Week in Review
Politicians everywhere want to build high-speed rail. Why? Because there are maybe only 2 high-speed rail lines in the world that operate at a profit. All other passenger rail requires government subsidies. Because the massive capital and operating costs for passenger rail are so great they cannot recover them via ticket prices. And high-speed rail is the costliest of all.
So passenger rail requires new taxation to support it. And politicians like new taxes. Also, building passenger rail requires an enormous infrastructure. Built and maintained by lots of people. Union people. Something else politicians love. Rewarding their union friends with lots of new union jobs. Which is why politicians love high-speed rail. They get a lot ‘thank you’ votes for all that government spending. No matter how costly or inefficient passenger rail is as a means of transportation. As we can see here (see I Spent 28 Hours on a Bus. I Loved It. by Eric Holthaus posted 2/4/2014 on Slate).
The infrastructure between point A and point B for cars and buses is already there. Paid for with fuel taxes. Planes need no infrastructure between point A and point B. But trains do. A very costly infrastructure.
Trains carry more people than buses. But not as many as planes. Which means the far greater cost of passenger rail is divided by fewer ticket purchasers. Whereas the less costly flying is divided by more ticket purchasers.
Planes can fly around 500 mph. Passenger rail can travel up to 100 mph on some sections of track. While high-speed rail travels at speeds of just under 200 mph on dedicated (and very expensive) track.
You add these points together and it’s little wonder that traveling by train costs about 20% more than flying. While taking 5.8 times as long. Or a little less for high-speed rail. Making the plane the undisputed champion of long-distance travel. And it works without massive government subsidies. Which is the best kind of travel there is. The kind where the people traveling pay for their travels. And not everyone else. As is the case with passenger rail.
Tags: flying, government subsidies, high-speed rail, infrastructure, passenger rail, planes, subsidies, taxes, trains, union jobs
Week in Review
The most dangerous parts of flight are the landing and taking off parts. Why? Because planes are big and heavy. And they travel fast. And whenever anything big and heavy travels fast near the ground bad things can happen. Because that’s a lot of kinetic energy that can do a lot of damage when it comes to a sudden and unexpected stop. But up in the air away from the ground planes easily earn their title as the safest way to travel. For up in the lonely expanses of the sky they can travel in excess of 500 miles per hour without a care in the world. Because the odds of them striking anything are virtually zero. This is where big and heavy things that travel fast belong. Not on the ground. Like high-speed rail. For even low-speed rail can be dangerous (see New York train derailment: Safety officials recover ‘black box’ by Tina Susman posted 12/1/2013 on the Los Angeles Times).
Investigators have recovered the “event recorder” from a Metro-North train that derailed in New York City early Sunday, a major step toward determining what caused the crash that killed four people and left scores injured…
Earl F. Weener of the National Transportation Safety Board said at a news briefing that the agency expected to have investigators on the scene in the Spuyten Duyvil area of the Bronx for a week to 10 days.
“Our mission is to understand not just what happened but why it happened, with the intent of preventing it from happening again,” Weener said. He said investigators had not yet talked to the train’s operator. Some local media have said the operator has claimed that he tried to slow down at the sharp curve where the derailment occurred but that the brakes failed.
The speed limit at the curve is 30 mph, compared to about 70 mph on straight sections of track.
Gov. Andrew Cuomo said the area is “dangerous by design,” because of the curve, but he said the bend in the track alone could not be blamed for the crash.
“That curve has been here for many, many years,” he told reporters at the scene, as darkness fell over the wreckage. “Trains take the curve every day … so it’s not the fact that there’s a curve here. We’ve always had this configuring. We didn’t have accidents. So there has to be another factor.”
High-speed rail is costly. Because it needs dedicated track. Overhead electric wires. No grade crossings. Fencing around the track. Or installed on an elevated viaduct. To prevent any cars, people or animals from wandering onto the track. They need banked track for high-speed curves. And, of course, they can’t have any sharp curves. Because curves cause a train to slow down. If they don’t they can derail. Which may be the reason why this commuter train derailed. It may have entered a curved section of track at a speed too great for its design. Which shows the danger of fast trains on sharp turns.
There haven’t been many high-speed rail accidents. But there have been a few. All resulting in loss of life. Because big and heavy things that travel fast along the ground have a lot of kinetic energy. And if something goes wrong at these high speeds (collision with another train or derailment) by the time that kinetic energy dissipates it will cause a lot of damage to the train, to its surroundings and to the people inside.
