HSR Negative

7/29/2019 HSR Negative

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HSR NEG


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HSR Solvency Deficit


3/23

No Ridership

The only people who have the money to use the high-speed raildont need it

Martin Engel, writer for High Speed Train Talk, A Summary Reality Check of WhyHigh-Speed Rail is a Bad Idea, June 25th, 2011, http://high-speedtraintalk.blogspot.com/2011/06/summary-reality-check-of-why-high-speed.html7. It [the high-speed rail] serves only those who can afford it and don't needit. Ticket prices for high-speed rail, as we keep saying, are the highest of all railroadtickets, world-wide. Even in China. High-speed rail is luxury, premium, first-classtravel for the affluent only. The government has no business pouringthetax-dollars collected from those who can't afford to ride this train, to build itfor those who can. . . .and subsidize each of those tickets as well. As they say in the UK, the poorshouldn't be building a luxury train for the rich.

HSR doesnt meet ridership forecastsAmos et al 10[Paul Amos, Dick Bullock, and Jitendra Sondhi; High-Speed Rail: The Fast Trackto Economic Developmenthttp://www.wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2010/07/26/000334955_20100726032714/Rendered/PDF/558560WP0Box341SR1v08121jul101final.pdf; pg. 14]Despite the clear success of high-speed rail in increasing ridership andimproving market share, even a good story can be oversold. High-speed projectshave rarely met the full ridership forecasts asserted by their promoters,and in some cases have fallen woefully short (such as the forecasts for the Eurostarservices between London and Paris and Brussels). A whole new area of behavioral research has been generated bythe phenomenon of over-forecasting in transport, known as optimism bias . But a brief reading of the early days of railway development in the U.S.A. and Europe would quickly reveal that optimism bias is actually an inherited trait,

handed down over generations, which tends to emerge whenever the recessive gene of optimism becomes over-stimulated by the dominant gene of selfinterest. 14 The financial outturn for individual lines is an area wherepublicly available data is sometimes rather sparse, and it would take much more detailed study to draw other than

the most general conclusions; but they are rather sobering. On the cost side, experience is thatconstruction plus train-set costs, outside of China where the costs aresignificantly lower, typically range from USD 35-70 million/km , depending on thecomplexity of civil engineering works, the degree of urbanization along the route 15 and the total capacity of therollingstock required (related to demand). Construction is generally cheaper where there is an existing rail corridoravailable, and when existing lines are used for the last few kilometers to bring trains into and out of an urbancenter. It is likely that there are economies from larger construction programs; certainly China has realizedcomparatively low unit rates on many components and processes due to the scale of the program, continuousworking with few delays, and wage levels lower than in other countries where high-speed rail is being introduced.
http://www.wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2010/07/26/000334955_20100726032714/Rendered/PDF/558560WP0Box341SR1v08121jul101final.pdfhttp://www.wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2010/07/26/000334955_20100726032714/Rendered/PDF/558560WP0Box341SR1v08121jul101final.pdfhttp://www.wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2010/07/26/000334955_20100726032714/Rendered/PDF/558560WP0Box341SR1v08121jul101final.pdfhttp://www.wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2010/07/26/000334955_20100726032714/Rendered/PDF/558560WP0Box341SR1v08121jul101final.pdf


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Answers To


5/23

AT: Consumer Spending Key

Countercyclical theory is wrong people should save ratherthan spend, as banks redistribute the money to people

who will spendRiedl, Senior Policy Analyst and Grover Hermann Fellow in Federal BudgetaryAffairs, Thomas A. Roe Institute for Economic Policy Studies, B.A. Economics andPoli Sci @ U Wisconsin, M.A. Public Affairs @ Princeton, 1/5/10 (Brian M, WhyGovernment Spending Does Not Stimulate Economic Growth: Answering theCritics, http://www.heritage.org/Research/Economy/bg2354.cfm)Critics' Objection No. 1: People Are Saving Instead of Spending, and Banks Are Not Lending.By Borrowing and

Spending these "Idle Savings," Government Can Circulate More Money Through the Economy. This is themost common defense of government stimulus cited by policymakers.Indeed, among proponents of government spending there is a strongfocus on whether people are spending or saving , with the implication that spendingcirculates through the economy while savings effectively drop out. But savings do not drop out of

the economy. Nearly all people put their savings in: (1) banks, which quickly lend themoney to others to spend; (2) investments in stocks and bonds; or (3) personal debtreduction. In each of these situations, the financial system transfers oneperson's savings to someone else who can spend it. So all money is quickly spentregardless of whether it was initially consumed or saved. The only savings that drop out of theeconomy are those hoarded in mattresses and safes. Some contend that recession-weary banks are hoarding savings well beyond the legal minimum reserves. Yet even when banks hesitate to lendtheir deposits, they invest them in Treasury bills to keep them circulating through the economy and earning

