Sunday, July 12, 2009

Is Public Policy an Obstacle to Privately Owned High Speed Rail?

Could a high speed rail system be built and operated at a profit by a strictly private concern? And, if so, why has it not been built and what is obstructing it?

Private banker Marilyn M. Barnewall discusses the possibility of a nation-wide high-speed rail system built by private capital to operate profitably without any sort of tax subsidies or support. Ms. Barnewall states in her article, "There is an alternative to having government build America’s high speed rail system. A private company has offered a high speed rail deal to the government – years ago. The deal offers high speed rail, not just “faster trains.” It promises to use no taxpayer funds. I repeat, no taxpayer money… just private capital."

Ms. Barnewall goes on:
"The offer says the company will: “Build and PAY without liens or encumbrances a total and complete Hi-Speed Bullet type domestic railroad system, based on existing Japanese/Chinese and/or other alternatives.” The offer further states the company will use American employees, suppliers and fabricators. The plans are thorough. Attention has even been paid to using high speed rail for emergency evacuations… what a difference that could have made for Katrina victims!

I was highly intrigued by this, and wrote to Ms. Barnewall to seek more information regarding the identity of the company and the specifics of its plan, including costs and technology. She sent me back a courteous reply stating that at this time, the identity of the company has to remain confidential, but offered to forward my name to the company so that I could receive mailings from them.

I don't doubt the statements of this prestigious private banker. For, after all, the United States once had a passenger rail system that was the envy of the world and was made up of hundreds of lines operated by dozens of carriers, large and small, whose principal purpose for being in business was to make a profit. In the 1920s, speeds of 100 MPH were commonplace, and our Midwestern cities were major rail hubs from which ran hundreds of trains daily, and they ran frequently and on time. So the pertinent question is, not how it is possible to operate a passenger railroad profitably, but rather, how and why did our railroads fail to begin with?

More important, if indeed it is possible to operate a high-speed passenger railroad profitably in the United States, why is no one doing it right now, and why are we discussing allocating tens of billions of dollars of government money toward building a government-run high-speed railroad, to be operated by none other than Amtrak?

Most of all, if a company is able to contemplate such an investment and desires to do so, what's obstructing it? And why is it necessary to work with the federal government? If investors perceive a market for an indispensable service, calculate that they can compete where the heavily-subsidized but still failing airlines cannot, and wish to place their own money at risk for an extended time horizon of many decades to make it happen, why are they being obstructed?

That this company is being actively obstructed, or at least doesn't have the clearance it needs to go forward, is obvious. Ms. Barnewell states that the company has "offered a high speed rail deal to the government- years ago." That's interesting, because never, during either the Republican administration that just passed on nor in the previous Democratic administration, did I read anywhere, in my eager searches for anything pertaining, of any private entity that could or would enter into such a project.

So we have to ask just what our leaders and their crony capitalists have to gain by suppressing the development of modern, efficient rail while allocating lavish subsidies to the fuel-guzzling, rapidly failing air carriers, who receive in excess of $14 Billion annually in federal subsidies, and pouring nearly $100 Billion more into rescuing the Detroit automakers who refused to adjust to changing market conditions and proved unable to generate technology and products in keeping with changing consumer demand, and have steadfastly clung to outdated business models and turned out inferior products ever since .

What conclusions can we draw from the lavish government support of failing, outdated, and parasitical enterprises alongside the aggressive obstruction of new industries manufacturing the products and services we need and want now, and will need desperately as we progress further into the twilight of the Age of Oil? Why is our "progressive" Democratic administration, just like the "regressive" Republican administration before it, throwing its policy-making weight, and trillions of dollars of tax revenues into supporting industries that are dying precisely because they have no purpose in an era of energy scarcity, and are impediments to developing the technologies and systems that we will need in order enjoy something like current levels of technological amenity?

For that is what "market signals" are increasingly telling us- that we are going to have to re-organize our transportation and other living arrangements drastically to retain our present level of comfort and be able to make a living in an economic landscape greatly altered by the loss of cheap energy. This company and its plans are a Free Market response to the growing scarcity of fossil fuels and the necessity to rebuild our rail system to replace both passenger air travel and heavy auto dependence as well as long-distance trucking, all of which will become impossible as liquid fuels become more expensive.

So, we have to conclude that our government not only will not supply the leadership necessary to mediate the transition from energy abundance to energy scarcity, but will be the most important obstacle to the adjustments, large and small, that we will have to make if we hope to manage this epochal shift with our lives and our civilization intact. We will have to build new industries and re-organize our lives completely, from the way we inhabit our land and the way we make a living, travel, and do and make just about everything else, in the face of government obstruction financed by bigger chunks out of our paychecks in the form of higher taxes at every level, in order to support the very things that have created our largest economic problems and the industries that cannot support themselves any longer because they are based on waste and require ever-larger supplies of fossil fuels, and have been possible only by the reckless extension of credit over the past twenty five years, mainly the FIRE economy, the creation of suburban sprawl, and total dependence on automobile and air transport.

We can also figure that our leaders no longer really care if we make it out here or not and that our federal government has become a conduit between the taxpayers, and Goldman Sachs and other members of the Crony Oligarchy, as we are forced to support with our taxes the large financial firms that engineered the collapse of our financial system as well as the wasteful and sadly obsolete Detroit automobile makers, and finance the construction of more highways that will be utterly unnecessary in coming years and whose construction and maintenance is environmentally destructive and a serious drain on our financial resources now; and we are supporting the construction of more unnecessary and unsalable houses in the exurban wastelands that are rapidly losing value and utility even now, under the auspices of the FHA, while financing the next wave of bad loans to under-qualified borrowers.

Yet we are, as a nation, sold on the notion that only government policy makers can solve our economic problems or supply the solutions to our current economic problems or the leadership necessary to transition to a new energy regime. Well, the evidence increasingly indicates that not only can our political leaders and multiple bureaucracies not help us here, but that they are the biggest part of the problem, mainly by their ability to impose broad, sweeping policies that support and reinforce obsolete and wasteful industries and practices, and whose disastrous results cascade and amplify down through decades.

However, we're stuck with the current situation for the time being, which is that any major industrial project has to have the approval of policy makers and clear a path through layers of obstruction, including the airline and auto lobbies as well as layers of bureaucracy and regulatory obstruction put into place 50 years ago with the aim of destroying our passenger railways. If we want to see a privately-financed high-speed network built instead of throwing good money after bad and funding a government-operated system with the waste and incompetence we have come to expect, we can pressure our legislators and senators at the federal and state levels both to remove legal obstructions to private rail development and let this system be built.


tharpa said...

??? Why not regular, 2-track, electric-powered, hi-rel, "medium-speed" rail system?
Entirely proven tech. Much Lower <<< cost. Less enviro probs ( track-layout, min radius of curves etc. )

Roger P said...


The North Coast said...

Hi, tharpa.

A medium speed, by which I am guessing you mean trains traveling at an average speed of 50-80 MPH, would be an improvement on today's snail trains, for a fact.

But the fact is that people want and expect much faster long-distance travel, at speeds of at least 100 MPH, which is extremely doable with electric trains, and is vastly more efficient than air travel.

My personal take is that the super-fast "bullet" trains (150MPH or more) will turn out to be much too costly to build, operate, and maintain, and are not necessary, even to compete with subsidized air travel.

I'm eagerly awaiting more news on the private company involved in this, and am very eager to see their cost and energy use projections for their project.

High speed trains will probably be limited in number and routes given the expense involved and will connect with "fast" trains inside metro areas.