President Barack Obama’s call for $13 billion in initial payments on a new high-speed rail system in America is likely to turn into a massive and wasteful boondoggle without the fundamental reforms that Democrats almost surely will not deliver.
For example, until a recent expose in The New York Times, 95% of staff at the Long Island Railway were going on disability upon retirement (and of course, as public sector workers, they were eligible for full pensions as early as age 50, which is beyond the dreams of the average private sector worker). A preliminary inquiry has found that many of these workers received additional disability benefits totaling an average of $36,000 per year in addition to their generous pension benefits while getting other perks as well. Likewise, San Francisco’s inefficient, public sector monopoly rapid transit company, BART, is now running a large deficit. BART’S answer is to further cut service and raise prices (just the opposite of which any privately run entity would do.) This will have the effect of further depressing ridership and putting the system further into long term deficit.
After a 28% recession-driven increase in traffic last year, – ridership on the expensive BART rail line to the airport is only about 60% of the ridership that was projected to justify the massive and costly rail expansion.
The Bay Area’s liberal politicians and journalists will probably never hold BART accountable for its poor performance, but conservative, pro-market candidates could highlight the issue in their campaigns and they would find no shortage of receptive voters for their message.
The woeful tale of New York’s subway system illustrates that this waste is not confined to the Bay Area. Despite soaring fares (in 1947 fares were just 5 cents—now they are $2) no extensions have been built to the system in more than a half-century and much of the system infrastructure is still in poor condition The Second Avenue subway in Manhattan, first planned in the late 1920s, and the subject of a specific bond issue in the early 1950s, is still unbuilt and . Half-completed construction on the project was abandoned on several occasions.
Much of the excessive costs for public transport come from bloated staff numbers, excessive pensions and health benefits, and a complacent workforce that is not rewarded for success nor punished for failure. For example, in one recent year at New York City’s MTA transit agency, fringe benefits climbed 20% and employment climbed 5% while ridership declined by 2.5%. Such a performance would be unthinkable for a company being run on a for-profit basis.
To push back against the President’s plans, conservatives should support laws that would make it easier for private companies to compete in mass transit, including rail. Japan Railways was privatized in the 1980s in the wake of fraud and related scandals, and split into seven separate companies which are now publicly traded. It is now generally considered the world’s best rail system. Similarly, allowing private companies to compete for public transport dollars would reduce prices for consumers and open up a wide range of innovative travel options.
Conservatives can take a strong position for greater mass transit availability while taking a popular stand against the bureaucracy and public employee unions that cripple our current transit system. Additionally, because public-transit using voters tend to skew lower on the income scale, mass transit reform provides an excellent way to reach out to a group of voters that has traditionally been less receptive to the GOP message.
Transit reform need not be limited to mass transit. Conservatives could also attack bureaucratic taxicab licensing procedures that make it difficult for entrepreneurs to offer services and often make short taxi rides a staggeringly expensive proposition. With the exception of perhaps New York and San Francisco, where congestion could possibly be used to justify some restrictions on license numbers, there is no logical reason for restricting who can own a taxi or what they can charge. In New York, taxicab medallions often sell for more than $200,000, which gives rise to a whole collection of parasites feeding off of a corrupt system. By broadening access to the taxi business, and letting operators charge a market, rather than fixed rate, we can drive down prices and increase taxi availability. Even in many poor countries in the developing world, personal mobility is available at greater frequencies and lower cost than what we have in America — whether by shared taxi, minibus, or even private for-hire vehicles that are readily available in an extremely open and competitive marketplace.
In contrast, the notoriously poor financial and operating performance of public transit agencies of all sorts is well known to those who study them. Unfortunately, this group includes too few conservatives because conservative politicians and public policy organizations have not, for the most part, invested in developing expertise in this area. A core audience of dissatisfied transit passengers is waiting for exactly the kind of reforms that conservatives could deliver in this sector. But to do so will require the conservative movement to branch out to new areas and court constituencies that it has all-too-often ignored in the past.
13 responses so far
1 HHomer // Apr 21, 2009 at 3:28 am
Privatisation of a monopoly is likely to be disastrous and end up with passengers being gouged without necessarily seeing major improvements to services.
There is merit in bringing in the private sector to address some of the issues Jeremy rightly raises but it needs strict regulation with guarantees of investment levels and timescales and pricing controls.
As far as high speed rail is concerned, as this requires entirely new tracks there is no reason why this can’t be run on a commercial basis from the start. In this case there is genuine competition from the airlines which will allow market forces to act.
2 ottovbvs // Apr 21, 2009 at 6:22 am
Essentially this is an argument for the status quo. And of course we know that big highway and airport projects have been completely free of boondoggles. The author of this piece says conservatives can “take a strong stance for mass transit.” The problem is is they haven’t. In fact they resist it at every turn in favor of highways and have for years kept Amtrak underfunded as those of us who live in the northeast corridor know only too well. Given the legal and political dimensions involved, mass transit can only happen under the auspices of govt and it’s never going to make a profit. Whenever I travel by train in Europe in their clean comfortable rolling stock, I wonder why the same isn’t possible here on lots of well travelled routes. The answers easy. Opposition by special interests like airlines and highway contractors and their mainly Republican defenders in congress.