interest.[14] In fact, the federal funds market--where banks lend each other any excess cash at the end of theday--exists because banks refuse to sit on unused cash even overnight. Thus,even in recessions, oneperson's savings quickly finances another person's spending.[15] Advocates ofthe "idle savings" theory fail to specify the location of all these newlyhoarded piles of dollar bills they believe have been shielded fromspending in the financial system. Even more telling, they also fail to explain--even if there weremassive amounts of idle savings--how the federal government is supposed to acquire them for injection as newspending. After all, even if individuals, businesses, and banks were hoarding dollar bills in mattresses and safes,why would they suddenly lend them to the government to finance a stimulus bill? The very idea of hoarding dollarssuggests these people and businesses would not trust the financial system, and would be quite unlikely to attend

the next Treasury bill auction.[16]Stimulus spending advocates must be able to showthat nearly all money lent to Washington would have otherwise sat idle inmattresses and bank safes.Otherwise, Washington is merely a middlemantransferring purchasing power from one part of the economy to another --and the justification for government spending as stimulus collapses.
http://www.heritage.org/Research/Economy/bg2354.cfmhttp://www.heritage.org/Research/Economy/bg2354.cfm#_ftn14http://www.heritage.org/Research/Economy/bg2354.cfm#_ftn14http://www.heritage.org/Research/Economy/bg2354.cfm#_ftn15http://www.heritage.org/Research/Economy/bg2354.cfm#_ftn15http://www.heritage.org/Research/Economy/bg2354.cfm#_ftn16http://www.heritage.org/Research/Economy/bg2354.cfm#_ftn16http://www.heritage.org/Research/Economy/bg2354.cfmhttp://www.heritage.org/Research/Economy/bg2354.cfm#_ftn14http://www.heritage.org/Research/Economy/bg2354.cfm#_ftn15http://www.heritage.org/Research/Economy/bg2354.cfm#_ftn16


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AT-Multiplier Effect

No multiplier effect crowds out spending from other areas,just shifts around funding

Riedl, Senior Policy Analyst and Grover Hermann Fellow in Federal BudgetaryAffairs, Thomas A. Roe Institute for Economic Policy Studies, B.A. Economics andPoli Sci @ U Wisconsin, M.A. Public Affairs @ Princeton, 1/5/10 (Brian M, WhyGovernment Spending Does Not Stimulate Economic Growth: Answering theCritics, http://www.heritage.org/Research/Economy/bg2354.cfm)Critics' Objection No. 3: Government Spending Has a Multiplier Effect That Allows the Money to Re-circulate Through

the Economy Multiple Times. This point is correct but irrelevant to the question of stimulus. Yes, $100 inunemployment benefits can be spent at a grocery store, which, in turn,can use that $100 to pay salaries and support other jobs. The total amountof additional economic activity will be well above $100; but becausegovernment borrows the $100, that same money is now unavailable to theprivate sector- -which would have spent the same $100 with the same multiplier effect. Consider a morecomprehensive example. A family might normally put its $10,000 savings in a CD at the local bank. The bank wouldthen lend that $10,000 to the local hardware store, which would then recycle that spending around the town,supporting local jobs. Suppose that the family instead buys a $10,000 government bond that funds the stimulus bill.

Washington spends that $10,000 in a different town, supporting jobs there instead. The stimulus has notcreated new spending, jobs, or a multiplier effect. It has merely movedthem to a new town . The mistaken view of fiscal stimulus persists because people can easily observethe factories and people put to work with government funds. By contrast, people cannot easilyobserve the jobs that would have been created or factories usedelsewhere in the economy with those same dollars had they not been lentto Washington. In his 1848 essay, "What Is Seen and What Is Not Seen," French economistFrederic Bastiat termed this the "broken-window fallacy," a reference to alocal myth that breaking windows would stimulate the economy bycreating window-repair jobs. In reality, the window-repair spending comes out

of funds that otherwise would have been spent (and created jobs) elsewhere in town.Today, the broken-windows fallacy explains why thousands of new stimulus jobs are not improving the totalemployment picture.
http://www.heritage.org/Research/Economy/bg2354.cfmhttp://www.heritage.org/Research/Economy/bg2354.cfm


7/23

AT: Fixes environment

1. No net environmental benefitHSR is LESS fuel efficientthan its status quo competitors, and does nothing to

mitigate the impact of CO2 emissionsAlbalate & Bel 10Daniel Albalate and Germa Bel, University of Barcelona(High Speed Rail: Lessons for Policy Makers from Experiences Abroad, 2010,http://danbyles.co.uk/conservatives/files/dan_byles/4.%20High%20Speed%20Rail%20Study%20-%20Barcelona%20Research%20Institute%20of%20Applied%20Economics.pdf)

There has yet to be a detailed, systematic evaluation of the impact of an expanding HST network on the reductionin CO2 emissions at either an aggregate or country level. However, information is available on the environmentaleffects of HSTs, particularly as regards their energy consumption. According to estimates conducted by van Essenet al (2003), energy consumed per MJ/seat mile by air transport is 240% higher than that attributable to HSTs.

