Even as California governor Gavin Newsome blames the state’s high-speed rail debacle on the consultants, President Trump and congressional Democrats have tenatively agreed to spend $2 trillion on infrastructure. Some have drawn the wrong lesson from California’s problems, suggesting that government should do everything itself, that privatization is wasteful, and government control is efficient.
In fact, it’s not the consultants, stupid! Nor is it the private sector in general, which has incentives to be efficient so long as it has to rely on market forces rather than a big-government sugar daddy. As the Cato Institute’s David Boaz points out, the real problem is the iron triangle of bureaucrats, elected officials, and private interests (including consultants, contractors, and unions) who benefit from big-government programs. All of them work together to get the programs approved and then have plausible deniability when things inevitably go wrong.
No one should have been surprised that the California project cost far more than originally projected. Wendell Cox and Joseph Vranich predicted it months before voters went to the polls in 2008 (and even their high estimate of $61 billion — $71 billion in today’s dollars — turned out to be low). As the Antiplanner has shown, almost every passenger rail project built by government in the last half century has had a large cost overrun. Continue reading
