Market Urbanism

Liberalizing cities | From the bottom up

“Market Urbanism” refers to the synthesis of classical liberal economics and ethics (market), with an appreciation of the urban way of life and its benefits to society (urbanism). We advocate for the emergence of bottom up solutions to urban issues, as opposed to ones imposed from the top down.

More fuel for the transit policy fire

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Controversy over the construction of high speed rail in California provides a glaring example of the rigidity inherent in using infrastructure projects as economic stimulus. A state study suggests that the Central Valley is not the most efficient location to begin the project’s construction, and that construction should begin in a population center such as Los Angeles or San Francisco. However, US Department of Transportation officials said funding would be revoked with a major change to existing plans because construction must begin by 2012. The LA Times reports:

Until those issues could be addressed, analysts called on the rail authority to push back its federally required construction deadline and consider relocating the initial segment to a major urban area where there was more potential for trains to run sooner.

Analysts further recommended that the Legislature not spend any more money on the project if the federal government did not allow the changes in the route and construction schedule.

Because the federal funding for the project comes from the American Recovery and Reinvestment Act, the project must be comply with the federal timeframe. However, for the long-run benefit of California residents, the flexibility to adjust plans as the market is reassessed makes more sense than adhering to the stimulus schedule.

Furthermore, many politicians and academics have questioned whether or not the train will be a long-run drain for California taxpayers.  The federal funding is contingent upon $9 billion in state bonds to fund construction of the rail line, but will allegedly be operated at a profit by a private company once construction is complete. In fact, Proposition 1A that voters passed to fund the project forbids subsidies to the train operator. The rarity of profitable high-speed rail systems and the US track record of rail subsidies call into question the feasibility of operating profitably. Will the rails that cost billions to construct sit empty, or will voters pass a new proposition for funding?

Alan Enthoven of Stanford University co-authored a study suggesting that the existing analysis from the California High-Speed Rail Authority likely underestimates the cost of running the line and overestimates the number of riders who will use it.  If Enthoven’s estimates are more accurate than those of the HSRA, the high speed rail project could end up being not only a train to nowhere, but one that requires a steady stream of taxpayer subsidies.

Comments

  1. This is what I struggle so much with; do we build HSR and deal with the subsidies that it will, almost-assuredly, need or do we wait until the technology catches up with the market? And how do we predict when that eclipse happens so we’re not caught even further behind the curve?

    If airlines start pricing out middle-income families, HSR may be a viable alternative given their prices don’t couple with oil-prices (we’ve already seen a decoupling of income-energy consumption, so this isn’t too far-fetched) and then we can have the discussion about HSR running at-cost. I want HSR, I love HSR, but it isn’t palatable economically speaking right now outside of the BosWash corridor.

    TBwww.radialsblog.com

  3. One big issue with CAHSR is that the MOUS (minimum operationally useful segment) is the whole thing.  San Francisco to Bakersfield, or Los Angeles to Gilroy, or any subset of LA-SF is far less useful than LA-SF.  It wouldn’t necessarily be a complete waste, of course; partial HSR is better for the rail customer than none at all, but the bulk of the benefit will be when the two cities are connected by HSR end-to-end.

    But of course, building the entire system in one phase is not practical–many parts of the system have not been designed, whereas the Central Valley system is almost ready to go.  (Likewise, the Interstate Highway System was built in pieces–I remember as a child numerous disconnected freeway stretches among US99 that eventually were stitched together to become I-5; and two-lane stretches of I-5 through Northern California).  Many of the complaints about project phasing strike me as being offered in bad faith by those hostile to the project and trying to undermine it, rather than those interested in the optimal construction plan.  Were the Grapevine section to be built first (and there are good reasons to do that, and good reasons not to), we’d hear complaints about expensive mountain construction when starting in the Central Valley would be cheaper; and were they to try and build everything at once, we’d hear calls for a phased approach.