The high speed of today’s high-speed trains is about 200 mph. Not even half of what modern jetliners can travel at. Yet they cost far more. Most if not all passenger rail needs government subsidies. Air travel doesn’t. Making high-speed rail a very poor economic model. But they are capital and labor intensive. Which is why governments build them. So they can spend lots of money. And create a lot of union jobs. Which tends to help them win elections.
Tags: curve, derailment, high speeds, high-speed rail, kinetic energy, planes, sharp curves, track
The Amtrak Crescent is about a 1,300 Mile 30 Hour Trip between New Orleans and New York City
An Amtrak train derailed this morning west of Spartanburg, South Carolina. Thankfully, the cars remained upright. And no one was seriously injured (see Amtrak Crescent with 218 aboard derails in SC by AP posted 11/25/2013 on Yahoo! News).
There were no serious injuries, Amtrak said of the 207 passengers and 11 crew members aboard when the cars derailed shortly after midnight in the countryside on a frosty night with 20-degree readings from a cold front sweeping the Southeast.
This is the Amtrak Crescent. About a 30 hour trip one way. It runs between New Orleans and New York City. Approximately 1,300 miles of track. Not Amtrak track. They just lease track rights from other railroads. Freight railroads. Railroads that can make a profit. Which is hard to do on a train traveling 1,300 miles with only 207 revenue-paying passengers.
People may board and leave the train throughout this route. But if we assume the average for this whole trip was 207 and they were onboard from New Orleans to New York City we can get some revenue numbers from the Amtrak website. We’ll assume a roundtrip. They each have to pay for a seat which runs approximately $294. Being that this is a long trip we’ll assume 20 of these people also paid an additional $572 for a room with a bed and a private toilet. Bringing the total revenue for this train to approximately $72,298. Not too shabby. Now let’s look at the costs of this train.
Diesel Trains consume about 3-4 Gallons of Fuel per Mile
If you search online for track costs you will find a few figures. All of them very costly. We’ll assume new track costs approximately $1.3 million per mile of track. This includes land. Rights of way. Grading. Bridges. Ballast. Ties. Rail. Switches. Signals. Etc. So for 1,300 miles that comes to $1.69 billion. Track and ties take a beating and have to be replaced often. Let’s say they replace this track every 7 years. So that’s an annual depreciation cost of $241 million. Or $663,265 per day. Assuming 12 trains travel this rail each day that comes to about $55,272 per train.
Once built they have to maintain it. Which includes replacing worn out rail and ties. Repairing washouts. Repairing track, switches and signals vandalized or damaged in train derailments and accidents. This work is ongoing every day. For there are always sections of the road under repair. It’s not as costly as building new track but it is costly. And comes to approximately $300,000 per mile. For the 1,300 miles of track between New Orleans and New York City the annual maintenance costs come to $390 million. Or $1 million per day. Assuming 12 trains travel this rail each day that comes to about $89,286 per train.
Diesel trains consume about 3-4 gallons of fuel per mile. Because passenger trains are lighter than freight trains we’ll assume a fuel consumption of 3 gallons per mile. For a 1,300 mile trip that comes to 3,900 gallons of diesel. Assuming a diesel price of $3 per gallon the fuel costs for this trip comes to $11,700. The train had a crew of 11. Assuming an annual payroll for engineer, conductor, porter, food service, etc., the crew costs are approximately $705,000. Or approximately $1,937 per day. Finally, trains don’t have steering wheels. They are carefully dispatched through blocks from New Orleans all the way to New York. Safely keeping one train in one block at a time. Assuming the annual payroll for all the people along the way that safely route traffic comes to about $1 million. Adding another $2,967 per day.
Politicians love High-Speed Rail because it’s like National Health Care on Wheels
If you add all of this up the cost of the Amtrak Crescent one way is approximately $161,162. If we subtract this from half of the roundtrip revenue (to match the one-way costs) we get a loss of $88,864. So the losses are greater than the fare charged the travelling public. And this with the freight railroads picking up the bulk of the overhead. Which is why Amtrak cannot survive without government subsidies. Too few trains are travelling with too few people aboard. If Amtrak charged enough just to break even on the Crescent they would raise the single seat price from $294 to $723. An increase of 146%.
