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.

High Speed Rail: Do We Really Need 220 MPH Trains?

According to a feasibility analysis that has just been published by the Midwest High Speed Rail Association, trains running as fast as 220 MPH between Chicago and St. Louis are doable. The Association pegs the cost at $11.5 Billion in 2012 dollars, not including new trains or maintenance facilities.

A plan to run service at 110 MPH, which would reduce the trip on the current route to 4 hours, would cost only $2 Billion.

At first blush, this is very good news. I use Amtrak to travel to St. Louis frequently, and right now, rail travel between the two cities often takes six hours and involves several miles of single-track operation on badly-maintained track belonging to freight carriers, and frequent delays from standing on a siding for 20 minutes to let another train pass. Additionally, service is infrequent, even though more trips have been added to meet the greatly increased demand. Right now,though, it's easier to catch a plane to St. Louis than it is public transit to many Chicago suburbs.

The trouble with most plans for rebuilding the U.S. rail system is that proponents just can't leave the words "high speed" out of it. The idea, of course, is to make rail competitive with air travel, and promoters are looking at the example set by Europe and Japan. What many people are not looking at is the cost of the super-high speed service in France and Japan, and the doubts that exist regarding the sustainability of these systems, given expense involved, especially as fossil fuels become scarcer.

Note that the cost of building a true high-speed system that runs at more than 200 MPH is at least five times the cost of a line that runs at 110 MPH. Can we really justify this massive difference in cost when we are confronted with so many critical needs at the same time we are also facing a terminal decline in fossil fuel supplies and the workout of trillions of dollars of bad debt?

A train does not need to run at 200 MPH to be competitive with a plane that flies at 325 MPH, even when travel-time is the only consideration, for flying time includes many hours on the ground: the trip to and from the airport, time spent checking in and going through multiple security checkpoints. These major time-wasters can add four hours to the time spent in-flight.

Grandiose programs involving major technological upgrades and much less fuel efficiency ought to be reconsidered in favor of more practical plans that might actually be feasible within a few years and whose cheaper cost might make the difference between a system that covers all cities and major towns, and runs frequently enough to be a reasonable alternative to air and auto travel, as opposed to one that is very flashy, but too expensive to build and operate to provide extensive, reliable, and frequent service. We arguably don't need a high-tech showcase that is so expensive to build and operate that there is no chance it can ever operate profitably, and will end up being just as intermittent and unreliable as the sad service we have now. If the fuel usage and operating costs approach those of our airlines, which are failing rapidly in spite of receiving $14 Billion a year in government subsidies, then it is clearly unworkable.

The U.S. rail system of the early 20th century was the envy of the world, and private carriers were able to run profitable operations running trains at 100 MPH during the 1920s, while providing a level of luxury and creature comfort that has never been equaled by the airlines. If we could once more have railroads that operated as well and efficiently as those of that era did, we'd be well off, and it matters more to have frequent, reliable service to all cities and major towns, than it does a glittering showcase that serves few people relative to its cost.

The focus on grandiose plans to the detriment of what is practical and proven is typical of development driven by government policy rather than private enterprise that has to respond to market demands in order to survive. Instead of diverting part of the outrageous subsidies for highways and airlines to Amtrak, we would do better to remove regulatory obstructions that now strangle our railroads, and level the playing field between the various modes of transportation so that we can clearly see which is more economical and efficacious, by rolling back the subsidies that are keeping our airlines aloft and maintaining our monopolized passenger rail.