However, the energy consumed by HSTs is 12.8% higher than a petrol-drivencar when traveling on the motorway, 55.9% higher than a diesel-driven caron the motorway, and 140.9% higher than an intercity train. Other estimates (van

Wee, van den Brink and Nijland, 2003) conclude that while energy use and emissions for HSTs are much higherthan for conventional trains, they are relatively similar to those for cars and buses. In the most favorable analysisfor HSTs conducted by Garca lvarez (2007) for Spain, HSTs and conventional trains were reported as producingsimilar emissions on two of the lines analyzed, while the conventional train was much more efficient on theremaining line. Clearly, the overall impact of HSTs on energy consumption is heavily dependent on the source of itstraffic - whether it is newly generated or attracted from previously existing modes (and, in the case of road

transportation, on whether it replaces cars or buses). However, HSR is not a particularly usefultool for fighting CO2 emissions, being less environmentally efficient thanconventional modern trains. Further, building a new and separate HST lineinvolves significant CO2 emissions that environmental HST analyses donot take into account. 15

2. Turn: High Speed rail increases fossil fuel consumptionbecause of long-term construction costs. Their evidenceis all from biased sources looking to profit

OToole 2008 (Randall, Senior Fellow @ Cato, High Speed Rail: TheWrong Road for America, policy analysis 625, 10/31,http://www.cato.org/publications/policy-analysis/highspeed-rail-wrong-road-america)Contrary to the apparent attraction of fast downtown-to-downtown travel times, the truth is that few peoplelive or work in downtowns anymore. As a result, even a 200-mileper-hourtrain wont take more than 3 or 4 percent of cars off the highways itparallels. Instead, the main effect of this heavily subsidized train will be toput struggling (and relatively unsubsidized) short-haul airlines out ofbusiness. Although the electrically powered train might be somewhat moreenergy-efficient and (if the electricity does not come from fossil fuels) lesspolluting than airplanes, the energy and pollution cost of constructing therail line (which will require huge amounts of fossil fuels) will be so greatthat it will take decades of operational savings to pay back that cost. And,soon after those decades are finally up, it will be time to completelyrebuild the lineat a high energy as well as fiscal cost. In short, high-speed rail will require a huge amount of public money to build. The
http://danbyles.co.uk/conservatives/files/dan_byles/4.%20High%20Speed%20Rail%20Study%20-%20Barcelona%20Research%20Institute%20of%20Applied%20Economics.pdfhttp://danbyles.co.uk/conservatives/files/dan_byles/4.%20High%20Speed%20Rail%20Study%20-%20Barcelona%20Research%20Institute%20of%20Applied%20Economics.pdfhttp://danbyles.co.uk/conservatives/files/dan_byles/4.%20High%20Speed%20Rail%20Study%20-%20Barcelona%20Research%20Institute%20of%20Applied%20Economics.pdfhttp://danbyles.co.uk/conservatives/files/dan_byles/4.%20High%20Speed%20Rail%20Study%20-%20Barcelona%20Research%20Institute%20of%20Applied%20Economics.pdfhttp://danbyles.co.uk/conservatives/files/dan_byles/4.%20High%20Speed%20Rail%20Study%20-%20Barcelona%20Research%20Institute%20of%20Applied%20Economics.pdfhttp://danbyles.co.uk/conservatives/files/dan_byles/4.%20High%20Speed%20Rail%20Study%20-%20Barcelona%20Research%20Institute%20of%20Applied%20Economics.pdf


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decision to build carries a huge risk both that the ultimate cost will bemuch greater than predicted, and that the ridership and other benefitswill be lowerespecially since the consulting firms hired to forecast thosebenefits expect to profit from rail construction. Once built, theenvironmental benefits will be miniscule and the main effect will be toreduce the availability of private, relatively unsubsidized modes of

transportation.


9/23

AT: Solves Economy

Doesnt stimulateRichard Stegemeier, Retired Chairman and CEO of Unocal, 2010, Richard

Stegemeier: High-speed rail economics bleak,http://www.ocregister.com/articles/speed-234453-high-rail.htmlHigh-speed railis a wonderful concept because it uses electricity and couldreduce our dependence on fossil fuels sometime in the distant future. But it's alsofar more expensive than commercial airlines and will require a new sourceof electricity from solar, wind or nuclear power. The president assures usthere will be no pork in the $3.8 trillion federal budget for 2011. That may be true ifwe ignore the proposed $2.3 billion high-speed-rail grant for California. Anundetermined amount of that money would be spent as a down payment on a $42.6billion proposal to connect Anaheim with House Speaker Nancy Pelosi's SanFrancisco and Los Angeles with Senate Majority Leader Harry Reid's Las Vegas.

