Wednesday, August 27, 2008

Constructing a Stronger Economy through High Speed Rail

NOTE: We've moved! Visit us at the California High Speed Rail Blog.

Now that Prop 1A is going to be on the ballot we're starting to see groups take sides on the issue. Outside the far-right anti-government groups like the Howard Jarvis Association most California political organizations will endorse it, and I'm not going to post about it every time that they do. But the first one that came up is from the California Alliance for Jobs and I thought it was worth dwelling on this for a moment.

The California Alliance for Jobs is a coalition of construction unions, many of whom will benefit from the high speed rail project. So their support isn't going to be a surprise, and some will just dismiss them as self-interested, that they just want jobs for their workers.

Of course they do. And so should we.

California's unemployment rate is 7.3% - a 12 year high and the 4th highest rate in the nation, only bested by states in truly dire straits like Michigan. That unemployment rate is going to grow worse over the next few years, and one of the hardest hit sectors has been construction. High speed rail will bring around 160,000 jobs to that construction sector right when those jobs are most desperately needed. 160,000 construction jobs means more spending in restaurants and small businesses, more tax revenue, and ultimately a far more significant economic boost than the tax rebate checks that came and went without any noticeable effect. The Authority projects over 400,000 permanent jobs will be created as a result of HSR.

California has often turned to infrastructure projects to help carry the state through tough times. We built the Bay Bridges in the depth of the recession. The State Water Project was approved during the late 1950s recession. Similar projects have been done around the country and around the world.

And those bridges and aqueducts weren't just make-work projects. They built lasting value. They anticipated the state's future needs and 50, 70 years later they still help our economy function.

But we have new needs. We need fast transportation that is independent of oil and runs on renewable energy (more on the CHSRA's study tomorrow). We need a way to provide transportation that is free from the soaring and unpredictable costs of driving or flying. We also need to cut back on carbon emissions that are threatening the basic functioning of our society through the global warming they produce.

We've already wasted time. This project should have been voted on in 2004 or 2006. Instead it finally comes in 2008. In that time other countries have passed us up, building for the 21st century while we sit here and delude ourselves into thinking the 20th century is still viable.

If we are to have economic growth over the next few years, and economic growth over the next few decades, we need to build high speed rail. It won't solve those problems itself. But it'll help get us there. So I'm glad to stand next to the construction workers in supporting high speed rail - because we are ALL going to benefit from this project. And we will ALL pay more and have less if we don't get Prop 1A passed in November.

31 comments:

Rafael said...

In addition to an army of construction workers, getting this project built will require a cadre of engineers trained in modern railroad technology. Foreign HSR vendors will no doubt compete aggressively for contracts and, California contractors will bring in foreign consultants and staff on the appropriate visas.

However, with so many HSR projects around the world, even California will struggle to attract enough foreign talent to build, extend and maintain the system. The human resources crunch will become even more severe if other steel wheel HSR projects get off the ground in the US as well.

The good news is that civil engineering sub-projects, i.e. moderate length tunnels, earth works, bridges, viaducts etc. will account for the lion's share of total construction cost - especially in the early phases. Existing local expertise from road construction will carry over, especially with regard to California's strict seismic and environmental standards.

There are also specialists in railroad track construction, though HSR calls for non-standard approaches due to its very tight tolerances on geometry. Other aspects of the mechanical and electrical technology will require extensive knowledge transfer and perhaps, the development of some original intellectual property.

It's quite common for third-world countries to insist on local subsidiaries or joint ventures plus license agreements and on-the job training for local manufacturing companies. As a matter of economic policy, these should be encouraged to set up shop in counties most in need of high-tech jobs. Siemens already has a light rail equipment plant in Sacramento and, Merced county is being considered for an HSR maintenance facility.

