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.
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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.
The Antiplanner wrote (with emphasis added):
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.
Correct.
Building the wrong transportation infrastructure is not “economic development” (except maybe for the consultants, contractors and manufacturers of train sets).
Case in point – the Chesapeake and Ohio Canal, which was to run from the Georgetown area of the District of Columbia west along the north shore of the Potomac River to Cumberland, Md. then across the Allegheny Mountains to someplace navigable along the Ohio River.
Ground for the C&O was broken in Washington, D.C. on July 4, 1828 (the very same day as the groundbreaking for another large transportation project with similar aspirations, the Baltimore and Ohio Railroad) was held in Baltimore.
In the case of westward transportation from the Chesapeake Bay watershed to the Ohio River valley, the railroad was the right technology, as it was a mode of transport much faster than the canal (and faster to build, as the railroad was complete to Cumberland and beyond before the canal got there). The canal was the wrong technology, and never made it beyond Cumberland, and was shut-down in the 1920’s after severe flood damage.
The entire B&O Railroad in Maryland operates to this day as part of CSX Transportation.
So what about the Panama Canal?
HSR makes sense in California, but not in Alaska.
CPZ, you’re full of crap!
It’s sad but what are you gonna do. How do you teach financial saving to a bunch of “Clueless” spendocrats. I could spit farther than the amount of tracks they could afford to build.
Sometimes I think about moving to California to get away from regional cooling, but then I see articles like these that change my mind.
Stockton has already filed bankruptcy. Which city will be next?
And now the gov is steering the ship right into this
titanic icebergboondoggle. I can’t even fathom what $100,000,000,000 looks like. All for what? A high-peed train that can’t even come close to competing with a 54-minute flight time that requires far less greenhouse-gas generating infra.Stockton has already filed bankruptcy. Which city will be next?
Mammoth Lakes
And now San Bernardino.
Cali is digging itself deeper and deeper.
Most people know Japan’s economy lost a decade (actually two), but few people really know why. … Since then, Japan’s economy has been sluggish
Japan’s economy actually grew by 25% between 1989 and 2000, despite stagnation from 1992 to 1994 and the Asian Economic Crisis Recession from 1997 to 2000, and another 14% from 2000 to 2008, or around 42% total in two decades. By comparison, the US grew 66% during the same 20 years.
Most of the difference is readily accounted for in the effects of US population growth vs. Japanese population non-growth.
Its amazing that financial hardship for banks and the stock market in Japan since 1989 is misinterpreted as economic malaise for the country, but there you have it. No different than confusing a financier like Mitt Romney for a businessman running a company that makes a product for sale.
Its amazing that financial hardship for banks and the stock market in Japan since 1989 is misinterpreted as economic malaise for the country, but there you have it.
Because in the long run, the economy and the stock market are closely related. A stock market cannot increase over the long term if the economy does not grow.
The stock market and GDP are linked in the long run. What this really says is that the Japanese stock market in 1989 was vastly overpriced, just like the US market was in 1929 and 2000. How long until NASDAQ 5000 again? Undoubtedly decades.
Most of the difference is readily accounted for in the effects of US population growth vs. Japanese population non-growth.
You say this as though population growth were somehow exogenous. It is no accident that the US, which has relatively open borders (by global standards, anyway) has also achieved exceptionally high levels of prosperity.
MJ:
Japan, which is Xenophobic and has relatively closed borders, also has exceptionally high levels of prosperity, and its GDP growth per capita, which is what really counts, is still faster than the US.
Every college in the US swears that organizations and nations can only succeed with diversity of races, gender, and sexual orientation. How can Japan or any organization succeed if they are not maximally diverse? Are you saying the college dogma might be wrong?
Spain tried to force transportation infrastructure with a new airport. One billion euros later, they are just letting it rust.
http://www.dailymail.co.uk/news/article-2170886/Spains-ghost-airport-The-1BILLION-transport-hub-closed-just-years-thats-falling-rack-ruin.html?ito=feeds-newsxml
Reminds me of the vacant buildings sitting half finished along I4 in Orlando. Lots of development like that in Miami and Las Vegas too from what I’ve seen over the past 3 years during travel.