    If there were an intermediate section of the line that was clearly more important than any other, particularly one which would have merit as a standalone project, a failure to build that first (without a good reason) would be grounds for criticism.  But that really isn’t the case with CAHSR.  Insisting that the first segment built must include one of the major-city endpoints is tantamount to insisting the project not start construction next year, as there are unresolved issues at both ends of the route.  But if what someone really want is the project to fail… that’s the whole idea, isn’t it?

  4. I dont know what they are thinking, running “test trains” in the CV. This isnt a new tech. Ive always thought the first line should be on the capitol corridor or even just the Caltrain corridor. HSR trains from SF -> SJ could have decent ridership, and would be a good start to the system, and the trackage would actually be useful if the system didnt work out.

  5. Look, the Economist does not ever know what it’s talking about. If you look at the annual reports of the major HSR operators of the world – JR East, JR Central, JR West, SNCF, DB-Fernverkehr – you’ll see that every single one is profitable. Even the Taiwan HSR system, famous for having gone bankrupt because of its huge interest rates, is now profitable after refinancing. The false statement that only Tokyo-Osaka and Paris-Lyon make money comes, I believe, from the fact that only those two lines were funded by a separate loan that was eventually repaid; other lines are profitable after depreciation and interest, but their profits are plugged into building more lines rather than paying back the original debt.

  6. “the trackage would actually be useful if the system didnt work out.”

    I think this is a problem that a lot of skeptics cling to: the HSR network is only useful for passenger rail and doesn’t do anything for freight, i.e. if HSR is a complete failure (and that is the doomsday scenario) that infrastructure is wasted. I’m not a structural engineer but I have a minor understanding of track schematics and I know that the gauges used for HSR are significantly smaller than what freight rail needs to support their tonnage.

    I’m not some one who scoffs at that bet; freight rail has been given distinct advantages in terms of right-of-way and land grants going back two centuries, maybe its time to give transportation-based rail an even chance.

    Also re: Alon: unfortunately Japan’s transportation infrastructure was the product of its near-total demolition in WWII. Being Hapa, I would love to have a Japanese import like JR come to the States, they’re just sprung from very different wells.

    http://www.radialsblog.com

  7. A dedicated right of way that could only take light-weight trains would be a godsend to Caltrain if HSR didnt work out. The Amtrak San Joaquin using the Central Valley HSR test track has a lot less utility in my view, especially due to the specs they have to build the track to for this alternate use.

  9. Steve,

    Much as I respect your opinion, I have to disagree on your HSR assessment. Every HSR system in the world makes an operating profit (that is, it makes money in normal operations before debt service is deducted); even Amtrak’s Acela does that and it’s hardly HSR by global standards. High-speed rail is profitable.

    Secondly, as several bloggers have discussed, the Central Valley alignment is the optimal starting alignment. See links below. In my own post, I demonstrated that this approach is actually not so different from the TGV’s. Others have shown similarities with the ICE, and TAV similarities likewise exist. Someone even showed positive comparisons with Spain!

    California Dreamin’
    Feds Slap Down LAO, Refuse to Budge
    Pull Plug on High-Speed Rail? Why?
    More Evidence California Compares Favorably to Other Routes

  10. The technology catches up with the market? What in the world do you mean by that?

  11. Hey, that was actually written by a new contributor, Emily Washington, not me. I don’t know much about the alignment debate in California, but the operational profits seem a bit like a red herring to me, anyway – the real money has to be spent on the infrastructure and the trainsets, and nobody really knows where that money is going to come from.

    I think the ultimate question here is, do you believe the whole system will get built? If you’re pretty certain of it, then I’m open to the idea that starting in the Central Valley makes sense. But if it’s not going to get built (or at least won’t get built for a very long time), then it doesn’t, because such a route is, let’s face it, close to useless. I believe that California will get rail within my lifetime, but then again, I’m only 22…

    Anyway, like I said, this area isn’t my specialty, so I’ll let Emily duke it out with you if she wants, but there’s my two cents.

  12. A reply to S M Stofka and Alon –

    Studies from both Berkley and Stanford have suggested that the CHSRA ridership estimates are overly optimistic. They predict 91-95 million riders annually, three times the number that rode Acela in 2010.  The CHSRA obviously had a large incentive to create ridership estimates that would demonstrate the project’s profitability, but if their numbers are highly inflated, the operation may not, in fact, be profitable in California.