That's an "oink-oink" if I ever heard one. I can understand the Las Vegas high-speed

link to accommodate the thousands of Californians who want to flee to Nevada toescape California's high taxes. High-speed rail as part of a short-termeconomic stimulus package is nonsense if it takes a decade or two tobuild. The environmental impact statement itself will take years. Acquiring680 miles of right-of-way will be contested in thousands of eminentdomain lawsuits and will take at least a decade to complete. If high-speedrail serves intermediate cities then it will increase travel time, createnoise and interrupt traffic flow at thousands of intersections. If itbypasses smaller cities to gain the advantage of speed, then it serves onlythe end terminals and disadvantages everyone in-between.

Tax increases offset gains

Sam Staley, Director of Urban Growth and Land Use Policy for Reason Foundation,8-18-2009, Why High-Speed Rail Fails as a Jobs Program,http://reason.com/archives/2009/08/18/why-high-speed-rail-fails-as-aOf course, rail proponents argue that spending money now on high-speedrail is a long-term investment that will pay off in higher economicproductivity over the long-haul. But these job creation and incomeestimates they use are based on spending for freight rail, not passengerrail. Freight rail in America is a crucial part of our transportation infrastructure,accounting for 43 percent of the shipment of goods and services from one city tothe other. Thus, investments in freight rail have a direct impact on the bottom linefor American businesses, increasing the speed and reliability of goods shipment andimproving productivity. Passenger rail in the U.S. is a different story. Passenger

rail currently carries a very small portion of city-to-city travelthe markettargeted by high-speed railand it's likely to remain modest well into thefuture. In 2008, Amtrak carried 28.7 million passengers. By comparison,there were 687 million airline passengers in 2008, in part because airservice provides frequent high-speed travel to geographically distantcities. Then there's our well-developed highway network that makesautomobiles very competitive with rail for distances under 200 miles. Inmost cases, once travel and wait times to train stations are factored in,


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travelers will spend as much time in route on the train as they will in a car.Consider a trip from Los Angeles to San Francisco, or Chicago to St. Louis, for atypical high-speed train traveler. You'll likely have to drive to the train station andpay to park. Once arriving in downtown St. Louis or San Francisco, you will likelyhave to take a taxi or rent a car to get to your hotel or meeting place (which is likelyto be outside the central business district). The reliable, diverse, and nimbletransit system that many advocates envision surrounding high-speed railstations simply doesn't exist in most cities today, limiting the appeal oftrains. To compensate for these disadvantages, taxpayers will have to steeplysubsidize train ticket prices for the business travelers and tourists thatare most likely to use them. Ultimately, high-speed rail's impacts onAmerican travel patterns and employment productivity are going to benegligible, and the actual job creation potential for high speed rail is muchmore modest than proponents admit. Take, for example, the Ohio Hub corridorlinking Cincinnati, Cleveland, Columbus, and Toledo to regional destinations such asChicago and Toronto. Ohio is one of the nation's largest state economies, employing5.3 million people. As an old-line manufacturing state, Ohio has lost 300,000 jobs

just in the past year. Needless to say, Ohioans will be attracted to the

optimistic rhetoric of rail's job creation potential. Moreover, preliminaryestimates by independent consultants suggest the Ohio Hub may actually cover itsannual operating costs (although supporters are counting on the federalgovernment covering 80 percent of capital costs of the $3.7 billion project). Yet,even with these federal subsidies the consultant reports suggest that a$2.3 billion investment in building the rail corridor would generate only54,540 jobs over the projected nine-year construction phase. That works outto 2,635 jobs per year at a cost of $42,170 per job. Further analysis found 16,700permanent jobs would be created by the system once the system was up andrunning, assuming optimistically that ridership reaches forecasted levels and faresare set to cover its operating costs. While that might seem like a lot of jobs,the effort will do little to stem the economic tide turning against Ohio andother states facing the headwinds of global competition and a risingservices-based economy. For transportation investments to have ameaningful economic impact, they will need to cost-effectively improveAmerica's ability to move goods, services, and people from one place toanother. High-speed rail doesn't do that. It is an extremely costly way toachieve limited portions of these goals, and it inevitably fails as a broad-based solution to the country's transportation challenges.