Given that the US is essentially a third-world country in terms of its rail infrastructure, California should swallow its pride and apply the same model in reverse. The expertise required to make HSR operations safe with regard to earthquake hazards should arguably be sought in Japan, while that for extremely high speed could come from Europe. Ideally, CHSRA should select not one but two trainset vendors. This may entail the definition of new open standards for safe operations.

Fortunately, the state boasts some of the world's finest universities, including many excellent engineering departments. Given the lead times involved in developing any high-tech workforce, one of the very first things CHSRA should do - assuming prop 1A is approved - is fund some tenured professorships at selected UC and Cal State locations. In addition to churning out a generation of homegrown railroad engineers, these should conduct research on e.g.

- HSR operations in strike-slip fault zones
- risk mitigation of terrorist and other criminal threats
- power grid management for large numbers of unpredictable producers and consumers
- train noise reduction at source and,
- cheap, reliable low-latency broadband internet access at HSR speeds.

Note that the sheer scale of this project will attract out-of-state and foreign engineering students to California. Many of the latter will seek legal work permits and ultimately, legal residence in California. These are the kinds of immigrants that greatly benefit the state's economy - especially if other HSR projects in North America follow in California's footsteps.

Rob Dawg said...

Given that the US is essentially a third-world country in terms of its rail infrastructure,

Given that the US is essentially a third-world country in terms of its passenger rail infrastructure,

The US rail network is in fine shape doing fine work.

upset taxpayer said...

So now we have the true story. This isn't about building a passenger rail system, its about creating construction jobs -- its California's version of a 1930's type of WPA program.

Yes we should worry about how many of jobs will go to workers outside California and maybe outside of the United States.

Just having read the ballot statement, and learning that an average family of 4 is going to be paying $20,000 over the life of the bonds for this boat anchor of a project, how can anyone with half a mind support this project?

Yes Robert you and your left leaning Democratic friends, can do your best to spend the state into bankruptcy.

Remember the motto as expressed by Rod Diridon:

IT WON'T RAISE YOUR TAXES.

(sub-text -- maybe it will raise Mr. Diridon's salary however.)

Brandon in San Diego said...

Taxpayer:

Make no mistake, this is not the official site of the CHSRA and the HSR project.

Simply because the most recent post focuses on jobs and employment does not make the subject number one in purpose.

Any proposed large project, especially mega projects, will outline each and every benefit that shold be realized.

The true purpose is about providing long-distance transportation infrastructure for a state that will grow form 38 million today to approximately 60 million by 2050 AND provides an alternative that is both less harmfull on the environment and less costly to taxpayers by relying on them to fund in-effecient highways and land gobbling airport terminals/gates/runways instead.

It is cheaper and cleaner than alternatives. HSR is more effective.

Brandon in San Diego said...

I also envision there being a lot of synergy with local public transportation.

If HSR stations are tied into city centers and robust public transit networks in those areas, local transit shoudl see a boost... thus making those systems more effecient and depend less on public subsidies for each rider trip.

Spokker said...

"(sub-text -- maybe it will raise Mr. Diridon's salary however.)"

If he helps get the project built he deserves a raise.

mike said...

upset taxpayer,

You're off by an order of magnitude. You mean $2,000 for a family of 4 over the life of the bonds, not $20,000.

For comparison, here is the amount that the same family of 4 can expect to pay in taxes for other state-level items over the same period (except the last one - that's private spending):

Prop 1A: $2,000
State K-12 Education: $658,623
State Higher Ed Subsidies (UC/CSU/CC): $206,090
State Prisons: $147,001
State Highways: $159,972
Chewing gum: $2,796

As always, context is important.

Rafael said...

@ rob dawg -

freight rail is profitable in the US, but there are problems, too. Most of the tracks are owned and operated exclusively by just one company. There's a lot of duplicate track, much of it single. This is inefficient.

Examples in California: Central Valley, Contra Costa County, LA harbor to LA downtown (until taxpayers shelled out for the shared-use Alameda corridor), getting out of the LA basin etc.