  13. Right now the efficiencies for our particular geographical construction are all in aviation. It’s a conflation of factors but if a train can’t match speeds with a plane and it’s still more expensive then the market is weighted towards flight. if you can make it price competitive with aviation then there’s an argument for HSR gaining mode-share for short-haul trips but it still won’t boot aviation for distances > 400 miles unless the price incentives are there.

    If I’m traveling from, let’s say, Boston to Charlotte for business, just a day trip, and the costs for rail and aviation are the same but the travel times are 3 hours shorter for flying, then I’m still going to be flying for efficiencies sake. If the prices are significantly lower for rail, though, there’s a chance that, depending on the size of my company, rail would be the better option. Right now that price gulf doesn’t exist for HSR; I can still fly from LA to SF for $29 each way on some airlines, I can guarantee HSR prices will be at least triple that. That’s what I mean by technology catching up with the market.

    And yes, the environmental arguments are compelling and I side 100% with them, but this has to be looked at from a purely economic POV as this is an economics blog, hah.

  14. There is no technological reason that you can find $29 flights for each way on some airlines. The whole business plan of CAHSR rests on matching the airlines average prices (actually, the plan is to set prices at 83% of average airfares, meaning lower average prices), which means that they are free to offer teaser fares or super low fares to fill empty seats, in the exact same way that the airlines do. The key is AVERAGE prices, not lowest prices. You can not find a $29 fare at any time or any airline that you want, the average is much, much higher. Are you suggesting that there are airlines filling up planes and making money off of $29 fares? You’re suggesting that there is a market-based reason that planes from LA-SF can operate more cheaply per passenger than high speed trains can? Seriously?

    The only advantage that planes might currently have is that most of the capital infrastructure is now a sunk cost paid for long ago by the government, rather than something new to be paid for by the government. However, with many of the airports in California still at least nominally planning on multi-billion dollar expansions, upgrades, new runways, etc, that argument doesn’t seem to hold a lot of weight.

  15. Emily, first, the prediction is 65-117 million, which is 6-10 times the ridership of the Acela plus Regional. But do not compare CAHSR with the NEC; the average speed proposed for CAHSR express trains is twice that of the Acela on its fastest segment, and it’s not going to be FRA-regulated to death.

    Second, SNCF confirms the lower end of the CAHSR predictions.

    Third, the various predictions of unprofitability resort to nasty tricks – for example, assuming that ridership will be half of projections while the amount of service provided is in line with projections. HSR does not have high fixed operating costs; thus even lines that have significantly fallen short of projections make money. Whatever the merits of CAHSR’s ridership projections, it’s wrong to say that few HSR lines have made a profit.

  16. There should be enough money to build at least to Los Angeles. The minimum useful operable segment is LA-Bakersfield, or LA-Fresno. The reason they started in the Central Valley rather than over the Tehachapis (or Tejon) is that the EIR for Palmdale-LA was not as advanced, so in order to meet the tight stimulus deadline they needed to start elsewhere. But they’re already looking to use money they already have to extend to at least Palmdale (or Santa Clarita) and thence LA.

    The problem is not money – it’s matching fund requirement. Prop 1A committed 9 billion to HSR, but all of the money must be match 50:50 from another source; without the 50:50 requirement, there should be enough money to construct a minimum operable segment to LA. Some foreign governments have made noises about funding the system – e.g. Japan said it would give half the money – but until the total amount of federal funding is known, they won’t commit money.

  17. The other reason why the segment starts from “nowhere to nowhere” (somewere in Bakersfield to somewhere north of Fresno) is because you’ll get the most track for the money, and it’s the best proving area.

    The populated areas (L.A. to Anaheim and the Caltrain right of way) already have the tracks, but the set-up costs will be high and the actual improvements very small. Therefore the marginal improvements are also going to be small. L.A. to Anaheim is already 40 minutes by 79 mph max train — cutting that time in half won’t necessarily double ridership because the actual time savings will be small. Same thing with the existing Caltrain Baby Bullet. The express service can cover San Francisco to San Jose in about an hour. Plus, the corridor pretty much has everyone who wants to ride it riding it right now, so again, improvements are at the dminishing returns phase.

