Excessive costs make U.S. rail look a boondoggle
When are big public-sector projects more of a drain than a stimulus for the economy? Strict anti-Keynesians would argue all the time. But even die-hard believers in government stimulus would have a hard time defending the merits of American rail projects. The simple reason: the costs involved are just too high.
Take Amtrak’s plan to improve the rail line connecting the Northeast corridor. The government railroad estimates it would take $117 billion to implement high-speed service. That exceeds the $17 billion cost of China’s longer high-speed train or the adjusted costs of earlier services in France and Japan.
Operationally, Amtrak’s plans are attractive. It proposes running fast trains on a dedicated track, which would run close to the existing Amtrak route between New York and Washington, but north of New York would divert from the current route, running to Boston through Danbury and Hartford (thus avoiding the congested suburban New Haven Line.) There would be several grades of service, with the fastest running at a maximum 220 miles per hour covering Washington-New York in 96 minutes and New York-Boston in 83 minutes — highly competitive with flight, even from Boston to Washington.
The problems are cost and time. Amtrak projects it would spend $274 million per mile, with completion only in 2040. That’s far out of line with similar projects abroad. The 1983 Paris-Lyon LGV Sud-Est was completed in seven years and cost $5 billion in today’s dollars, or $20 million per mile. In Asia, the 1964 Tokyo-Osaka Tokaido Shinkansen, criticized bitterly for its cost, was completed in six years for $20 billion 2010 dollars, or $63 million per mile. China’s Wuhan-Guangzhou line was completed last year after five years of construction for $17 billion, or $28 million per mile.
Excessive cost hasn’t always been an American problem — the 1,777 mile-long Transcontinental Railroad was completed in 1869, seven years after authorization, at a cost of only $1.1 billion in today’s dollars. Bureaucracy, complex environmental regulation, lawsuits, political pork and NIMBYism have combined to make the public sector thoroughly uncompetitive in both cost and time — apparently by a factor of five or ten times compared to other countries.
If 2011’s new Congress wants to restore competitiveness, it has at least one starting point.