Rethinking the Profitability of High Speed Rail - an Argument in Favor of High Speed Rail in California

Much controversy has surrounded high speed rail in general, and the plans to build a high speed rail line in California between San Francisco and Los Angeles. Largely the controversy has been economic in nature. For example, critics of high speed rail in California have argued that high speed rail will never be profitable, and indeed that it will cost state tax dollars to maintain and operate the high speed rail line once it is completed (around the year 2020). To for supporters of high speed rail to respond effectively to this critique, they must be successful in showing that the critics of high speed rail have a narrow view of profitability and of the state's relation to transportation infrastructure.

Perhaps surprisingly, my on viewpoint on this subject begins with the starting point that I agree that high speed rail will never be profitable in the traditional sense. By this I mean that I find it unlikely that high speed rail will ever be self-sustaining in the sense of revenue from ticket sales exceeding the costs of operating and maintaining the high speed rail line.

My argument in support of high speed rail rests on two assumptions. First, high speed rail (and transportation infrastructure) will have an overall economic benefit to the state beyond profit in the strict sense. Second, high speed rail is analogous to other publicly-funded transportation infrastructures regarding the state's obligation to provide funding.

Let's begin with the first assumption, which is that high speed rail provides an overall economic benefit to the state, regardless of its level of profitability. A high speed rail line allows citizens (i.e. workers) to travel from home to work, or from workplace to workplace, with great speed and efficiency. Given the large quantity of travelers between, say, San Francisco and Los Angeles, it is clear that an efficient means of travel would help to bolster the sectors of the economy that are dependent on travel between these two areas. In addition, high speed rail would help to reduce the number of cars on the freeways, and airplanes in the skies, which would greatly serve the interests of the environmental movement in California. New transportation technology, and new infrastructure, means new jobs, which would also help to put Californians back to work, just as the development of the national highway system accomplished back in the 50s and 60s.

The second of my assumptions is that the state has the same level of obligation to support and fund a high speed rail network as it does the state (or Federal) highway system. To put it bluntly, freeways and highways are not profitable. Other than toll roads and bridges, freeways and highways generate no revenue, and certainly no profit. Tax dollars are used to support the highway infrastructure because ease of transportation is seen as an inherent good in a civilized society. In other words, the benefits of easy travel are seen by the state as outweighing the costs of taxing its citizens and maintaining the infrastructure. I argue that the very same reasoning applies to high speed rail, especially in California, a state in which the highway system is congested and inefficient and in which high speed rail could make a genuine difference to the quality of life of many state residents.

Against those who argue that a high speed rail line should be dependent on profitability, I argue that profitability is the correct criterion to apply to transportation infrastructure in a broader sense that takes into account the inherent good of easy transportation and its associated benefits to the economy and to quality of life.

For what it is worth, I am a fiscal conservative who is not fond of being taxed in general. However, I do not mind paying taxes to maintain a freeway or highway system, so long as the system works and the funds are used in an efficient manner. Likewise, I do not mind being taxed for the purpose of obtaining a reliable high speed rail network, whether at the state level in California or at the national level through Amtrak or other potential high speed rail carriers.

For some, rail travel is seen as antiquated and inefficient. However, as riders of the existing rail lines in California (for example, the Amtrak Capital Corridor or the Amtrak San Joaquin) will tell you, rail travel can be efficient, reliable, and vastly more pleasant than travel by automobile. Our increasingly consumer economy is already largely dependent on innovation in rail travel, to which the success of Union Pacific and Burlington Northern Santa Fe will attest. However, passenger rail service has not kept pace with the times due only to a lack of adequate funding and a lack of vision of the benefits that a modern high speed rail network would bring to the states and to the country as a whole. The success of high speed rail in other countries demonstrates sufficiently that high speed rail is neither antiquated nor a drain on the economy.