    Connecting L.A. to Bakersfield will be a major challenge. Presently, there is no passenger rail service between the cities. To go between L.A. and Bakersfield requires a bus connection, one that is reasonably fast (about 2 hours, 15 minutes). The high-speed train would have to beat that significantly, and preferably by going to the Antelope Valley. There is no major population center and very challenging topography via the Grapevine between Santa Clarita and Bakersfield.

    This is why it’s best to wait on getting the urban connections.

  18. There is something called independent utility that covers the contingency of failure. In the event that California abandons high-speed rail but lays tracks, those tracks must plug into the existing railway network. The Central Valley could still get much faster San Joaquin service out of the deal.

  19. TM Brown, technology won’t solve the inherent inefficiency of short-distance flights — time lost in taxiing and landing approaches, particularly — as well as airborne traffic conestion (planes can’t run nose to tail at the same elevation). There also isn’t a push by the aerospace industry to make a vehicle with the passenger capacity of a plane and the flying characteristics of a helicopter (namely, vertical takeoffs/landings).

    There’s a sweet spot for HSR — in the 100 to 500 mile range — where it becomes an attractive option for long-distance driving and short-distance flying. Aviation in particular has a very high cost for an unsold seat; rail, a much lower one. Alon might now what the tipping point is for what percentage of an HSR line could capture in order for a competitive plane trip to be unviable.

  20. This is what I struggle so much with; do we build HSR and deal with the subsidies that it will, almost-assuredly, need

    Subsidy is a great spook word, isn’t it?

    Subsidy or no subsidy — and the general case for HSR worldwide shows that it can stand on its own — the rest of economics or the world at large won’t change a damn bit. The U.S. subsidizes Amtrak to the tune of $1 billion a year. With a U.S. population of 311 million, that works out to about $3 a person a year. Take away the subsidy and liquidate Amtrak, you’d give away $3 to each American. Once. That doesn’t even factor in the costs of a liquidation.

    As for subsidies distorting “the market”, there’s one advantage of living in a wealthy nation. We can afford a distortion. A third world nation has a very real “crowding out problem” — if it takes away $3 out of the economy, it has no other activity that could make up for the taxation. Wealthier nations can offset subsidies through their economic activity. So, Amtrak would be a terrible idea for Honduras. The U.S., on the other hand, can afford it with little ill effect on the broader economy.

    The best way to reduce or eliminate subsidies is not to cut service but to invest more deeply in them. Paying more in capital over a relatively short timeframe will result in less ongoing operating costs over the life cycle of the service. Acquiring right of way is a one-time-for-all-time cost; you’ll have the right of way for as long as you choose to run service. The assets — trains, tracks, stations, last decades. Adding an improvement — faster trip times, attracting more passengers, offering premium amenities — improves revenue and reduces costs.

  21. The test track will allow for a San Joaquin service on steroids. Also, NARP on its site has the top station and revenue pairs for each train. For the San Joaquin in particular, all 10 of the top 10 ridership pairs involve the portion of the line between Fresno and Bakersfield. The Hanford area (this would include Visalia), which wasn’t scheduled to get a high-speed rail station initially, accounts for 2 of the top 10. Fresno and Bakersfield itself is one of the top destinations, and the rest involve Bakersfield or Fresno to somewhere larger (Sacramento, Stockton, etc.).

    So the choice for the test track means it will benefit all 10 of the 10 major trip combinations possible on the San Joaquin. The test segment turned out to be a better choice than thought.

  22. As a resident of the Bay Area and an occasional rider of Caltrain, I would opine that there’s a lot of room for improvement on that corridor. It could really benefit from electrification, and a better schedule. Right now, the baby bullet and the locals get in each others’ way, because there are only two tracks and nowhere to pass.

  23. I think the “it’s only a billion dollars a year” argument is silly– you can use it to justify anything. And liquidation would presumably raise some money from the sale of assets (real estate). Not that I support it.