The consequence of this inefficiency is that some key lines are so badly clapped out (e.g. Central Coast) that FRA has had to impose very low speed limits. This makes them next to useless for passenger traffic. Others - e.g. Tehachapi Pass - are closed to passenger trains altogether, so they have to hop on a bus instead.

So in terms of intercity passenger rail, I think it's fair to say that California's rail infrastructure is that of a third world country. BART does operate on time but it's very expensive to operate because it's essentially a subway system taken to ludicrous extremes.

Nowhere else will you find a line that's over 50 miles long without any bypass tracks. That means every train has to run the entire length of its line and there is no way to provide express service levels.

Eric said...

Mike,

Those sure would be great comparisons to get published into a newspaper article to really wake up the public about how much is spent on other things and how "cheap" (figure of speech) this project really is.

nikko pigman said...

@Mike: that's an interesting point. I agree, send those to an op-ed page. But before you do that, I would like triple check each number so you don't get bitten later for having a statistic slightly off.

@Rob Dawg: I agree with you to a limited extent. Passenger rail in the US is certainly within the 3rd world realms.

Freight rail service, although I would not call it first rate, is extremely profitable and popular in the US. The US freight railroads carry more freight and make more profit than any other rail system in the world. As one magazine article put it "it is the envy of the world".

But there are still disadvantages. Freight railroads suffer from terrible operational inefficiencies and decades of decay and neglect of the infrastructure. That is the result of the 'dark ages'.

Now that the railroads have climbed out of the pits of financial ruin, they're actually making some headway. And, like I said before, they're suffering from the decay of an infrastructure that was neglected so long ago. What magnifies this problem is the fact that the railroads are getting unprecedented traffic volumes. But also by a lack of foresight of the original builders of the railroad lines, granted that would have been the late to mid-1800s, so they would have no idea what it would evolve into. In any event, that leaves railroads with lines that aren't particularly ideal for speed or operational efficiency.

@rafael: I here that about a half dozen universities are supposed to introduce railroad engineering courses.

nikko pigman said...

hear*

someguy said...

to be fair, until you have sat on top of a converted boxcar with hole-in-the=floor bathrooms, switch-backing down the Andes you haven't seen "third world rail"

upset taxpeyer said...

I apologize for my error by saying the cost per family of 4 was $20,000 over the life of the bond.

Indeed the correct number is $2,000 for a family of four.

Taxes paying for highways come from fuel taxes, user taxes. Taxes paying for airport runways, come from fare taxes.

Its hardly fair to lump all the taxes together. Users should be paying for the systems they use. Those that don't use the system should not, at least not pay nearly as much.

Brandon in San Diego said...

Funds for highways also come from sales tax... something we each pay regardless of our use of those facilities.

On the other hand, HSR will mitigate a lot of the anticipated demand for long-distance travel expected from 22 million additional Californians... thus providing a benefit to highway users.

We have more strength and ability to react to circumstances with more variety in our transportation options. Did I mention before that decreasing reliance on foreign oil also benefit national security?

I'd rather spend my money on other things than fuel... I hate traffic and needless time travelling... I enjoy options... and I hate terrorists and the need for heightened security. Things should be easier in this world... and I feel HSR is an answer for much of that.

political-i said...

@upset taxpayer

People who pay for gas might not use the Interstates as much as daily commuters so in terms of paying a fair share is out of the question unless you are talking about the bridges which is definitely user pay.

Any major infrastructure takes capital to build and start up and then maintained by fares, government subsidies (transit organizations) and state taxes. That is why it is such a huge cost is that we're dealing with a new infrastructure. It will cost more later as well.

Cal said...

General tax funds pay for alot of air and highway...and would not even be here if was not for very large grants long ago.The pasenger
train system has been cheated manys years and now its time to even up the field..This system will last for at least 60-70 years!! Is that not worth every penny for our state? We still use railroads ROW from 1889!

earl g. said...

You can say what you will about the demise of passenger train service in this country.

