The Case Against Subsidized High-Speed Rail

by Marc Scribner on April 1, 2010

in Economy, Mobility, Politics as Usual, Regulation, Stimulus to Nowhere

President Obama’s stimulus package set aside $8 billion in subsidies for high-speed rail projects in the United States (known as the High-Speed Intercity Passenger Rail (HSIPR) Program). Vice President Biden, the administration’s most vocal passenger rail supporter, apparently believes countries should be judged based on the amount of money their governments spend on infrastructure boondoggles.

Amtrak has been a fiscal black hole since its creation, and these moves will likely exacerbate an already costly problem. Meanwhile, the intercity bus market has grown, with vibrant competition keeping fares low and improving the quality of service. Megabus, a subsidiary of the U.K.’s Stagecoach Group, launched in 2006 and now has routes throughout the East Coast and Midwest—they offer tickets priced as low as $1 and provide free unpriced Wi-Fi access. Subsidized high-speed rail poses a threat to this competitive industry, and consumers will be the ultimate losers.

The rail romantics and eco-know-nothings have managed to convince much of the public that magical trains of the future are the remedy to every perceived transit and environmental woe. The next time you come across someone spouting this Rah! Rah! Rail! nonsense, remember that there are many good reasons to oppose government-financed high-speed passenger rail. Here are a few:

• Amtrak has been engaging in predatory pricing for decades, running up massive operating deficits while charging passengers artificially low fares. This has retarded the growth and competitiveness of the private intercity bus industry, robbed consumers of more choices in domestic travel, and bilked taxpayers out of billions of dollars.

• There is no evidence that Obama’s HSIPR Program will produce any management efficiency gains. The traditional (inefficient) model of government-run passenger rail is essentially unchanged.

• Government-run high-speed rail faces several inherent management and implementation problems: retraining employees (maintaining high-speed and traditional heavy rail require different skill-sets), NIMBY concerns, right-of-way disputes with freight carriers, and increased politicization (and thus the risk of government failure) of American travel.

• Buses travel on existing highway corridors and do not require a massive new infrastructure. There are plenty of arguments in favor of adjusting the public financing mechanisms for roads, but that is irrelevant in this context.

• Because trains require rails and can move only forwards and backwards, many rail projects are tied to “comprehensive redevelopment” plans that work against the claimed environmental benefits of trains vs. roads, even if the locomotives in question emitted zero pollution. In addition, these plans necessitate central planning on a grand scale, increase eminent domain abuse, and incentivize assaults on property rights. Buses, in contrast, can depart and arrive virtually anywhere and re-route at will given road conditions.

• Private bus operators have successfully expanded to new markets throughout the Midwest in recent years. The high-speed rail project in the low-population Hiawatha corridor from Milwaukee to Minneapolis, for example, puts private bus operators in direct, unfair competition with government-subsidized high-speed rail.

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