    We subsidize the competition (autos) immensely. From roads, paid for by property taxes and general revenues, to regulations, like the minimum parking regulations which require anyone building a house or a commercial building to build extra parking, plus all the externalities like pollution and health and oil-related wars.

    Currently, our solution is to argue for subsidizing transit as well. But the alternative solution is to end subsidies for autos, and “let the market decide”.

  24. Right now I can’t find a single flight from LA to SF, for any date, for less than $70. And that’s probably only going to go up…

    A flight may be shorter by three hours, but how much of that time will be eaten up by getting to the airport, having to arrive an hour in advance, going through security, delays on the tarmac, waiting for your luggage, and getting to your destination? The difference in time spent may be less than you think. In addition, a business traveler may prefer five hours of uninterrupted train travel to three hours of all the hassles involved in flying today.

  25. The time argument with HSR is a tough one because there are a lot of hypotheticals that go into determining that trip time if HSR becomes a transformative piece of infrastructure. This country loves an “efficient” safety structure when it comes to transportation. If HSR starts to dominate short-haul trips (i.e. < 400 miles) then I don't think it's too out there to think that TSA may start slapping minimum "check in" times just like they do at airports. This, of course, is just a hypothetical scenario but I think it's a likely one.

  26. I respectfully disagree with the sweet spot argument for HSR though I do think if you cut that to about 200 miles you’d have a very good argument. If we look at Spain’s HSR program a big part of the concept was that it would create a business community along the corridor as well as commuters that could travel to Madrid without driving for 3 hours. It was amazingly successful in accomplishing that. I think the US just has a different geographical makeup; our bedroom communities are already dominated by cars so unless we do something about altering that mode share through disincentives (something I wholeheartedly agree with) we’re going about things in the wrong order.

    And yes, people don’t understand how scarily crowded the skies are (I mean that seriously).

  27. Is pegging train fares to 83% of average of air fares really anyway to run a market-driven business? I’m not any sort of free market thumper nor do I even think we run anything close to a semblance of “free market” at home, but train fares have to be allowed to be what they’re going to be. I understand the irony of my saying that because if we really let the market do its work on the airline industry tickets would be $500 from Boston to New York  and most brands would be out of business.

    And what do you think the price difference is going to be between flying and the train, really? I would bet that the word marginal comes into your head immediately. And how doesn’t the argument that a large scale government expenditure on a passenger-only transportation system in a state with significant debt servicing not make sense? The reason that the Interstate system was such a good ROI was because it supported the freight industry; delivery times went down, transportation costs almost went to nil. I really don’t care about government debt, to be honest, but the political realities that the U.S. and California are in wouldn’t be too friendly to this sort of thing.

  28. It’s not a hard peg, that’s just the initial plan intended to stress growing ridership at first over other desires.

    The price difference for LA-SF will be marginal, but the price difference for all of the intermediate locations to either end, as well as locations in between, will likely be much lower, as very little air service exists now. For example, Fresno-SF flights are always more expensive than LA-SF flights, so we’ll probably see a lot of travel growth from these currently under-served areas.

    Regarding the money spent – the reason it doesn’t make sense to me is because the cost of not building HSR is not $0. There are still plans on the table to build a new $4 billion runway at LAX, a $3.5 billion runway at SFO, and several other upgrades at the lesser airports. In addition, I-5 is approaching capacity in several areas between the north and the south. If the investment of $X billion prevents the need to invest $X billion in other places, then that seems like a wash. Of course, political realities are that the status quo is always preferred, I understand that. However, since we’ve got a head of steam already on this project, I don’t see the point in dropping it now.

  29. The TSA bogeyman is brought up in every HSR discussion, but I have yet to see a good reason for why it would happen other than “it’s inevitable.” Why would it happen, exactly? It hasn’t happened on buses or current trains. It hasn’t happened with the cruise industry. It hasn’t even happened at stadiums and arenas (many of these do use private security to check folks coming in, but not all, and certainly none use a federal-level agency). It only happened with airplanes after the worst terrorist attack in the history of the country.