Of course Amtrak can’t charge these prices. Traveling by train is a great and unique experience. But is it worth paying 80% more for a trip that takes over 7 times as long as flying? That is a steep premium to pay. And one only the most avid and rich train enthusiast will likely pay. Which begs the question why are we subsidizing passenger rail when it’s such a poor economic model that there is no private passenger rail? Because of all those costs. Congress loves spending money. And they love making a lot of costly jobs. And that’s one thing railroads offer. Lots of costly jobs. For it takes a lot of people to build, maintain and operate a railroad.
Which is why all politicians want to build high-speed rail. For it doesn’t get more costly than that. These are dedicated roads. And they’re electric. Which makes the infrastructure the most costly of all rail. Because of the high speeds there are no grade crossings. Crossing traffic goes under. Or over. But never across. And they don’t share the road with anyone. There are no profitable freight trains running on high-speed lines to share the costs. No. Fewer trains must cover greater costs. Making the losses greater. And the subsidies higher. Which is why politicians love high-speed rail. It’s like national health care on wheels.
Tags: Amtrak, Amtrak Crescent, block, costs, diesel, freight train, fuel, high-speed rail, maintenance, New Orleans, New York City, passenger rail, rail, railroad, revenue, road, signals, switches, ties, track, train
Week in Review
Governments everywhere have a love affair with high-speed rail. Because it’s big. It’s costly. And best of all it takes a lot of union workers to build it. And even more to maintain and operate it. That’s a lot of grateful people who will remember them at the next election. And when you get down to it that’s what politics is all about. Buying votes with taxpayers’ money. And few things cost more than high-speed rail. Which is why governments love them. Even if they are not good economic models (see Upgrading existing rail network would be better value than HS2, government analysis finds by Tim Ross posted 11/3/2013 on The Telegraph).
Ministers published their latest economic “business case” for the controversial £50 billion high speed project last week, as the Prime Minister sought to deflect pressure onto Ed Miliband over Labour’s wavering support for the plan…
Ministers paraded the latest official estimate of the economic value of the plan, which claimed that HS2 would deliver £2.30 in benefits for every £1 spent on the scheme.
The figure was based on an assessment of the impact of quicker travel times, more trains running between London and the north, and extra investment in jobs and businesses along the new route, among other factors.
However, detailed analysis buried within a separate 150-page study into the alternatives to HS2, also published by the Department for Transport last week, showed that upgrading services on existing rail routes would provide far better value for money.
According to this study, one package of improvement works to existing lines between London, Birmingham and northern cities would deliver economic benefits equal to £3.30 for every £1 invested, 43 per cent more than HS2.
This is why high-speed rail is not a good economic model. It may deliver everything they say it will but whatever it does deliver is never enough. Not with those mammoth price tags. In this case £50 billion (about $80 billion). To return £2.30 for every £1 invested that would come to £115 billion in new economic activity. Britain’s GDP in 2012 was about £1.49 trillion. So the expected return on that high-speed rail investment would be 7.7% of GDP. Sounds nice. But highly unlikely when you consider Britain’s GDP growth was than 1% in 2012. Coming in at 0.1%. Worse, all the costs will be in the first few years of breaking ground. While the new economic activity will be spread out over decades. Guaranteeing costs will exceed revenue for a very long time.
Of all the high-speed rail lines in the world only two actually operate at a profit. One in Japan. And one in France. Every other passenger train in the world loses money and requires taxpayer subsidies. And because they do it is better to spend less than more. Especially when more is £50 billion (about $80 billion). And you can produce a greater return on investment by spending less. But that is hard to do when you’re in the business of buying votes. Which is why they keep trying to build high-speed rail.
Tags: buying votes, high-speed rail, HS2
Week in Review
We transport heavy freight over land by train. And transport people over land by plane. Have you ever wondered why we do this? Especially you train enthusiasts who would love to travel by train more often? Here’s why. Cost. Railroads are incredibly expensive to build, maintain and operate. Because there is rail infrastructure from point A to point B. And at their terminus points. Whereas planes fly through the air between point A and point B. Without the need for infrastructure. Except at their terminus points. Making railroading far more expensive than flying.
