High-Speed Rail: A Bad Idea in the U.S., a Bad Idea in China

Today, Stuart Varney of Fox Business Network hosted Andy Kunz, the honcho of the lobbying outfit U.S. High Speed Rail Association. His advisory board is comprised almost entirely of rent-seeking corporate types, career government bureaucrats, and anti-oil eco-ideologues, so it should come as no surprise that Mr. Kunz believes automobility is facing imminent collapse and that the United States needs to follow China’s lead and invest hundreds of billions of dollars into a high-speed rail network.

The problem with this sort of thinking is that it is completely off-base. Not only would high-speed intercity passenger rail almost certainly be a complete failure in the United States, China is not exactly a success story worth using as a model for the U.S. As the liberal Washington Post columnist Charles Lane noted in the paper last Saturday, China’s full-steam-ahead experiment with high-speed rail has been a disaster and has now begun to implode:

Seems [the rail] ministry has run up $271 billion in debt — roughly five times the level that bankrupted General Motors. But ticket sales can’t cover debt service that will total $27.7 billion in 2011 alone. Safety concerns also are cropping up.

The meager ticket sales to China’s growing urban professional class (which would also be the targeted demographic in the United States) can’t even cover interest on the construction debt, let alone operating costs and ongoing capital costs related to expansion and maintenance. Mr. Kunz claims he recognizes the severity of China’s high-speed rail corruption and shoddy construction problems, and that these sorts of issues should be “weeded out.” However, he doesn’t mention the consequences of the inherent risk to the taxpayers of such giant undertakings: cost overruns of 40 percent or more are the norm in public rail infrastructure projects.

Furthermore, as I’ve mentioned before here, the United States has an excellent rail system (see, for example, my recent comments to the Surface Transportation Board on the dangers of re-regulation)… when it comes to freight rail. The United States has invested heavily in roads and (privately) freight rail. In contrast, China has built out passenger rail and largely ignored freight rail and necessary highway capacity increases. As a result, whereas coal in the United States is moved almost entirely by rail or barge, China loads its coal onto trucks. Remember that 60-mile traffic jam headline from last summer? Most of the gridlocked trucks were loaded with coal on their way to power plants or steel mills. Likewise, staple cereals such as rice and wheat are also largely moved by truck.

But perhaps the most annoying false claim made by Mr. Kunz is his statement on the cost of the Interstate highway system relative to the cost of a 17,000-mile high-speed passenger rail network in the U.S. The 46,800-mile Interstate system took 35 years to build at a cost of around $500 billion (2008 dollars), funded primarily by excise taxes on gasoline, diesel, tires, and other driving-related products. In contrast, the cost of a 17,000-mile high-speed passenger rail system would likely range from around $500 billion to $1 trillion, and there is no way for it to self-finance itself through a program similar to the Highway Trust Fund. For it to be true, electrified, TGV-style high-speed passenger rail, the track would need to be dedicated — meaning it couldn’t be used by freight carriers. In contrast, the Interstate system can and does support far more passengers than rail ever could or would, and it allows trillions of dollars worth of freight to be carried by trucks on it every year.

This is not the first time someone has taken issue with Andy Kunz’s terrible reasoning and complete lack of understanding of real-world capacity constraints. Read venerable transport scholar Gabriel Roth’s incredibly brief take-down of Mr. Kunz late last year.