Benjamin Studebaker

Recently, I was asked to comment on the debate over state investment in infrastructure, specifically the role that high speed rail has to play. Today I’d like to investigate to what extent high speed rail is a viable option in developed countries as a means of expanding and improving the transportation network and the economy more broadly, comparing it to added investment in airport infrastructure or highway infrastructure.

In the United States, both the democratic and republican party platforms propose more investment in infrastructure, with one critical difference–the democratic platform expresses support for high speed rail:

We will give our businesses access to  newer roads and airports, and faster railroads and Internet access. We will fight for immediate investments for highways, transit, rail, and aviation and for the creation of a national infrastructure bank to help modernize our infrastructure, put hundreds of thousands of construction workers back on the job, and help businesses grow.

In contrast, the republican party platform expresses no support for state funding of railways at all:

It is long past time for the federal government to get out of way and allow private ventures to provide passenger service to the northeast corridor. The same holds true with regard to high-speed and intercity rail across the country.

This is not a discussion exclusive to the United States, however. In the United Kingdom, there has been a long-running debate between the three major political parties, all of whom support the expansion of high speed rail through state-run outfit High Speed Ltd. , and passionate activists who have consistently disputed the case in favour. As of the time of writing, Britain’s High Speed 2 is going forward. I was in Britain for much of that debate and had the opportunity to read quite a bit about it. Let’s look at what the case in favour was:

• Economic efficiency: high speed rail improves economic geography, reducing commute times and improving employee productivity
• Environmental responsibility: high speed rail generally consumes much less energy per passenger per mile, with savings as high as 90% when the electricity being used is generated by nuclear or renewable power in comparison with airplanes
• Stimulus benefit: an often under-emphasised consequence is the demand boost that the economy receives from the expense on the railway itself

There were of course, arguments disputing these claims. Let’s discuss each in more detail.

The economic case:

The primary claim opponents of high speed rail in England made is that employees work on the train, and consequently time spent commuting is nonetheless efficiently spent time. The British Department of Transport investigated and found that office workers in Britain do indeed use on average between 70 and 80% of their time spent on trains. While this argument provided a counterargument to high speed rail in the UK, it provides the precise opposite in the USA. This is because the American case is more complex. The proposed high speed rail lines in the states are looking to poach commuters who would otherwise drive cars or not work nearly as far away rather than simply speed the travel of commuters already taking conventional trains. In that light, this data looks advantageous to high speed rail, because it indicates that commuters who switch from driving to taking trains on account of high speed construction will eventually become extremely efficient in the use of their journey time. A motorist stuck in traffic provides no work productivity whatsoever.

Another prominent claim made by opponents is that high speed rail is inherently costly and unprofitable. Evidence from currently existing high speed lines contradicts this. A study from the European Commission also shows that high speed rail is more time efficient than either car or plane transportation at distances ranging from 160 to just under 800 miles. It also indicates that, between 1990 and 2008, passenger numbers nearly quintupled. This provides both a rationale for passengers choosing high speed rail, and firm evidence that passengers are acting upon that rationale. It is argued that the strong performance of high speed cannot be replicated in the United States due to cultural differences, but the US rail is at present so much slower and less efficient than European rail that a direct comparison is near-impossible. While many Amtrak trains travel around 100 miles an hour, maxing out at 120-150, European high speed rail routinely travels at around 150 miles per hour, maxing out at around 200.

Economic geographers provide the additional argument that it makes it more convenient for people living further away from their places of employment to commute, and can tie nearby cities together. For instance, the proposed California High Speed line, which is to link Sacramento, San Francisco, Los Angeles, and San Diego, not only can increase productivity by moving people from cars to trains, it can create opportunities for people living in one city to work in another, consequently linking all of the cities more closely economically. Such benefits are limited, however, because the proposed high speed railways are passenger only and do not apply to freight.

The environmental case:

Critics of the environmental case argue that high speed is only more energy efficient if the electrical power is generated cleanly and if the trains carry a sufficient percentage of their capacity. In this, they are partially correct, as established by a University of California Berkeley study. Under current electrical generation, too high a percentage of power is generated in the United States by fossil fuel plants for trains to provide the same kinds of advantages they provide in Europe, where nuclear power plays a larger role. While they may still outperform cars and planes on average, trains are unable to do so if travelling at far under capacity. Arguably, however, this merely provides an incentive for states like California considering the implementation of high speed to also provide funding to alternative energy so as to decrease the size of high speed’s carbon footprint. While high speed rail’s footprint can be reduced along with the footprints of all electrical devices, there remains no credible alternative fuel source with wide market penetration for cars or planes.

Stimulus:

The current economic malaise in which the United States finds itself is caused by insufficient spending and consequently insufficient demand. The Obama stimulus package only accounted for one third of the economic output gap. There remains much government spending that is required to make up this output gap, and, with current interest rates on government debt below 2%, money can be borrowed at interest rates that are frequently below the rate of inflation and consequently negative. The cost of high speed rail, which seems a negative to so many people, is in reality a positive, at least up to the point at which other projects on which money might be spent prove more effective. If the environmental concerns are taken seriously and a concerted effort is made to reduce dependency on fossil fuels for power generation through state subsidies, the demand benefits could be larger still, complementing environmental and economic advantages.

In sum, I think state investment in high speed rail makes sense in countries that can purchase debt cheaply (which is the case in both the US and UK). It is especially advantageous at this moment because of weak economic demand, which makes it not merely a long-term investment in economic performance, but a short term aid as well to fuelling an economic recovery, regardless of which side of the Atlantic one finds oneself on.