    The only way that I could possibly see it happening is with a major terrorist attack against an HSR line, which is possible of course. However, is that your argument? Because a terrorist attack is bound to happen at some point, which will tempt Americans to bring TSA into HSR trains, we shouldn’t even discuss building it in the first place?

  31. The “sweet spot” of HSR is 100-250 miles for driving — this is the range where taking a train has the most advantages over driving. A trip might be possible > 100 miles, but the time difference isn’t substantial to cut down driving. The 250-500 mile range is generally less economical for airlines to serve; trips > 500 miles on HSR become less economical.

    The 200 miles you mention would be the centerpoint distance. This is where the greatest ridership would come from, with the end-to-end trips generally producing the least traffic. If you had an HSR line that was exactly 500 miles, and each station was 100 miles apart, you’d have A-B-C-D-E-F, with A and F representing the terminals. A-F trips would have the smallest combination. Trips such as A-C, A-D, B-D, B-E, C-E, C-F and D-F would likely represent the greatest station pair combinations.

    Keep this in mind as I explain why the “U.S. is just different” is a straw man.

    The U.S. is not too spread out for HSR. Population density isn’t evenly smoothed out across the landscape like cake batter; population is very concentrated.

    In some research I have done, I’ve plotted MSA populations of 1 million or more around 8 continental U.S. cities that could serve as “hubs” where trips can originate. So far, I’ve done the Eastern Time Zone hubs of Washington D.C. (selected as a hub over NYC because it offers greater network connections to the Midwest and South) and Atlanta.

    DC to Atlanta is more than 500 miles, but it could get a 220-mph upgrade, especially considering how many major metros are along the way. In between those two cities are: Richmond, Va.; Raleigh/Durham, N.C.; Greensboro, N.C., Charlotte, N.C.; and Greenville/Spartanburg/Anderson, S.C. These all have MSA populations greater than 1 million.

    You can have a national HSR network without running coast-to-coast lines. Geographically, the area that would get screwed in the continental U.S. is the north Mountain states. There’s a “saddle” pattern where you connect the dots of Seattle, Portland, Sacramento, Salt Lake City, Denver, Kansas City and Minneapolis. There are no major population centers inside of this saddle, and it would not make sense to build HSR here.

  32. The “sweet spot” of HSR is 100-250 miles for driving — this is the range where taking a train has the most advantages over driving. A trip might be possible > 100 miles, but the time difference isn’t substantial to cut down driving. The 250-500 mile range is generally less economical for airlines to serve; trips > 500 miles on HSR become less economical.

    The 200 miles you mention would be the centerpoint distance. This is where the greatest ridership would come from, with the end-to-end trips generally producing the least traffic. If you had an HSR line that was exactly 500 miles, and each station was 100 miles apart, you’d have A-B-C-D-E-F, with A and F representing the terminals. A-F trips would have the smallest combination. Trips such as A-C, A-D, B-D, B-E, C-E, C-F and D-F would likely represent the greatest station pair combinations.

    Keep this in mind as I explain why the “U.S. is just different” is a straw man.

    The U.S. is not too spread out for HSR. Population density isn’t evenly smoothed out across the landscape like cake batter; population is very concentrated.

    In some research I have done, I’ve plotted MSA populations of 1 million or more around 8 continental U.S. cities that could serve as “hubs” where trips can originate. So far, I’ve done the Eastern Time Zone hubs of Washington D.C. (selected as a hub over NYC because it offers greater network connections to the Midwest and South) and Atlanta.

    DC to Atlanta is more than 500 miles, but it could get a 220-mph upgrade, especially considering how many major metros are along the way. In between those two cities are: Richmond, Va.; Raleigh/Durham, N.C.; Greensboro, N.C., Charlotte, N.C.; and Greenville/Spartanburg/Anderson, S.C. These all have MSA populations greater than 1 million.

    You can have a national HSR network without running coast-to-coast lines. Geographically, the area that would get screwed in the continental U.S. is the north Mountain states. There’s a “saddle” pattern where you connect the dots of Seattle, Portland, Sacramento, Salt Lake City, Denver, Kansas City and Minneapolis. There are no major population centers inside of this saddle, and it would not make sense to build HSR here.