If planes are so much cheaper to operate than trains then why don’t we use planes to transport all our freight? Here’s why. Price. Trains charge by the ton of freight they transport. And they can carry a lot of tons. An enormous amount of tons. Which makes the per-ton price relatively inexpensive. A plane can carry nowhere near the amount of freight a train can carry. It’s not even close. Which makes the per-ton price to ship by plane very, very expensive. So only high priority freight that has to be somewhere fast will travel by plane. Heavy bulk items all travel by train.
We may be having an obesity problem but in the grand scheme of things people are very light. But take up a lot of volume for their given weight. The space their body physically occupies. And the greater space around them containing the air they must breathe. That holds the food and drink they must consume. And the toilets they need to relieve themselves. Now let’s look at a 747-400 with 450 passengers on board. Let’s say the average weight of everyone comes to 195 pounds. So the total flying weight of the people comes to 87,750 pounds. Assuming flying costs for one trip at $125,000 that comes to $1.42 per pound. If we add 15% for overhead and profit we get a $1.64 per-pound ticket price. So a 275-pound man must pay $451 to fly. While a 120-pound woman must pay $197 to fly. Of course we don’t charge people by the pound to fly. At least, not yet. No, we charge per person. So the per-person price is $224, where the lighter people subsidize the price of the heavier people.
The 747-400 is one of the most successful airplanes in the world because it can pack so many people on board. Reducing the per-person cost. Now let’s look at that same cost being distributed over only 28 passengers. When we do the per-person cost comes to $4,464. Adding 15% for overhead and markup brings the per-person price to $5,134. A price so high that few people could afford to pay for it. Or would choose to pay for it. And this is why we transport people by plane. That can carry a lot of people. And we transport heavy freight by train. That can carry a lot of tons. And why this idea will probably not work (see Elon Musk Is Dead Wrong About The Cost Of The Hyperloop: In Reality It Would Be $100 Billion by Jim Edwards posted 8/16/2013 on Business Insider).
Tesla CEO Elon Musk’s plan for a space-age Hyperloop transport system between Los Angeles and San Francisco would cost only $7.5 billion, he said in the plans he published recently…
But the New York Times did us all a favor by calculating the true cost of the Hyperloop: It’s going to be ~$100 billion…
The Hyperloop is a pressurized tube system in which passenger cars zoom around on an air cushion, at up to 800 miles an hour.
There is no greater infrastructure cost between point A and point B than there is for high-speed rail. Because these rails have to be dedicated rails. With no grade crossings. All other traffic either tunnels underneath or bridges overhead. These tracks are electrified. Adding more infrastructure than just the tracks. All of which has to be maintained to exacting standards to allow high-speed trains to travel safely. Which is why high-speed rail is the most costly form of transportation. Why there are no private high-speed rail lines as only taxpayer subsidies can pay for these. And for all these costs these trains just don’t transport a lot of people. Making high-speed rail the most inefficient way to transport people.
The Hyperloop will be more costly than high-speed rail as this is an elevated tube system of exacting standards. Requiring great costs to build, maintain and operate. While transporting so few people per trip (28 per capsule). Not to mention high-speed travel is very dangerous. Unless it is up in the air separated by miles of open air. But on the ground? When a high-speed train crashes it is pretty catastrophic. And it can tear up the infrastructure it travels on. Shutting the line down. So traveling 800 miles an hour inside a narrow tube is probably not the safest thing to do.
Of course the biggest fear in a system like this is some politician will pass legislation to build it. Because of all the taxpayer-subsidized union jobs it will create. As they are constantly trying to build high-speed rail for the same reasons. For the politics. Not because it’s a good idea. For any idea requiring taxpayer subsidies is rarely a good idea.
Tags: 747-400, Elon Musk, flying, freight, heavy freight, high-speed rail, Hyperloop, infrastructure, per-person cost, per-ton price, plane, rail infrastructure, railroad, train, transport heavy freight, transport people
Trains require an Enormous Amount of Infrastructure between Terminal Points whereas a Plane does Not
Trains and jets are big and expensive. And take huge sums of money to move freight and passengers. Each has their strength. And each has their weakness. Planes are great for transporting people. While trains are best for moving heavy freight. They both can and do transport both. But pay a premium when they are not operating at their strength.
The big difference between these two modes of transportation is infrastructure. Trains require an enormous amount of infrastructure between terminal points. Whereas a plane doesn’t need anything between terminal points. Because they fly in the air. But because they fly in the air they need a lot of fuel to produce enough lift to break free from the earth’s gravity. Trains, on the other hand, don’t have to battle gravity as much. As they move across the ground on steel rails. Which offer little resistance to steel wheels. Allowing them to pull incredible weights cross country. But to do that they need to build and maintain very expensive train tracks between point A and point B.