3 dendup // Apr 21, 2009 at 6:49 am
Conservatives have said that liberal support of mass transit amounts to a war on the suburban way of life. That promoting mass transit is tryingto tell Americans where to live and part of the Smart Growth movement that has the intent of increasing coercive gov’t.
Now I think this is a bunch of hooey, but hey…
What I am confused about is Jeremy’s apparent complete ignorance of all this. I mean I can barely absorb all the pro gay stuf I’ve been hearing from conservatives. Now you guys are going to sign on to mass transit?
Wecome aboard!
4 sinz54 // Apr 21, 2009 at 7:24 am
ottovbvs: Your claim that “mass transit can only happen under the auspices of government” is simply false.
In the early 20th century in New York City, the Interborough Rapid Transit (IRT) Company, a private venture, built New York’s first successful subway lines. A sister operation, also private, the Brooklyn-Manhattan Transit (BMT) Company, operated successful subways in Brooklyn that ran to Manhattan and connected at various stations to IRT lines.
The government of the City figured out how to monopolize the system: They started their own public operation, the Independent (IND), to compete by public subsidy with the IRT and BMT and thus drive them out of business. The City approved the construction of IND lines that in some areas like the Bronx would be built only a few blocks from the IRT lines, thus drawing passengers away from them. Ultimately the BMT and IRT went bankrupt, and the City took them over.
That’s a lesson for Obama’s proposed health care reforms: His public health care option is a stealthy way to drive the private insurers out of the market by subsidizing the public option as much as necessary so it can beat the private insurers on price. Exactly the same way the IND subway drove the IRT and BMT out of business in New York.
Finally, anyone who watches “Honeymooners” reruns will find out that New York City’s bus lines were private as late as the 1950s. Again, the City monopolized them too eventually.
5 sinz54 // Apr 21, 2009 at 7:45 am
dendup: Obama doesn’t seem to understand that rail cannot work without reversing America’s basic demographic trends. He said of rail: “Imagine boarding a train in the centre of a city. Imagine whisking through towns at over 100 miles an hour, walking a few steps to public transport, and ending up just blocks from your destination.”
I can’t imagine that, because I don’t live that way. I live in the northern Boston suburbs, near the New Hampshire border. I live there, I work there, I shop in shopping malls there, I eat in restaurants there, I go to movie theaters there. The population and business densities are too low to support mass transit. The buses that are available rattle by nearly empty, even during the rush hour, because they don’t go near 90% of the industrial parks where people work, or 90% of the homes where people live, or 90% of the malls where people shop. And I rarely go into Boston, maybe a few times a year.
Business has followed Americans into the suburbs. The type of lifestyle Obama was telling us to “imagine” is long gone, for most of us.
When Eisenhower built the Interstate Highway System, tens of millions of Americans already had cars and wanted better, faster roads. Obama, on the other hand, is building rail that will never be used efficiently, because it assumes a society that disappeared after World War II.
6 dendup // Apr 21, 2009 at 8:58 am
Sinz: you may be right – there are a lot of things to consider here. Mass transit expansion is predicated on the idea that build it and they will come because of escalating energy prices.
The suburbs of today are becoming more dense and contain a significant business presence, not the bedroom communities of the past. Can these “Edge Cities” support mass transit? Probably not without further evolution of this trend.
Where and how people live is constantly changing. As the highway system showed, if people are ready for it, a change in the transportation infrastucture can reorder the shape of cities.
“If people are ready for it” being the operational phrase.
But my point was more was that many conservtives have had a more basic objection to mass transit ie that it reduces liberty by forcing people to abondon the suburbs.
http://www.heritage.org/Research/SmartGrowth/bg2260.cfm
http://www.aei.org/publications/pubID.10057/pub_detail.asp
This article makes it seem the only obstacle to expanded mass transit was those mean ol’ union workers. It was this articles assumption that improving mass transit is both needed and that meeting that need is a good thing that caught me by surprise.
Omitting past ideological objections made me wonder if people are more ready for it than I would have thought.
7 barker13 // Apr 21, 2009 at 9:22 am
Two EXCELLENT posts, Sinz.
(*WINK*) (*THUMBS UP*)
Now, to touch on one issue JC brings up, we as a society need to do away with pensions.
Pensions are a ponzi scheme of sorts. Ponzi schemes usually end badly for those involved in them. It may take a while… generations perhaps… but once the demographics no longer work that’s the end of pensions “working” and the beginning of pensions drawing the lifeblood out of the “owners” (shareholders, private; taxpayers, public) of the “enterprise” in question.
Liabilities are… er… liabilities. (*SHRUG*) Future liabilities may be “future” but they’re still “liabilities.” And sooner or later the “future” arrives. (That’s what happened over time to the Big Three.)
Now I’m not saying that private firms – and even public entities – shouldn’t contribute to employees’ retirement accounts; I’m simply saying that this is where contributions should end.
