High Speed Rail will be equivalent to throwing government subsidies into a black hole – crushes the US economy Utt, Ph. D. & Herbert and Joyce Morgan Senior Research Fellow in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation, February 11, 2011
Advocates for more spending on passenger rail, including HSR, often point to Europe and Japan as role models and aspirational goals for American policy. This Euro-envy manifests itself in the promotional statements of America’s rail hobbyists and the foreign companies that hope to sell billions of dollars of equipment, consulting, project management, and engineering services.For example, in an April 2009 press conference, President Obama played the envy card, arguing, “Now, all of you know this is not some fanciful, pie-in-the-sky vision of the future. It is now. It is happening right now. It has been happening for decades. The problem is that it’s been happening elsewhere, not here.” Obama went on to extol HSR systems in France, Spain, China, and Japan and concluded, “There’s no reason why we can’t do this. This is America. There’s no reason why the future of travel should lie somewhere else beyond our borders.”If one’s knowledge of European travel preferences comes from Time, The New York Review of Books, and Pink Panther movies, then the President’s statement would seem to ring true. Sadly, the reality is quite different. European and Asian governments have paid staggering sums to subsidize a mode of travel that only a small and shrinking share of their populations uses.In its most recent report on European travel patterns, the European Commission noted that passenger rail’s share of the European market (EU-27) declined from 6.6 percent in 1995 to 6.3 percent in 2008, reaching a low of 5.9 percent in 2004. Market shares for autos and buses also fell over the period, while the airlines’ market share jumped. In effect, Europeans are adopting more American modes of travel, despite massive taxpayer subsidies for rail. They are shifting their travel to unsubsidized, taxpaying airlines, which expanded their market share from 6.5 percent in 1995 to 8.6 percent in 2008. Indeed, by 2008, passenger rail’s share of the transportation market was the lowest of all modes, except travel by sea and motorcycles.Although the total size and scope of European subsidies for passenger rail are not known, a recent report by Amtrak’s Inspector General indicated that they are sizable and likely exceed what the U.S. government pays for highways. One purpose of the review was to address the contention that passenger rail in other countries, especially HSR, operates at a profit (that is, without subsidies).For 1995–2006, the study found that the governments of Germany, France, the United Kingdom, Spain, Denmark, and Austria spent “a combined total of $42 billion annually on their national passenger railroads.” These six countries have a combined population of 269 million, and their expenditure of $42 billion on passenger rail in 2006 is roughly proportional to the $54.8 billion that the government of the United States (population of 309 million) spent on all forms of transportation, including highways, rail, aviation, water transport, and mass transit.Data from individual countries reveal the financial catastrophes that the U.S. could confront if it embraces Euro-style passenger rail programs. According to the left-leaning The Economist, passenger rail subsidies reached $8.9 billion in 2008– 2009, and the magazine wondered:It is not clear why the public should be heavily subsidizing a mode of transport that accounts for a tiny minority of all travel: 8% of the total distance travelled in Britain during 2009, compared with 85% by cars and vans. The relatively few who use railways often are disproportionately well-off: three-fifths of the traffic is concentrated in the wealthy commuting counties of the south-east.Despite...
Please join StudyMode to read the full document