Many many moons ago, in the late forties and early fifties, passenger trains were being used on a competitive basis.

They kept losing ridership for a number of reason, not the least being extremely poor service, both in passenger comfort and on time arrivals and departures.

The expansion of the interstate highway system, made driving more appealing and then of course the arrival of the jet age, when air travel simply out classed train travel for any kind of medium to long distance trip.

The more people deserted the trains the poorer the service became.

Rail passenger service today in this country is really viable pretty much only in the eastern triangle. Certainly here is California, it is hardly a factor, outside of commuter service.

I don't see many wanting to take a train from LA to SF when they can do it on an airplane. You can say the train may be competitive point to point travel times today, with security lines now being a problem at airports. Bring on this HSR train, and security lines will have disappeared, as automated systems come into play.

A train traveling at 200 MPH is no match for a jet going 550 MPH, over a stretch like LA to SF.

The advantages of air over the train are numerous. Airplanes leave from many different airports at each end of the LA to SFO segment. They leave non-stop every hour on the hour. From the proposed HSR schedule, only 4 non-stop trips a day?

Get people out of their cars. If you need a car at your destination, your going to drive on the shorter segments. There goes many of the projected riders even from Fresno to each end.

The train will take very little of the LA to SFO traffic. What it will take, is what the air carriers want to get rid of. Fresno to LA, Fresno to SF. The routes they don't want because of low volume
and low efficiency.

The 117,000,000 passengers per year is a pipe dream. So is the $55 fare from Fresno to SF.

So just keep buying into the snake oil salesmen that these guys are and you get what you deserve.

Anonymous said...

And the taxpayer paid for those airports and freeways that made it easy for the railroad to be run out of the passenger business! BUT
that was 50years ago..now we need forward thinking!!! America has used all it oil up..So there is no snake oil sales in this project!! Just the usual "Old White Hair Dudes" whinning about it!!!

anonymous said...

The conception that all the oil is used up is baloney. As Rafael as pointed out, maybe you can say that about cheap oil, but the industry has managed in the past and still today to provide for a 40 year known reserve of oil

Then there is the well over 2000 year supply of coal in this country. Fossil fuels should not be dismissed just because Gore follower fanatics believe the world is coming to an end because of global warming.

This has not been brought up before, but those advocating powering this via only renewable energy sources, wind photo voltaic etc. better realize that those sourse of power are 2.5 to 3 times the cost of coal or gas burning or nuclear plants.

Everything is a trade off. Choose your poison.

davisgrad said...

"Its hardly fair to lump all the taxes together. Users should be paying for the systems they use. Those that don't use the system should not, at least not pay nearly as much."

You pay for tickets on the HSR.Do you pay for tickets on roads? I think not....

"A train traveling at 200 MPH is no match for a jet going 550 MPH, over a stretch like LA to SF."

Actually, if you include security lines, baggage check, etc., it does. You should actually look up the study done by the HSR authority before posting.

"I don't see many wanting to take a train from LA to SF when they can do it on an airplane."

Amtrak ridership is SOARING, especially in California. Read the news please before posting, or at least Robert's excellent posts.

Cal said...

Then the poison I choose is HSR!!
YES we do need lots of oil for many
decades to come..We also need travel options..HRS is one ..so is airtravel ..so is your car..its about choice ,,just as many other countries have ..here its still some PopulareScience article

Brandon in San Diego said...

I have flown numerous times within the state. I have done so at least 3 times this year already; and for non-work purposes.

To me, flying seems a bunch like "hurry up and wait" "hurry up and wait" ... with lines at almost every single step. It's terrible I tell ya!

You hurry up and wait for...