  33. Clarification on my point: There’s one substantial population center within the saddle: Boise, Idaho. It would be within the 500 mile catch area for a trip originating in Seattle, Portland or Salt Lake City.

  34. Like TM Brown, I concur that you raise good points, WillisQ.

    A lot of the anti-HSR crowd likes to say trains are unnecessary because flights between LAX and the Bay Area are plentiful and affordable. They forget the “flyover country” that is the Central Valley, which has a population of 5 million between Sacramento and Bakersfield yet unserved except by expensive small-plane flights. Southwest or other carriers don’t have plans for SoCal to Bay Area planes to stop in Bakersfield, Fresno and Modesto along the way.

    Meanwhile, the Central Valley is the fifth busiest train corridor in the U.S. — incredible considering that the San Joaquin doesn’t serve any “tent pole” station. It’s possible to go from L.A. to San Francisco via the San Joaquin, but it requires a bus at each end (Bakersfield L.A. and Emeryville San Francisco). The market also supports busy Greyhound service, a regional intercity bus company, and at least 5 different Mexican bus services.

    Also, just getting some kind of train service between L.A. and San Francisco is bound to make a dent in the air market for those cities. The plane will be faster, but some trips are bound to be cut. That won’t be a bad thing, as the airlines can reposition plane trips to serve other markets. What HSR also has going for its favor is that stations are more convenient to major residences than airports. Union Station is closer to most of Southern California than LAX is. HSR will be on the way to SNA, ONT, BUR, SJC and SFO, so trains may serve as a complement to plane service.

  35. I think the 83% figure is not some sort of strict peg, just a guide to their strategy: offer more convenient service at a modestly lower price. You shouldn’t read anything more into it.

    Why do you think flight tickets from Boston to NY would be $500?

  36. You can subsidize anything, true, but every subsidization comes with a value proposition. What do you get back from the subsidies? Remember, for public subsidies, the profit motive does not necessarily apply and a community may just want to get a good or service instead.

    California subsidizes public higher education to an extreme degree. It doesn’t matter that the tuition is class-blind; middle-income and upper-income kids don’t have to pay more just because they can afford to pay more. The “farebox recovery” of UCs, CSUs and community colleges is abysmal — none of the systems can ever hope to make money off of teaching resident students. And the mission statement (Master Plan) makes the colleges’ goals foremost to provide higher education access to California students; tuition “farebox recovery” is not an explicit goal. Still, though, when you see how much more the average student makes by having a degree versus a high school diploma, the system gives the opportunity for most Californians to earn higher incomes at much less expense than a private college.

    And liquidation would presumably raise some money from the sale of assets (real estate).

    Not for Amtrak it won’t. Most Amtrak stations are locally owned; generally speaking, all of the ones that have a plausible market for them are locally owned. You can tell which stations are Amtrak-owned; they are usually slabs with benches or shanties that are far outside of the cities they are meant to serve. If an Amtrak station has something value-added, like an architecturally significant station, a central location, attached offices/hotels/shopping, or an intermodal transit center, these would be locally owned. Amtrak can’t sell these.

    All Amtrak has to its name are its train fleet and physical assets such as office equipment, computers and fixtures. Amtrak would be lucky to make much more over the cost of a liquidation auction for those. The freights might scoop up the locomotives, and the passenger cars would have to be scrapped or sold to local commuter agencies. Ironically, that would mean liquidating the train cars and reusing them on commuter services that have a worse farebox recovery than Amtrak!

    Americans would actually lose money on an Amtrak liquidation when you factor in the severance costs for all of its employees. Amtrak could be shut down tomorrow, but it would still be obligated to pay off creditors and still owe its employees severance pay as well as pension and health care costs. Legally, Amtrak cannot shirk these payments. The government would just pay these costs out of the general fund until all the terms of the collective bargaining agreements are met.

    Taxpayers will end up paying more than $3 to recover that $3 from the liquidation.