Default negKenneth Button, 3-6-2012, Professor George Mason University School of PublicPolicy, Is there any economic justification for high-speed railways in the United

States?, Journal of Transport Geography, Volume 22, May 2012, Pages 300302Any ex ante economic analysis of HSR involves a high degree ofuncertainty in forecasting (Brownestone et al., 2010). Some of the problemsare of a purely technical kind in specifying underlying factors influencingcosts and utilization, but there is often a significant degree of capture ofpredictions by those favoring a particular policy. This is highlighted by[Flyvbjerg et al., 2002] and [Flyvbjerg et al., 2010] who, looking at forecastingacross a range of countries, fo und a tendency for over-prediction of capacityutilization and under-prediction of the outcome costs of investments, e.g.


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12/23

AT: Solves Economy

Empirics go neg their sweeping claims cant be verifiedDavid M. Levison, Networks, Economics, and Urban Systems Research Group,

University of Minnesota, Department of Civil Engineering research was funded byNew York University, May 2012, Accessibility impacts of high-speedrail, Journalof Transport Geography, Volume 22, Pages 288291.3. Economic development effects There is no grounded empirical work to dateon the economic development impacts of high-speedrail in the UnitedStates, since such services do not exist. Little has been written fromobjective (as opposed to vested) sources. The Congressional Research Servicehas tried to balance the arguments (Peterman et al., 2009). The job estimates fromCalifornia4 would be enormous if they could be validated. A single infrastructureproject creating 450,000 jobs (out of a total civilian employment of under 16million5) gives a total of almost 3% of the states workforce. The constructionrelated jobs alone are 1% of the states workforce. Presently, construction is

estimated at 577,000 jobs, so this project would absorb on the order of one-third toone-fourth of all construction jobs in the state. While the propaganda of projectpromoters may not be plausible, logically there are some regional effects. Anargument could be made about strengthening intercity linkages to refashion thecurrent metropolitan system into a megalopolitan system, where people moreregularly interact between cities. One could envision this as Switzerland writ large.If, as Adam Smith suggests, the division of labor is limited by the extent of themarket, and transportation can be used to expand the market, the division of laborcan therefore increase (i.e. be more specialized), which should have some positiveeffects for the economy (akin to agglomeration economies). Melo et al. (2009)conduct a meta-analysis of estimates of urban agglomeration economies from 34studies. The ranges of effects are quite large, and no clear conclusions

about the magnitudes can be drawn.The authors write The findingssupport the intuition that agglomeration estimates for any particularempirical context may have little relevance elsewhere.

Their models are flawedDavid M. Levison, Networks, Economics, and Urban Systems Research Group,University of Minnesota, Department of Civil Engineering research was funded byNew York University, May 2012, Accessibility impacts of high-speedrail, Journalof Transport Geography, Volume 22, Pages 288291.High-speedrail lines have been built and proposed in numerous countriesthroughout the world. The advantages of such lines are a higher quality of servicethan competing modes (air, bus, auto, conventional rail), potentially faster point-to-point times depending on specific locations, faster loading and unloading times,higher safety than some modes, and lower labor costs. The disadvantage primarilylies in higher fixed costs, potentially higher energy costs than some competingmodes, and higher noise externalities. Whether the net benefits outweigh thenet costs is an empirical question that awaits determination based onlocation specific factors, project costs, local demand, competition, andnetwork effects (depending on what else in the network exists). The optimalnetwork design problem is hard (in the mathematical sense of hard, meaning


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optimal solutions are hard to find because of the combinatoric possibilities ofdifferent network configurations), so heuristics and human judgment are usedto design networks. The network architecture of high-speedrail lines hastended to be in a hub-and-spoke pattern, connecting a hub city (e.g. Paris,Madrid, Tokyo) to secondary cities in tree-like architecture. The networks haveoccasional crossing links, typically at both lower speed, lower frequency, and lower

