Last week, the California legislature voted to destroy the state’s economy for another decade. The 21 senators who voted for the measure told the public they were approving a high-speed train from Los Angeles to San Francisco, but everyone knows they barely have enough money to build from Fresno to Bakersfield.
In voting to borrow $4.5 billion as a down payment on a rail line that is certain to cost at least $68 billion, and more likely over $100 billion, the legislature is risking the state’s entire economic future. The state already has a $16 billion deficit in its budget (which it closed only with one-time tricks and the promise of increased taxes), and the rail line will immediately increase that by more than a quarter of a billion per year, and in the long run (if it continues building) by much more.
This is not about jobs. More jobs are going to be killed by running up tax rates (or further cutting services) to pay for the deficits. This is not about transportation. Though advocates promise fast downtown-to-downtown travel times, only 2.5 percent of Los Angeles-area jobs are located in downtown LA, so few residents will ever have reason to ride the train. This is nothing more than pork barrel.
Most people know Japan’s economy lost a decade (actually two), but few people really know why. The government-owned but supposedly profitable Japanese National Railways borrowed hundreds of billions of dollars against its extensive land holdings in order to build and operate high-speed trains demanded by politicians. In 1987, the government privatized the rail lines (selling them well below cost) and planned to sell the company’s land to make up the difference. But the planned land sales helped to prick the nation’s property bubble, and taxpayers instead absorbed much of the debt.
Since then, Japan’s economy has been sluggish despite (or, more accurately, partly because of) the fact that the government continues to build little-used high-speed rail lines. California’s history is a little different, but the lesson is clear: building obsolete transportation systems will do nothing to help the economy. For California’s sake, we can only hope they stop building when they run out of the money they have in hand today.