  37. 200 is really the lower end at which HSR can compete with the car. For example, Tokyo-Nagoya, a distance of 212 miles, is a thriving HSR connection, but most people on that route drive because the reduced trip time from taking the Shinkansen doesn’t always justify the cost or the lack of a door-to-door trip. If you want HSR to have a mode share of 50% or more (total, not just air/rail) then you’ll want to place it at slightly longer range, e.g. Tokyo-Osaka at 320 miles.

    In the Northeastern US the optimal range is if anything longer, since trains have to compete with buses and not just cars. Ditto the Sunbelt: the more sprawling the cities HSR connects are, the higher the breakeven point with the roads is. In contrast, the convenience of flying doesn’t really depend on how much sprawl there is; connecting transit can connect to air almost as effectively as to rail.

  38. 200 is really the lower end at which HSR can compete with the car. For example, Tokyo-Nagoya, a distance of 212 miles, is a thriving HSR connection, but most people on that route drive because the reduced trip time from taking the Shinkansen doesn’t always justify the cost or the lack of a door-to-door trip. If you want HSR to have a mode share of 50% or more (total, not just air/rail) then you’ll want to place it at slightly longer range, e.g. Tokyo-Osaka at 320 miles.

    In the Northeastern US the optimal range is if anything longer, since trains have to compete with buses and not just cars. Ditto the Sunbelt: the more sprawling the cities HSR connects are, the higher the breakeven point with the roads is. In contrast, the convenience of flying doesn’t really depend on how much sprawl there is; connecting transit can connect to air almost as effectively as to rail.

  39. One big difference is that hijacked airliners can be used as guided bombs, as we saw on 9/11.

    Electric-powered high-speed trains cannot be used in this fashion, as a) they aren’t laden with thousands of pounds of highly-explosive aviation fuel, and b) are confined to their trackage.

    Street-running vehicles such as busses often carry combustable fuels, but not enough to destroy a large building should they be driven at high speed into the side of one; in addition, the kinetic energy available to ground-running vehicles is limited due to both lower mass and velocity.

    Besides airliners; what other civilian vehicles pose a risk for a terrorist attack that destroys more than the vehicle itself?  Large boats are a major one; which can easily demolish bridges if permitted to collide with support piers.

    But the primary risk of terror attacks on HSR are to passengers; whereas terror attacks on aircraft can endanger far more.

  40. Sir:

    “Unfortunately Japan’s transportation infrastructure was the product of its near-total demolition in WWII.”
    You must be referring to some other country, some other “WWII” – or perhaps some other planet.

  41. The problem with both studies is that they fail (“refuse” might be a better choice of words) to place the CHSRA ridership estimates “in context.”

    The most recent CHSRA ridership forecast that I’ve seen is 36.5 million / year by 2025, and 41.0 million / year by 2035.

    In terms of annual traffic density (pass-km per km of system length), you’ll see that the CSHRA forecasts imply about 20 million pass-km per km of system length. In other words, about 20 million passengers traveling, on average, over each km of line.

    If you can’t stomach the CHSRA forecasts, then slash ’em in half. You’d have a tough time defending a ridership figure below 20 million per year, but Berkeley and Stanford don’t seem to care about that.

    Nor do Berkeley and Stanford have the slightest interest in comparisons you can make on this table:

    “High-Speed Rail Passenger Traf?c Density Statistics”
    http://www.publictransit.us/ptlibrary/HSRtrafficdensity2010.pdf

    Among the things you’ll see is that, in terms of annual traffic density, the Tokaido Shinkansen is a “textbook example” of an “outlier.”

  42. “Look, the Economist does not ever know what it’s talking about. If you
    look at the annual reports of the major HSR operators of the world – JR
    East, JR Central, JR West, SNCF, DB-Fernverkehr – you’ll see that every
    single one is profitable.”

    You most certainly will not find that they are profitable.  There would be virtually no HSR anywhere in the world without massive government subsidies.

  45. An “operational surplus” is not a profit.  It ignores capital costs.  It’s like claiming an airline is profitable by ignoring the costs of buying the planes.

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