- getting to the airport
- checking bags and/or getting priority pass
- going through security. (Oops, don't forget to take your shoes and belt off, disrobe all metal and electronic devices; exposing yourself to revealing x-ray equipment and ethical TSA staff. And let's not forget the need to putting that stuff back on).
- getting a drink (like coffee) at the only stand in the terminal
- finding a seat in a small waiting area
- all in the same maneuver... getting on the plane by first checking your ticket, slowly walking single file down a long gate, ducking into a doorway for a cylinder tube with wings, lifting carry-on to over-head bin, squeezing into a seat with little leg room... and then having need to listening to a flight attendant give an inspired safety announcement and demonstration of how to use seatbelts, oxygen masks, and the emergency exit door... and what door not to use in case of a water landing.
- And then getting off plane is no fun either. Peeps stand, take bags out of overhead, remain standing b/c.... get this... the plane is not ready to de-board travelers.

HSR should be much much more travel friendly.

For one, safer and less risky travel means...
- less security demands...
- no disrobing for x-rays...
- being able to bring your own food and drink...

And, HSR also means...
- going through check-in with more than 1 or 2 persons checking tickets (maybe 3 or 4, faster and more efficient)...
- not being corralled to go through one door (an HSR train can have a dozen or more doors!!! And board from a large platform and not a tight terminal)
- lots of onboard room for storage and legs.
- numerous bathrooms
- dining CARS (not a snack cart)
- being able to use cell phones and computers (CANNOT BE UNDERSTATED!!!!)
- origin an destination is in a city center, which have amenities in and of themselves (airports have squat, which means big effort to leave and do something else).

And I am sure I only covered a small portion of the differences and others could add on.

Spokker said...

Though I agree with many of your points, the final amenities on the high speed train consist have not been finalized and will not for some time.

I don't expect there to be a dining car but a cafe car of some kind.

Leg room could go either way. I hope to God that Amtrak Surfliner levels of legroom are provided at minimum. Superliner leg room would be great but too much to ask for.

I hope security is minimized but if rail travel ever becomes popular it too could succumb to the hysteria of this post-9/11 world.

Armed security roams the Northeast Corridor and here in California Metrolink claims to do security checks but I haven't seen it yet.

None of it is effective and it's all a big show. The articles about agents getting through airport security with banned items is hilarious.

mike said...

upset taxpayer,

First, there is a distinction between capital expenditures and operating costs (there's a good economic reason for it, which we can go into if you'd like). HSR should easily cover its operating costs from passenger revenues, which is much better than the roadway system is doing right now. Fuel taxes don't come close to covering total spending. For example, California collected $3.5 billion in fuel taxes last year and it cost us $2.75 billion just to fund CHP + DMV. Virtually all the money is gone before we even get to maintaining the first mile of roadway!

Second, even just talking maintenance and operations, almost all of the fuel tax money goes only to state and federal highways. County and local roads are paid for by property taxes and sales taxes. Guess what, of the 4,000,000 miles of roadway in the US, only 900,000 are owned by the states and Federal government. The other 78% is covered by general fund tax dollars.

Third, vehicle license fees are not user fees. For a tax to qualify as a user fee, the amount of tax paid must be strongly related to the amount of usage. Fuel taxes arguably meet that criterion since they are related to number of miles driven (though obviously some cars are much more fuel efficient than others). The vehicle registration fee, however, completely fails that test. For example, my wife and I are city-dwellers and drive 5,000 miles/year. We pay $270/year in VLF. A close friend of mine is a suburb dweller. He and his wife drive 35,000 miles/year and pay $160/year in VLF. We pay 11.8 times as much per mile as he does...and you're going to tell me that the fee is set based on usage?? That's actually a less egregious case because we're both of roughly similar socioeconomic status. Check out this California VLF analysis paper. When looking only at households that own cars, a household with a $100,000 income can expect to pay almost 7 times as much in VLF as a household with a $10,000 income. To quote the authors: The VLF and its equivalents elsewhere...are distinct from other transportation-related taxes. Unlike many other taxes, the VLF bears no relationship to costs or benefits from use of the transportation system. Some transportation-related taxes seek to recapture some external benefits by taxing actual system use (crossing a bridge or tunnel, consuming gasoline)...Other taxes are assessed in some rough proportion to the impacts that a user places on the system, simply by participating (e.g., registering a vehicle) or by imposing specific externalities (e.g., causing road damage from excessive axle weight, driving during rush hour, etc.). The VLF does not fit any of these categories; instead, it is loosely related to individuals’ ablity-to-pay.