To illustrate the difference in costs each incurs moving both people and freight we’ll look at a hotshot freight train and a Boeing 747-8. A hotshot freight gets the best motive power and hustles on the main lines across the country. The Boeing 747-8 is the latest in the 747 family and includes both passenger and freighter versions. The distance between Los Angeles (LA) and New York City (NYC) is approximately 2,800 miles. So let’s look at the costs of each mode of transportation moving both people and freight between these two cities.
Railroads are so Efficient at moving Freight because One Locomotive can pull up to 5,000 Tons of Freight
There are many variables when it comes to the cost of building and maintaining railroad track. So we’re going to guesstimate a lot of numbers. And do a lot of number crunching. An approximate number for the cost per mile of new track is $1.3 million. That includes land, material and labor. So the cost of the track between LA and NYC is $3.6 billion. Assuming a 7-year depreciation schedule that comes to $1.4 million per day. If it takes 3 days for a hotshot freight to travel from LA to NYC that’s $4.3 million for those three days. Of course, main lines see a lot of traffic. So let’s assume there are 8 trains a day for a total of 24 trains during that 3-day period. This brings the depreciation expense for that trip from LA to NYC down to $178,082.
So that’s the capital cost of those train tracks between point A and point B. Now the operating costs. An approximate number for annual maintenance costs per mile of track is $300,000. So the annual cost to maintain the track between LA and NYC is $840 million. Crunching the numbers the rest of the way brings the maintenance cost for that 3-day trip to approximately $278,671. Assuming a fuel consumption of 4 gallons per mile, a fuel cost of $3/gallon and a lashup of 3 locomotives the fuel cost for that 3-day trip is approximately $100,800. Adding the capital cost, the maintenance expense and the fuel costs brings the total to $566,553. With each locomotive being able to pull approximately 5,000 tons of freight for a total of 15,000 tons brings the cost per ton of freight shipped to $37.77.
Now let’s look at moving people by train. People are a lot lighter than heavy freight. So we can drop one locomotive in the lashup. And burn about a gallon less per mile. Bringing the fuel cost down from $100,800 to $50,400. And the total cost to $516,153. Assuming these locomotives pull 14 Amtrak Superliners (plus a dining car and a baggage car) that’s a total of 1,344 passengers (each Superliner has a 96 passenger maximum capacity). Dividing the cost by the number of passengers gives us a cost of $384.04 per passenger.
Passenger Rail requires Massive Government Subsidies because of the Costs of Building and Maintaining Track
A Boeing 747-8 freighter can carry a maximum 147.9 tons of freight. While consuming approximately 13.7 gallons of jet fuel per mile. At 2,800 miles that trip from LA to NYC will consume about 38,403 gallons of jet fuel. At $3/gallon that comes to a $115,210 total fuel cost. Or $778.97 per ton. Approximately 1,962% more than moving a ton of freight from LA to NYC by train. Excluding the capital costs of locomotives, rolling stock, airplanes, terminal infrastructure/fees, etc. Despite that massive cost of building and maintaining rail between point A and point B the massive tonnage a train can move compared to what a plane can carry makes the train the bargain when moving freight. But it’s a different story when it comes to moving people.
The Boeing 747-8 carries approximately 467 people on a typical flight. And burns approximately 6.84 gallons per mile. Because people are a lot lighter than freight. Crunching the numbers gives a cost per passenger of $123.11. Approximately 212% less than what it costs a train to move a person. Despite fuel costs being almost the same. The difference is, of course, the additional $465,753 in costs for the track running between LA and NYC. Which comes to $346.54 per passenger. Or about 90% of the cost/passenger. Which is why there are no private passenger railroads these days. For if passenger rail isn’t heavily subsidized by the taxpayer the price of a ticket would be so great that no one would buy them. Except the very rich train enthusiast. Who is willing to pay 3 times the cost of flying and take about 12 times the time of flying.
There are private freight railroads. Private passenger airlines. And private air cargo companies. Because they all can attract customers without government subsidies. Passenger rail, on the other hand, can’t. Because of the massive costs to build and maintain railroad tracks. With high-speed rail being the most expensive track to build and maintain. Making it the most cost inefficient way to move people. Requiring massive government subsidies. Either for the track infrastructure. Or the electric power that powers high-speed rail.
