High-Speed Scam in CA

The so-called Business Plan of the Calif High-Speed Rail Auth, a glossy self-promotional brochure, declares that high-speed rail “is a system that can be operated without public subsidy.” In fact the fine print reveals the need for $11b of taxpayer subsidies even if massive projected diversions from air and road are achieved – revenues through 2050 at present value of less than $10b compared to present value capital costs of $15b and operating costs of $6b. So there is a large public subsidy.

The whole case for this project is made in terms of speculative benefits by way of reduced delays and accidents to motorists and air travelers and benefits to the rail users themselves. But if those benefits cannot be captured in fares in a competitive marketplace they are likely to be largely theoretical. If every project that produced theoretical external benefits were subsidized by tax money, the government would take 100% of our income and ‘plan’ everything in the economy.

In Florida Gov Jeb Bush had the right idea – by all means encourage investors to build it, so long as government subsidy isn’t demanded. It took them about 5 seconds to lose interest, for high-speed rail was only going to run on one huge government crutch.