cost of construction than the mainline. As these systems were designed nationally,and the largest city is often the capital (as in Paris, Madrid, and Tokyo), which isalso (roughly) centrally located, it is no surprise that the hub was based where itwas. Germany has fewer very highspeed links (faster than 300 km/h), and a flatter(less-hubbed) network, perhaps reflecting its strong federalism, relativedecentralization into a multi-polar urban structure and late formation into a nation-state. Italy has centered its hub in Milan, the largest metropolitan area in thecountry. The reason for the hub-and-spoke architecture is to achieveeconomies of density in track usage and network effects at the hub citywhich enable frequent service to multiple destinations. Multiple pathsbetween origins and destinations would diffuse the network effects and result inless frequent service, and therefore reduce demand. The hub-and-spokearchitecture, while benefitting the network as a whole when demand is insufficientto enable frequent point-to-point service, clearly serves the hub cities the most, asthey gain from all the incoming flows which create additional demand, and thusgreater service. In air transportation, airlines often use hub-and-spoke networks,and if they have a large market share at a hub airport, will use that advantage tocharge a premium for travel, thereby capturing some, if not all, of the benefitsconsumers receive from being located in a hub airport city. 2. Hubs and spokesThe spatial impacts of the new lines will be complex. They will favour thelarge central cities they connect, especially their urban cores, and thismay threaten the position of more peripheral cities. (Hall, 2009) [T]hewider economic benefits of high-speedrail are difficult to detect, as theyare swamped by external factors, but are likely to be larger in morecentral locations than more peripheral locations. (Preston and Wall, 2008) Asused here, a hub is a center of activity, from which multiple (at least three) spokes(links connecting the hub with other locations) emanate. On a network with a treestructure, the primary hub is the point from which the maximum number of spokesemerge. There may be secondary and tertiary hubs on the network as well. Theproposed US Program (Upper Right of Fig. 1) has no well-thought out nationalarchitecture. There were a number of independent proposals that have been drawnon a single map. These can be thought of as hubs (metro area 2010 Census rankingin parentheses) based in New York (1), Los Angeles (2), Chicago (3), Dallas (4),Atlanta (9), Phoenix (14), Seattle (15), Denver (21), and Orlando (26).1 The Floridanetwork (Orlando Hub) has been canceled by the Governor, though intransportation, nothing is permanently dead. The US High-speedRail Associationnetwork includes even more cities.


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15/23

AT: Solves Economy

Math disproves their claimEdward L. Glaeser, economics prof at Harvard, 2009, Is High-Speed Rail a Good

Public Investment? http://economix.blogs.nytimes.com/2009/07/28/is-high-speed-rail-a-good-public-investment/Is President Obamas vision of hyper-fast trains racing through America a soundtransportation policy or a costly boondoggle? Last week, I began a four-part serieson the costs and benefits of high-speed rail. The readers of last weeks post seemedparticularly eager to get to traffic congestion and the environment, but spaceconstraints compel me to push these off until next week. Today I will get mired inthe sometimes dull arcana of rail costs and direct benefits to users Im going toframe the discussion around an imaginary 240-mile link between Dallas andHouston, but the basic formula for direct costs and benefit is general Number ofRiders times (Benefit per Rider minus Variable Costs per Rider) minus Fixed Costs.Im simplifying, but a formula needs to be simple if interested parties can

seriously debate the numbers, and the only way that America is going toget to the right answer on public investments is if numbers trumprhetoric. I will plug illustrative figures into the formula, but not only am I well awarethat every number here is debatable, I am hoping for just that debate. Last week, Icited data from the Government Accountability Office suggesting that $50 million amile was a reasonable construction cost figure. To make this one-time costcomparable to everything else, which is an annual flow, the fixed cost needs to beconverted into an annual cost, which is done by multiplying by an interest rate,capturing the opportunity cost of capital. If that cost of capital is 5 percent (as Isaid, everything is debatable), then the up-front capital cost is $2.5 million a mileper year, or $600 million for a 240-mile line. The other cost that is independent ofthe number of riders is track maintenance. One recent European estimate puts that

cost at $140,000 a mile per year for a two-track system. A feasibility study of high-speed rail in Britain came up with the considerably higher figure of $493,000 a milefor surface trains. Ill stay closer to the lower estimate and go with $200,000 a mileper year, which brings the fixed costs of the track up to $648 million per annumOther train costs rolling stock purchase and maintenance, personnel more orless scale up or down with the number of passenger miles. Unfortunately, there isplenty of range on these cost estimates. A 12-year-old classic in this field has anumber of 10.5 cents a mile (in todays dollars), but one recent European studycomes out at 50 cents a passenger mile. Amtraks operating expenses run at about45 cents a passenger mile. Ill average between 10 and 50 and plug in 30 cents apassenger mile in operating costs, which comes to $72 for a 240-mile trip. Iestimate benefits by comparing rail to air. A train going from Dallas to Houston at

150 miles an hour would take 96 minutes. Southwest Airlines takes an hour for thesame route, but the need to arrive early could add on an extra hour. Ill add on anextra 36 minutes for the driving time to the airports, which means that the trainsaves an hour. The per-passenger benefit from the high-speed rail line is the savedcost of the Southwest ticket ($80) plus an hours worth of time (lets say $40, whichseems generous), plus any added benefits from the comfort of the train (lets say$20 more). All told, benefits per trip are $140. Since the variable costs are $72 forthe trip (30 cents a mile times 240 miles), benefits minus variable costs come to$68 a trip. If these numbers were right (and I think that they are very kind to rail),


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then the system should be able to run a healthy operating surplus. How many riderswill take high-speed rail between Houston and Dallas? Amtrak gets about 11 millioncustomers in the Northeast Corridor, which has four large consolidated metropolitanareas together totaling 44 million people. If that four-to-one ratio held in Texas,then the high-speed rail link could expect three million riders, and more to come as

