In the Washington Post, Chuck Lane details "China's train wreck":
As minister of railways, Liu [Zhijun] ran China’s $300 billion high-speed rail project. U.S., European and Japanese contractors jostled for a piece of the business while foreign journalists gushed over China’s latest high-tech marvel.Agreed. Though a centerpiece of President Obama's recent stimulus plans, even the WaPo editors label high-speed rail "a lost cause."
Today, Liu Zhijun is ruined, and his high-speed rail project is in trouble. On Feb. 25, he was fired for "severe violations of discipline" -- code for embezzling tens of millions of dollars. Seems his ministry has run up $271 billion in debt -- roughly five times the level that bankrupted General Motors. But ticket sales can’t cover debt service that will total $27.7 billion in 2011 alone. Safety concerns also are cropping up.
Faced with a financial and public relations disaster, China put the brakes on Liu’s program. On April 13, the government cut bullet-train speeds 30 mph to improve safety, energy efficiency and affordability. The Railway Ministry’s tangled finances are being audited. Construction plans, too, are being reviewed.
Liu’s legacy, in short, is a system that could drain China’s economic resources for years. So much for the grand project that Thomas Friedman of the New York Times likened to a "moon shot" and that President Obama held up as a model for the United States.
Rather than demonstrating the advantages of centrally planned long-term investment, as its foreign admirers sometimes suggested, China’s bullet-train experience shows what can go wrong when an unelected elite, influenced by corrupt opportunists, gives orders that all must follow -- without the robust public discussion we would have in the states.
The fact is that China’s train wreck was eminently foreseeable. High-speed rail is a capital-intensive undertaking that requires huge borrowing upfront to finance tracks, locomotives and cars, followed by years in which ticket revenue covers debt service -- if all goes well. "Any . . . shortfall in ridership or yield, can quickly create financial stress," warns a 2010 World Bank staff report.
Such "shortfalls" are all too common. Japan’s bullet trains needed a bailout in 1987. Taiwan’s line opened in 2007 and needed a government rescue in 2009. In France, only the Paris-Lyon high-speed line is in the black.
Most proposed new passenger rail systems would require massive subsidies. Florida turned back Federal funding for fears of the necessary state spending. Wisconsin rejected high-speed rail funding, asking instead for reduced Federal monies to improve existing train service. California's high-speed rail -- mandated by a 2008 state ballot measure -- will bankrupt the state.
As George Will writes:
Generations hence, when the river of time has worn this presidency’s importance to a small, smooth pebble in the stream of history, people will still marvel that its defining trait was a mania for high-speed rail projects. This disorder illuminates the progressive mind.Perhaps that's why the mainstream media -- including (former) economist/columnist Paul Krugman -- ignore the actual numbers (which favor freight, not passenger, trains).
Coyote Blog's Warren Meyer calls high speed rail and mass transit modern "cargo cults" -- "great cities of the world have large mass transit systems so therefore if our city builds a rail system we will become great." Another example of liberals preferring the pretty over the proven.
(via reader Doug J., Krugman-in-Wonderland, reader Warren, Right on the Left Coast, The Antiplanner)