Tags: Boeing 747-8, freight, freight train, fuel, fuel cost, government subsidies, heavy freight, high-speed rail, hotshot freight, infrastructure, jet, locomotive, maintenance costs, passenger rail, passengers, planes, railroad, railroad track, track, train tracks, trains
Week in Review
Trains are heavy. Getting a train moving is one thing. But getting it to stop is another. Because heavy things moving fast have a lot of kinetic energy. The energy of something in motion. In classical mechanics we calculate the kinetic energy by multiplying one half of the mass times the velocity squared. That last part is really important. The velocity part. For as the speed increases the kinetic energy increases by a far greater amount. For example, a train increasing speed from 30 kilometers per hour (18 mph) to 190 kilometers per hour (114 mph) increases its speed by 533%. But because we square the velocity the kinetic energy increases by 3,911%. Making high-speed rail more dangerous than regular rail. Because of the great amounts of kinetic energy involved.
Airplanes are very heavy. They travel at great speeds. And have great amounts of kinetic energy. Which is why plane crashes or so horrific. Anything with that amount of kinetic energy suddenly stopping dissipates that energy in great heat, noise and the explosion of solid parts. But plane crashes, thankfully, are rare. For when they are travelling at those great speeds they’re up in the air thousands of feet (or more) away from anything they can hit. And if there is a malfunction they can fall safely though the sky (with enough altitude) until the pilots can recover the aircraft. For airplanes have the best friend to high speed objects. A lot of empty space all around them. Not so with high-speed rail (see Driver in custody after 80 killed in Spain train crash by Teresa Medrano and Tracy Rucinski posted 7/25/2013 on Reuters).
The driver of a Spanish train that derailed, killing at least 80 people, was under police guard in hospital on Thursday after the dramatic accident which an official source said was caused by excessive speed.
The eight-carriage train came off the tracks, hit a wall and caught fire just outside the pilgrimage destination Santiago de Compostela in northwestern Spain on Wednesday night. It was one of Europe’s worst rail disasters…
Video footage from a security camera showed the train, with 247 people on board, hurtling into a concrete wall at the side of the track as carriages jack-knifed and the engine overturned…
El Pais newspaper said the driver told the railway station by radio after being trapped in his cabin that the train entered the bend at 190 kilometers per hour (120 mph). An official source said the speed limit on that stretch of twin track, laid in 2011, was 80 kph…
Investigators were trying to find out why the train was going so fast and why security devices to keep speed within permitted limits had not slowed the train…
Spain’s rail safety record is better than the European average, ranking 18th out of 27 countries in terms of railway deaths per kilometers traveled, the European Railway Agency said. There were 218 train accidents in Spain between 2008-2011, well below the EU average of 426 for the same period.
There are no rails to derail from in the air. And no concrete walls to crash into. Air travel requires no infrastructure between terminal points. High-speed rail travel requires a very expensive, a very precise and a highly maintained infrastructure between terminal points. As well as precise controls to keep the train from exceeding safe speeds. Planes do, too. But when you have thousands of feet of nothingness all around you there is time to make adjustments before something catastrophic happens. Like derailing when speeding through a curve too fast.
Air travel is safer than high-speed rail travel. Which is why when a plane crashes it’s big news. Because it happens so rarely these days. Thanks to good aircraft designs. Good pilots. And having thousands of feet of nothingness all around you when flying at speeds close to 950 kph (570 mph). Unlike having a concrete wall just a few feet away from a train traveling at high speeds.
High-speed rail may work in France and Japan. The only two rail lines to pay for themselves are in these countries. But every other passenger rail line in the world needs a government subsidy. Because the costs of a rail infrastructure are just so great. Making high-speed rail more of a source of union jobs than an efficient means of transportation. Which is why they are a fixture in countries with liberal governments. Who subsidize the high cost of these union jobs with taxpayer money. In exchange for votes in the next election.
