Private Rail is a Promising Alternative to California’s High-Speed Train Wreck

Two years ago, the Trump administration rated infrastructure improvement as one of its key goals. While not much has happened since then, the president did raise the issue again in his State of the Union address.

This prompted Department of Transportation Secretary Elaine Chao to write, “to keep pace with the needs of a growing economy, the Trump administration is committed to improvements that address all facets of infrastructure.” Chao added, “It’s not just about funding (but) government red tape delays, and sometimes denies, needed infrastructure improvements.”

To say it another way, modern infrastructure and improvements are needed but government policy, administered by elected officials or unelected bureaucrats, is often an impediment.

Need proof? California Gov. Gavin Newsom recently announced that California’s high-speed train plans are being scaled back because the plan “would cost too much and … take too long.” The projected cost has definitely been high-speed, doubling in ten years to nearly $80 billion, with taxpayers likely to be on the hook for most of the bill.

What was the impediment in California? Cost overruns, poor decisions, political controversy and a lack of innovation. In other words, poor government management. While high-speed trains are packed with technology and are an embodiment of transportation innovation, the thinking behind transportation policy stopped being innovative in some places long ago.

No longer should it be enough to just argue that state and federal officials need to be more vigilant and cautious when spending taxpayer money on these projects. That intellectual trap only leads to one conclusion — if federal or state government cannot pay and control the transportation, then it cannot happen. But what if infrastructure thinking got as innovative as the technology in a high-speed rail system?

In Texas, the Texas Central Rail project is taking a different route. It is a private sector, rather than government, project. Backed by private capital, the system will be operated as a private sector venture. Whether the market deems it successful or a failure, the risk will be borne by investors.

Imagine the benefits of large capital infrastructure projects being paid for with venture capital rather than from the pockets of taxpayers. The immediate advantage would be that taxpayers will not be liable for massive investment, decades of ongoing operational expenses, or the costs of failure. Longer term, convenience, price and service of the systems will have to stay competitive, governed by the market instead of politics. But some are not convinced.

This isn’t the only private-sector high-speed rail project on the books. There’s a long-planned private sector high-speed rail train project between Las Vegas and Southern California, which has secured most of the project approvals and recently announced a partnershipwith famed billionaire Richard Branson. That project aims to be completed by 2022 for a cost of just $3.6 billion.

Some critics argue that these projects will not succeed because people will continue to drive or take a flight. That guess is interesting, but just serves to highlight that high-speed rail will add to what free market advocates call competition, a good thing as it delivers options and lower costs to consumers.

While government-subsidized rail does offend free market principles, innovations to enhance the marketplace with private actors competing for business should not. The alternative is to allow only the government to plan, build and operate infrastructure or allow the nation’s infrastructure to crumble.

Private investors can maintain and operate rail service so long as they can pursue their dream of innovating in the transportation marketplace. The innovative experiment in Texas could show a new way to build desired and needed infrastructure across the country.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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