in contrast, has fewer negative externalities.  The land value boost around stations is enormous, offsetting any losses for land near the tracks.  Noise is modest relative to automobiles, particularly trucks and emergency vehicles, and pollution is not only just a fraction of what is released by cars and planes but is also generally released in low population areas where power plants are located.  HSR also reduces congestion at both the roads and airports it competes with.

The "free market" cannot work when there are so many externalized factors, both postive and negative.  It will simultaneously under-supply everything, monopolize what it does supply, and supply the wrong balance of options because the externalities are not symmetric.  We have to approach the decision on how much capital to allocate to transporation, and how much to allocate between various options, using an entirely different conceptual framework.  Given the success of HSR abroad, and the virtually inevitable rise of oil prices over the coming decades, HSR stands out as a clear path forward to providing our transportation needs for the next century and beyond.

High Speed Rail–Density Distraction

It is absolutely certain that one of the first objections anti-HSR individuals will express is that the US has too low of a population density to support HSR.  This is logical, if you believe that our purchase of Alaska somehow diluted the population density of New York City.  Of course, that argument would be absurd.  What matters is local and regional density, not nation-wide density.  The question is what parts of the US have sufficient density for HSR, and which ones will during the time-frame of their operation.

The “mid-west corridor” serves as a good example of a typical place that is suitable for HSR.  Specifically, this discussion will focus on five state – New York, Illinois, Pennsylvania, Ohio, and Indiana, which form a fairly densely-populated corridor between New York and Chicago.  The population, land area, population, and GDP of this five-state region stacks up very comparably to France, which has one of the world’s best HSR systems, the TGV, which not only servers over 100 million riders a year, but has set numerous speed records and generates annual profits of over a billion dollars.  In contrast, no true high speed rail exists in the United States, with the closest example being the Acela Express, which barely averages half the speed of HSR.

 

Location	Population	Area (sq mi)	Density	GDP ($bil)
New York	19,570,000	47214	415	1157
Illinois	12,875,000	55584	232	644
Pennsylvania	12,764,000	44817	285	576
Ohio	11,544,000	40948	282	483
Indiana	6,537,000	35867	182	268
Total	63,291,000	244249	282	3127
France	60,876,000	210688	289	2560

 

A robust mid-western HSR system might look something similar to the map below.  One line would leave westward from Boston, travel across upstate New York, along Lake Erie to Cleveland, where it would become the “Tri-C” line heading south through Ohio into Kentucky.  A second line would leave New York City, head west to Pittsburg and then bend back north to meet the first line at the Cleveland airport before heading straight west to Chicago.  There it would turn south for St. Louis.  Several small and medium size north-south connectors and the DC-Boston line would fill out the grid pattern.  The total distance of track covered within the five-state boundary is just shy of 2500 miles (4000 km).  France, for comparison, has about 1200 miles of HSR in operation, 130 miles under construction, and over 1600 miles in the planning stages.

 

 

It is clear that at a regional level at least, the mid-west corridor states have sufficient population density to support HSR.  This argument is only going to grow stronger with time, as the population of the US is projected to rise by more than 50% during the remainder of this century.  The only possible objection I see here is that local population density might be insufficient – that while our cities have enough people, they are too sprawled out.  There is some truth to this, but this ignores both the fact that our population is going to grow, and the fact that the very act of building HSR will influence future density patterns.  Land near HSR stations is some of the hottest real estate on earth.  Build it and people will move there.

 

What goes for the mid-west applies elsewhere.  The entire eastern seaboard has population densities similar to the mid-west corridor.  Florida has a population density of 350 people per square mile.  California’s population is 242 per square mile, but half of the state is empty deserts and mountains and virtually all the people reside on either the coast or the central valley.  Even the eastern third of Texas, where most of its residents reside, has a population density similar to France. 

 

There may be good reasons not to build HSR along our eastern, western, and southern coasts, as well as the mid-west, but density is not one of them.  They already have sufficient regional density to support HSR and will only have even higher densities for the foreseeable future.