Finally, the real cost of the roads, airports, and railways isn't maintenance costs or even construction costs. It's land costs. Remember, all the land that this infrastructure sits on is owned by you and I, the taxpayers. Roads take up roughly 20% of the land in urban/suburban areas. Think of the value of all the land in the SF Bay Area and the LA Basin and multiply it by 0.2. Think that's a big number? If drivers had to pay us the fair market rent for the land that their roads are built on, I guarantee you that the amount we spend on roads would double, triple, or quadruple overnight. Put another way, if CA HSRA were given a free right-of-way like virtually all of our roads received, I promise you the system could be built at a fraction of the cost with no taxpayer subsidy (most of the savings would accrue because they'd no longer have to "create" their own ROW in urban areas via tunneling, aerial structures, trenches, embankments, etc.).

At the end of the day, you need to ask yourself this: If roads are self-funding, why don't we see private companies building them for us at no subsidy all over the place? We waste 4.2 billion hours per year in traffic - building roads should be a gold mine, right? But it's not, because no private company wants to do it unless there's subsidies. The closest thing is the privately constructed toll lanes that Schwarzenegger is proposing (e.g., SR-91 in Southern California), but even those receive huge subsidies in the form of free right-of-way, grading, tax free bonds, and most importantly, "non-compete" clauses (i.e. the state cannot build additional highway capacity in the same corridor). I'm sure that if CA HSRA got some nice "non-compete" clauses that prevented the state from ever improving any Bay Area or SoCal airport or widening any freeways running along the same corridor as HSR, then there would be no problem with building the entire system using only private financing. It's what the roads get - seems fair to me!

Anonymous said...

@ spokker

who writes:

At the end of the day, you need to ask yourself this: If roads are self-funding, why don't we see private companies building them for us at no subsidy all over the place?

Isn't that what some of these new toll roads are all about? Private companies willing to invest in highways.

mike said...

earl,

You sound like you have never ridden an HSR system abroad. Try telling the airline executives that have to compete with HSR on sub-3 hour routes about how "a train traveling at 200 MPH is no match for a jet going 550 MPH." The execs will laugh you out of the room. The airlines get absolutely slaughtered. Heck, Air France is so desperate that they are ditching planes altogether and getting into the business of running trains.

mike said...

Anonymous,

Did you even read beyond the sentence you quoted? I already explained to you that, given the same perks offered to the toll road builders, there is no doubt that CA HSRA could be built using private financing. Forget 60 million or 80 million or even 117 million riders. If CA HSRA could get those "non-compete" clauses, I guarantee you they'd be carrying 200+ million riders/year by the middle of the century

mike said...

eric & nikko: The budget numbers come straight from the Governor's latest proposed budget. However, forecasting forward 40 years necessarily implies projecting - there's no way around that. Since 1977, CA government spending has grown an average of 7.9% per year. But population has also grown 1.6% per year, so per capita govt spending only rises 6.3% per year. Inflation was also high for the first 5 years of that period though, so I conservatively went with 5.5% per year nominal growth.

Anyway, given the amount of time that we spend writing comments that only get read by a few dozen other people, we really ought to try sending some letters or op-eds to the papers. I may try to prepare a couple of more succinct things that I can send out later in September or early October.

Brandon in San Diego said...

^^^ No kidding!

Anonymous said...

In Australia the toll roads are all going broke because nobody wants to use them. I think mike is right in saying that toll roads are only viable when propped up with subsidies, special non-compete clauses and very good loans.

And even then they fail.

So yes, I support building toll roads, as long as they really are funded completely privately. But nobody wants to do that.

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