Tags: air travel, aircraft, airplane, derail, high-speed rail, high-speed rail travel, kinetic energy, plane crashes, rail infrastructure, rail safety, rail travel, railway deaths, Spain, Spanish train, train, velocity
Week in Review
Big Government liberals in the U.S. say state capitalism is the way to go. And high-speed rail. Just like the Chinese. In fact, they can’t get enough of what the Chinese are doing. Because they say the Chinese get capitalism right. By putting ‘state’ in front of it. Instead of what we normally see in front of it. Free market. But their big state funded rail system is far from perfect. Far, far from perfect (see China’s push for rail reform could be dead in its tracks by Michael Martina posted 2/2/2012 on Reuters).
The ministry’s touted web-based ticket booking system was supposed to replace the antiquated ordeal of waiting in long queues. It didn’t. The system crashed minutes after its launch before the annual holiday migration of 200 million people by rail, and proved as frustrating as any line-up at a station…
The online fiasco — which spurred a barrage of criticism — was the latest in a litany of troubles for the ministry, which has been plagued by scandals and missteps. Some of those problems have been deadly, including a July crash of a new high-speed train that killed 40 people.
But for decades the Ministry of Railways has proven impervious to reform efforts, fending off attempts by leaders to merge it with other ministries or close a separate court system run by the 2.1 million-employee ministry…
The current reform drive could also stumble, said Zhao Jian, a rail expert at Beijing Jiaotong University who has criticized China’s expensive bullet train expansion. For one, the ministry’s $2.2 billion debt load could deter any splitting of its business and regulatory arms.
“If you separate the government function from the business function, the transportation enterprise must take on the debt. But if the debt is so great that the enterprise will immediately become bankrupt, then who will take it on?” Zhao said.
The problems of state capitalism are plain to see. You have a 2.1 million public sector bureaucracy. Who speak with a loud and unified voice and could play havoc with the system if they don’t get their way. And public spending so great that nothing in the private sector can manage the accompanying debt. No amount of ticket revenue can fund current operations and service this debt. It’s just impossible. Which means it can’t be spun off from the government. Because only government funding (taxes, borrowing and the printing press) can support this behemoth. Because large-scale rail like this is just not a viable economic model. Which means it will never be reformed. And it will always remain a fiasco. Until it and the state finally collapse. Sort of like in Greece. Only without anyone large enough to bail them out.
And this is exactly what the Big Government liberals in the U.S. want. Of course, when they start running things everything will be perfect. So they won’t make the same mistakes the Chinese have made. Or the Greeks have, for that matter. Even though they can’t point to a single success story in the history of Big Government liberalism. For sharing the wealth and growing government has never increased economic activity. But only led to growing bureaucracies and out of control spending. Like the Chinese. Only without their booming manufacturing sector powered by cheap labor to help pay for some of these costs.
No, China’s state capitalism is not the economic model to follow. If you want robust economic activity you need to get the state out of the economy. And let free market capitalism do its magic. Like it did for the British during the Industrial Revolution in the 19th century. And like it did for the Americans in the late 19th century and early 20th century. Before the growth of government in both countries grew. And sucked the life out of their economies.
Tags: Big Government, big-government liberals, bloated bureaucracy, bureaucracy, capitalism, China, China's Ministry of Railways, Chinese, debt, economic activity, free market, free-market capitalism, high-speed rail, liberals, Ministry of Railways, private sector, public spending, rail, state capitalism
Week in Review
Before we commit to high-speed rail we probably should figure how to make the less costly type of rail not lose money first (see Amtrak’s true costs by N.B., WASHINGTON, D.C. , posted 11/7/2011 on The Economist).
AMTRAK, America’s government-run passenger rail service, received $1.4 billion in taxpayer subsidies in 2011. Critics reckon that’s too much, and say that the company should either be self-sufficient or privatised. Some surveys suggest that the majority of Americans agree. But Amtrak’s defenders are striking back, arguing that the railroad actually receives fewer dollars per passenger mile (ppm) than highways.
Yes, but Amtrak sells tickets. Our highways don’t. Except for private toll roads. But private toll roads are private. And typically the government doesn’t subsidize them with federal money.
Airlines don’t receive subsidies like Amtrak does. That’s because there is a demand that they can meet profitably. Passenger rail just can’t do that. Their costs are just too great. Which is why Amtrak can’t survive without federal subsidies.
And if Amtrak can’t operate profitably we have no business getting in the high-speed rail business.