Texas grows. But as President Obama has said one of the appeals of high-speed rail

is walking only a few steps to public transportation, and ending up just blocks fromyour destination. Thats bad news for Texas. In Dallas less than 5 percent of thepopulation takes public transportation to work, and more than 60 percent of all jobsare more than 10 miles from the city center. For these reasons, driving willcontinue to be extremely attractive for travelers who want to save parkingfees and need cars once they arrive. Ill go with 1.5 million trips a year (evenincluding future growth), which would make the new rail line about as popular as allairplane flights between the two cities are today Now its just down to multiplying:1.5 million trips times $68 a trip means $102 million for benefits minus operatingcosts. Annual capital costs came in $648 million, more than six times thatamount . If you think that the right number is three million trips, then the benefitsrise to $200 million, and the ratio between the per rider net benefits and costsdrops to one-to-three. This is the cruel arithmetic faced by people, likemyself, who would love to be pro-rail. One hint for train lovers who would liketo make this comparison look better: make a compelling case that the interest rateshould be much lower, as nothing else makes nearly as much difference. Also keepin mind that I havent brought in the environment or congestion. Theyre up nextweek.


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Link to PTX


18/23

Plan Unpopular w/ GOP

Funding for new HSR projects is extremely unpopular-Thisguarantees heavy costs in political capital

Fiscal Times 6-24-12. MERRILL GOOZNER House Puts the Brakes on HighSpeed Rail [http://www.thefiscaltimes.com/Articles/2012/06/24/House-Puts-the-Brakes-on-High-Speed-Rail.aspx#page1]House Republicans, however, are blocking all new grants arguing that repairingcurrent systems is the priority. Funding should go to existing infrastructure needsrather than unrealistic new high-speed rail lines to nowhere, the appropriationscommittee report accompanying the legislation said. The program, now funded by regular appropriations,was axed from the Transportation Department funding bill last week, drawinga veto threat from the president. The effort to cage the TIGER grants is only the latesteffort by House conservatives to slow down or eliminate funding for masstransit, freight rail and high-speed rail projects, which they see as a waste ofmoney on trains to nowhere. Last February, the initial House reauthorization of the surface

transportation trust fund, which allocates the gasoline tax, eliminated the 20 percent set-aside for rail projects thatwas established by President Ronald Reagan in 1982. Only a revolt by Republican legislators from the suburbsoutside New York City, Philadelphia and Chicago forced House Transportation Committee chairman John Mica, R-Fla., to withdraw the bill.


19/23

Plan Unpopular-General

Plan unpopular---everyone hates on it.The Examiner 12 (HSR politics: The politician's vs. the public's view of the

project, January 13, 2012, http://www.examiner.com/article/hsr-politics-the-politician-s-vs-the-public-s-view-of-the-project |SK)High-Speed Rail has become a political battle between Republicans and Democrats both at the state and federallevel. With events changing rapidly at the high-speed rail authority, with Van Ark's resignation yesterday, therecould be change in the wind as far as the decisions where to spend the federal money. There could be a moresprinkled approach considering the exclusive use of money for the central valley has been widely criticized. It couldbecome the new North vs. South fight in Washington, D.C. a civil war if you will but just in California among

Democrats. Both sides clammoring to grab federal dollars for their districts-either the Los Angeles end or the San Franciso end. See U.S. Senator DianneFeinstein's note to Jerry Brown. However the public does not view this project politically.Example, there are more than seven citizen groups who watch this project on a daily basis. Some were establishedinitially as watchdog groups such as Californians Advocating Responsible Rail Design (CARRD) who prides itself ontransparency and process and Community Coalition on High Speed Rail (cc-hsr.org) whose original mantra was "do

it right or don't do it" however as facts have come forward its clear to everyonethat there is a major problem with this high-speed rail project. Othersgroups, established later emerged primarily to oppose the project becausethe facts simply didnt justify the investment in the plan. All groups have slightlydifferent agendas and approaches but they stay in touch. Frankly they have done a remarkable job, spending nearnothing compared with the Authority's millions spent on public relations. An informal study of each group finds theirpolitical make-up was the same as their geography. In the Peninsula, they are composed of Democrats and