I’m not talking disability… that’s a somewhat different situation and for those disabled on the job I see nothing wrong with employers paying a certain percentage of salary/benefits throughout said disabled employees “missed” working years until retirement, but sticking to the simple outline of what I’m saying, neither private firms nor government (i.e. the taxpayers) should be on the hook for “pensions” that might end up being paid for far more years of retirement than the employee actually spent working.
Hey… if this means raising salaries so be it. The point is, in simplest terms, there are just too many uncertainties and too much unfairness (on both ends – if you die right after retirement with no spouse or child beneficiaries or if you end up collecting a pension for 50 years or more) inherent in a pension system to justify it.
Private savings, that’s the ticket. Real savings, real investment, real wealth is the way to save for retirement, not hoping that somehow in the future someone else will be around to handle “future liabilities.”
And yes… this applies to the social security system too.
And yes… I understand people can lose their investment funds or large portions of them and have. My answer? That’s life. If you’ve lost so much that you require government aid to survive… then to those individuals we as a society will provide a safety net – but by safety net I’m talking exactly that… not anything approaching the “ideal” retirement.
I know many folks aren’t going to agree with me, but what I’m talking about is reality. Pensions make sense when you can look forward to decades of boom years; I just don’t see decades of boom years coming. Even with millions and millions of immigrants, we’re not talking the the kind of “load bearing beam” that’s required. Nope. More and more pensions – private and public – are being outted as ponzi schemes in the sense that long term… there really are no reasonable prospects of their being able to sustain themselves.
Anyway… points to ponder.
BILL
8 ModerateGal // Apr 21, 2009 at 9:27 am
sinz, the layout I saw on the news about the high speed rail plans were from city to city, not just within cities. I would probably use one that would allow me to travel to other cities easily.
Here is the map: http://www.businessinsider.com/obamas-sweeping-high-speed-rail-plans-2009-4
Check this out about Spain’s rail:
http://www.thinkspain.com/news-spain/16520/spains-high-speed-train-the-envy-of-obama
9 ottovbvs // Apr 21, 2009 at 10:57 am
sinz54
7:24 AM
“ottovbvs: Your claim that “mass transit can only happen under the auspices of government” is simply false.”
Er….get real….your example was a hundred years ago. The greatest promoter of street railways in US history was Charles Tyson Yerkes who basically built the Chicago system largely by all kinds of practices that wouldn’t pass muster today. Similarly the entire rail system was built by private capital in the late 19th century but it was riddled with govt handouts, boondoggles and corruption. Go google Credit Mobilier. In 2009 the only entity with the capital raising abilities, power and reach to build fast transit systems are federal or state govt. The notion that this could be done by private capital is ludicrous because the truth is that in narrow financial terms they don’t produce a satisfactory ROI. Mass transit is a combination of transport system and social service with all kinds of social benefits that can’t be measured in strict cash terms. The reason most of these transit systems were taken over by the govt is because they were going bust as was the case with Amtrak.
10 sinz54 // Apr 21, 2009 at 12:18 pm
ottovbvs sez: “Mass transit is a combination of transport system and social service with all kinds of social benefits that can’t be measured in strict cash terms.”
I see. If there’s no objective way to measure the benefits of mass transit, then these routes are going to be chosen by politicians as pork for their districts, regardless of whether they are cost-effective on dollar grounds alone.
We actually have such a mass transit system where I live. Buses go by every 15 minutes, nearly empty except for two or three elderly or poor passengers, even during the rush hour. The routes were chosen by politicians for their own inscrutable purposes. Economically, this is such a money loser for the community that it should have been shut down long ago. But they keep it running because of these ineffable “social benefits” that can’t be measured. Maybe they give off an aura in hyperspace or something.
11 sinz54 // Apr 21, 2009 at 12:25 pm
ModerateGal: I don’t know where you live.
But looking at a map here, the distance from San Diego to San Francisco is 450 miles. The Department of Transportation defines “high speed rail” at 90+ mph (the European and Japanese standards are higher).
450 mph at 90 mph, with a 20 minute stopover in Los Angeles along the way, would take 5 hours and 20 minutes.
From Travelocity.com, I find that the same trip from San Francisco to San Diego nonstop by air would take 1 hour and 38 minutes, some 3 hours and 40 minutes less time than by rail.
Rail is just not competitive, even in a dense corridor like the California coast.
12 ModerateGal // Apr 21, 2009 at 12:46 pm
sinz, you are right in that the rail would compete with airlines. I live in the south, so the southern routes would be what would appeal to me.
My concern is more about what the cost would be to take my family of four somewhere on it. At some point, it is just more worth it to make the drive than spend the money on tickets.
But it sure would be nice to take some traffic off I-10…
13 gibberish // Apr 21, 2009 at 12:54 pm
450 miles is the outer limit of rail compared to air
But when you figure in hours wasted getting to the airport and the security check time plus trains a bit faster it isn’t a bad deal. And 90 mph is pathetic – 150 is where high speed starts in the real world
I just did London Paris by train – city centre to city centre took 3 hours. Yes, flight would be 1 hour but getting in and out to the airport makes it more like 6. No surprise that the number of flights on this route is pretty low these days
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