Tags: Amtrak, federal subsidies, high-speed rail, subsidies
Week in Review
Railroads are expensive to build. And to operate. Especially high-speed railroads. Why? Because unlike airplanes that fly in the air between cities trains have to travel on track between cities. And that’s a whole lot of railroad infrastructure. That’s why railroads don’t suffer as much during times of escalating fuel costs as trucking and aviation. Because fuel isn’t their greatest cost. As it is for trucks and planes. It’s that massive infrastructure that they have to build. And maintain.
To build a railroad you need lots of money. And lots of labor. Preferably cheap labor. And that usually means government money. And immigrant labor. That’s how they built the first transcontinental railroad in America. Along with a lot of inefficiencies. And corruption. Typical when you put government and big piles of money together.
That first transcontinental railroad needed a lot of ‘fixing up’ before it was safe for use. They had to move some track from ice to terra firma. Rebuild some bridges that weren’t disposable after a few uses. That kind of thing. Because that’s the kind of craftsmanship you get when government is in charge of the money. What we call crony capitalism. Government rewarding their friends. Picking winners and losers. And helping those who will help them. That is, return the favor of government contracts with campaign contributions.
Governments all around the world are in favor of building more high-speed rail. Because it will ‘put people to work’. And ‘save the planet’. By moving people out of gasoline-powered cars into electricity-powered trains. Electricity that is generated from even more polluting coal-fired power plants.
The Americans have been trying. Obama’s stimulus included billions for high-speed rail. That did nothing. Meanwhile the Chinese have been doing it. By making money for the banks to lend. And using cheap ‘second-class’ migrant labor from China’s countryside to build their high-speed rail. And how has that been working? Not so good (see Can’t pay, won’t pay posted 10/29/2011 on The Economist).
EFFORTS to curb inflation in China are having some painful side-effects. A squeeze on bank lending has prompted some businesses short of cash to stop paying wages to blue-collar workers. Even the much-vaunted state sector is feeling the pinch. Work has all but ground to a halt on thousands of kilometres of railway track, and many of the network’s 6m construction workers have been complaining about not being paid for weeks or sometimes months…
The government touted building railways as a great way to keep the economy buoyant during global financial trouble, and boost employment. But the $600 billion stimulus launched in 2008 is all but spent. Indeed, the central government has urged state banks to cut back on lending in order to curb inflation, which in the year to July reached a three-year high of 6.5%, before dropping to 6.1% in September.
Yet another example of why Keynesian economic stimulus stimulates only economic bubbles and inflation. Which are always corrected by recessions. And the greater the stimulus/bubble the greater the recession. Of course Keynesian government economists everywhere will all come to the same conclusion. That China isn’t spending enough. And that governments everywhere should follow the Chinese example. But without the one flaw of turning off the easy credit spigot. Because Keynesians always say that any inflation created by government stimulus is minor and negligible in comparison to all the good that it does.
Similar problems have also been reported in road building and property construction, prompting a growing number of demonstrations and violent incidents, including clashes with employers and suicides. Such difficulties are likely to get worse towards the end of the year, when companies traditionally try to settle accounts with employees. Wage inflation is adding to employers’ woes. Minimum wages have risen by an average of nearly 22% in the two-thirds of China’s provinces which have adjusted them this year. Nice if you can get it, but not much use if you are not being paid at all.
But the Keynesians couldn’t be more wrong. Once inflation starts it ripples through the economy. Costs go up. Wages go up. Increasing consumer prices everywhere. There’ll be some economic prosperity for a little while. But soon inflation will eat away at the standard of living. People will be making more money everywhere. But that money will buy less and less. It will buy less of a house. Fewer toys. And even less food. This is the endgame of Keynesian stimulus. And we’re seeing it played out on a grand scale in China. Like we saw in Japan during their Lost Decade. Where the Japanese suffered a deflationary spiral that just never ended. To correct all that damage caused by their Keynesian bubble.
This could prove to have a devastating effect on the American economy. For the Americans will have no one left to finance their debt. And yet President Obama, the Democrats and all those mainstream Keynesian economists are all clamoring for one thing. Can you guess what that is? That’s right. More Keynesian stimulus.
Some people just never learn.
Tags: bubbles, China, Chinese, economic stimulus, high-speed rail, high-speed railroads, inflation, Keynesian, Keynesian bubble, Keynesian economic stimulus, Keynesian economists, Keynesian polices, Keynesian stimulus, labor, money, railroad infrastructure, railroads, recession, spending, stimulus, track