Independents. Even in Senator Joe Simitian's district, 61% stated they would vote to end theproject if construction costs and funding were uncertain-- one would assume theyare primarily Democrats. Those in the Central Valley were mostly Republican members which echo the party

alignment of that region. Strange alliances indeed: farmers, dairymen, religiousleaders, artists, writers, professors, financial and economic experts and aton of business, advertising and marketing executives, venture capitalistsand attorneys all working together without pay and without corporatesponsorship. Frankly, its a situation of smart people joining forces to examine the project, regardless of theirparty affiliation. This reflects the August 2011 Probolsky Poll which found the more people knew about the project,the more likely they wanted to ditch it. http://www.examiner.com/transportation-policy-in-san-francisco/newest-high-speed-rail-poll-vs-the-authority-s-poll In the last year, critical data came forward that deserved more than a

passing glance and yet no tipping point, no line in the sand, no watershed moment has occurredto push the legislature to deliver the consequences they keep hintingabout. The newly published report by the Independent Peer Review Group was to be the true watershedmoment. After all, they are required by law to give their expert opinion about the state of the project. But no, thiscritical report had no effect on the Governor and several key legislatorsaround the state. See transportation expert Kenneth Orksis article which questions why there has beenno effect. http://www.newgeography.com/content/002612-a-devastating-verdict-california-hsr The Independent

Peer Review Group concluded, We cannot over-emphasize the fact that moving ahead on the HSRproject without credible sources of adequate funding, without a definitivebusiness model, without a strategy to maximize the independent utilityand value to the State, and without the appropriate managementresources, represents an immense financial riskon the part of the State of California.Every single independent agency has major problems with the Authoritys plan. See the first 90 seconds of this

YouTube video of Senator Simitian where he lists every independent agency (5 of them at the time) which hasissues the project: In a world of sanity, one without politics, with major issues being stated by every state agencyincluding the LAO and the Peer Review Group objects, the legislature would have by now stopped the project in itstracks. The bottom line: the publicwhether a democrat, independent or republican -- agrees after looking at the

facts and come to the same conclusion as the peer group and others review bodies: the project shouldbe stopped. The legislature is the only group that can de-fund the project
http://www.examiner.com/article/hsr-politics-the-politician-s-vs-the-public-s-view-of-the-projecthttp://www.examiner.com/article/hsr-politics-the-politician-s-vs-the-public-s-view-of-the-projecthttp://www.examiner.com/article/hsr-politics-the-politician-s-vs-the-public-s-view-of-the-projecthttp://www.examiner.com/article/hsr-politics-the-politician-s-vs-the-public-s-view-of-the-project


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today. The project isnt what the voters voted for . What are they waiting for? Perhapsthey will they take the easy way out and send it back to the voters but that would be shifting their responsibilitiesback at the voters. The public is weary and and are beginning to register their displeasure on http://revoterail.com/.It was created to re-call of the project.


21/23

Plan Unpopular w/ Public

Public wont get behind HSR initiativesDorsey 10. Thomas Dorsey, Founder & Executive Director Soul of America. MBA

in Marketing from UCLA, where he served as a fellow in the UCLA EntrepreneurialCenter. MS in Information Systems and a BA in Communications. America MustBuild Interstate High Speed Rail Part 1.[http://soulofamerica.com/interact/soulofamerica-travel-blog/interstate-hsr-network/]Unfortunately, vote trading for Interstate HSR is harder to come by due topublics lack of knowledge about HSR benefits vs. costs. Today the narrativecenters around HSRs direct costs to taxpayers without mentioning the indirect costs orthe costs of alternatives. Hearing only soundbites from news media, the average Joe or

Jane will reflexively think, No More Taxes, when they dont knowexisting taxes can pay for it and that HSR is cheaper than highway or airport expansion.


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Link to States CP


23/23

The Great Reset

States best to solve in emerging knowledge economy, Federalgovernment too rigid

Salter 09 (Professor of Politics and Director of Global BiopoliticsResearch Group, State strategies of governance in biomedicalinnovation: aligning conceptual approaches for understanding 'RisingPowers' in the global context, February 2012,http://www.globalizationandhealth.com/content/7/1/3In general terms, the advanced economies ofNorth America and Europemet the uncertainties accompanying the shift from Fordist to post-Fordist modes of mass production and consumption with evolution ofthe'competition' state as the vehicle for the pursuit of nationaladvantage through innovation . Rather than concerning themselves withgovernment interventions to ensure full employment and respond to market

failures, states began to focus their attention instead on the neo-liberalsupply-side policies that would give a sharp edge to theircompetitiveness in the global knowledge economy. Particularly in thecase of the knowledge driven bio-industries, this meant a concentration notonly on the infrastructures of innovation but also on 'agglomeration andnetwork economies and the mobilisation of social as well as economicsources of flexibility and entrepreneurialism' [5]. To be effective as players inthe global economy, it was argued, competition states needed to bring theirsocial and cultural values into line with their entrepreneurial ambitions.Entrepreneurialism needed to be embedded: as a consequence theinstitutional reforms ofthe competition state eschewed rigidbureaucratic hierarchies and relied instead on new forms of networkbased governance.

Documents

HSR Negative