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I'll let others address the specific points, but in general the article fails because it makes a conceptual mistake of many involved in debating transportation policy that structurally biases the conclusions against more investment in large projects such as HSR.  The mistake is to conceive of HSR as solution to a transportation problem instead of as a solution to an economic growth problem. The principal object of any new transportation project is not to move people to where they presently want to go, but to move people to different places where more economic development, i.e., growth, can occur.

Presently, economic growth prospects everywhere are constrained by space limitations (congestion), energy limitations, and environmental limitations. If we assume a no growth world, the Carbusters article and others who make the claim that HSR doesn't deliver enough energy reduction and other benefits which justify its cost can be (though not necessarily have to be) correct. Given other transportation options, and existing travel routes, a new, competing means of moving people may not provide enough efficiency or other benefits.

But we don't live in a static world. For better or for worse, we live in a growing world where the principal obstacle to growth is figuring out how to get more benefits from ever scarcer resources.  And HSR does precisely that by allowing ever more people to travel rapidly over longer distances despite increasing constraints on energy, space, and the climate. Its another well-shaped piece to complete another round of the ongoing Tetris game of growth and urbanization.  

It is true that HSR is unlikely to lead, by itself, to lower greenhouse gas emissions and other economic benefits because people are likely to just increase their overall travel instead of merely switching modes of it.  But that is a good thing -- a benefit of HSR and not the drawback that its detractors try to claim.  HSR allows economic growth to occur that otherwise would never be able to.

To understand this point I think it is helpful consider a business case study of early American railroads. Famously, all of the major railroads in the 19th century except one are said to have relied on substantial US government assistance for operation (and which went bankrupt nonetheless). The one railroad that didn't was the Great Northern Railroad, which today, after over a century of growth and acquisitions of weaker competitors, has grown into the Burlington Northern Sante Fe Railroad (BNSF), which itself recently became super-billionaire Warren Buffet's largest acquisition. It was founded in Saint Paul, Minnesota by a Canadian named James J. Hill, who subsequently also became, for a time, the richest man in the world like Mr. Buffet is today, personally underwriting much of Great Britain's efforts in World War I as well as changing US policy on the war from neutrality to alliance with Britain. (Although a Canadian citizen, J.J. Hill was politically very involved in US politics and served as chairman of the Democratic Party in Minnesota for most of his later life.)

Unlike the other railroad barons of the age, however, James J. Hill did not view his business as principally that of transportation. Rather, he viewed himself, and built his business, upon a model of real estate development.  He bought strategic tracts of cheap, inaccessible prairie land (much of it recently surrendered by Native American Indians), as well as urban land in city centers that would benefit from increased farming, and then he built railroads to reach them, selling the land for a profit.  It didn't really matter for the Hill railroad whether or not it paid for itself -- it sometimes did but often didn't -- because the real profits of the whole enterprise were the land valuation gains from economically developing the Great Plains. (That's where the name "Empire Builder" comes from for the Chicago-Seattle line that Hill built and is now run as an Amtrak service.)

Similarly, HSR allows for economic growth that would otherwise be constrained by real scarcity in space, energy, and environmental damage. Limiting analysis to mere transportation and efficiency outcomes like the Carbusters article does misses the primary benefit that new transportation options such as HSR provide -- economic growth.

by santiago on Mon Nov 8th, 2010 at 04:05:50 PM EST
IIRCC, the Union Pacific, Southern Pacific and AT&SF all had federal land grants as incentives to the investors. The UP had grants of the right of way and square miles on alternating sides of the right of way from Nebraska to California. That was a lot of land, even if it was still occupied partly by bison and Native Americans. I would think that the Northern Pacific had the same deal. These were national priority projects and the land that was being granted was, in effect, other people's land. This was one reason that late 19th century moguls were so concerned about Georgist land tax programs.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Nov 9th, 2010 at 08:56:08 PM EST
[ Parent ]
The Great Northern railway (Northern Pacific was a different, competing one led by tycoon Jay Cooke and which did receive land grants and also went into bankruptcy) actually didn't have the same grants provided to other railroads, perhaps because James J. Hill was not a US citizen or perhaps because he simply didn't ask for them. Part of the Great Northern was formed from J.J. Hill's purchase of the St. Paul, Minneapolis & Manitoba Railway, which had previously received land grants for rail right of way, but Great Northern itself never actually received any land grants -- the only railroad never to have done so, in what is now a legend in US railroad history.


by santiago on Mon Nov 15th, 2010 at 11:30:58 AM EST
[ Parent ]
(and let's face it, that's the best case, for Europe and the US), economic growth is not required to justify the cost. It's more a matter of the cost of not doing so. For example : maintaining real estate value in cities served by HSR, rather than seeing them collapse as other modes of transport become impracticable.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II
by eurogreen on Thu Nov 11th, 2010 at 06:32:04 PM EST
[ Parent ]
Maintaining real estate values IS an economic growth justification for rail.  

But that's a good question.  I'm not sure the math holds out for rail (or any other new mode of transportation) without economic growth.

Here's a proposition to ponder: Without economic growth, there is no need for any expansion of transportation infrastructure.

by santiago on Mon Nov 15th, 2010 at 11:35:10 AM EST
[ Parent ]
Well, yes and no. Within the foreseeable future, we'll have to replace the entire car fleet and petroleum support infrastructure anyway, just to retain current capacity. So the decision is not between doing maintenance on existing infrastructure versus building a new system, but between which new system to build in order to handle any given transportation task.

Even if this were not the case, the case for an upgrade to the infrastructure that results in lower resource use for the same service would depend on your planning horizon. If the service cost, including depreciation, is lower for the new mode than the old mode, then there exists a discount rate for which an upgrade is viable.

Finally, it is possible to have growth in terms of the quality of service rather than in terms of the number of ton- or passenger-kilometers travelled. Rail offers a number of advantages over airplanes and cars - they are more comfortable than either; unlike planes, you don't have to go through a gauntlet of goons to get on; and unlike cars you're not driving yourself, so you can use the time for more interesting pursuits.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Nov 15th, 2010 at 01:53:58 PM EST
[ Parent ]


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