In California’s Legislature just authorized to spend, with Federal assistance, an under-estimated $100 billion to build a route between San Francisco and Los Angeles that will consist of a government monopoly riding on tracks near one of the largest earthquake faults in the world for most of its length, all to deliver passengers slower and at greater overall cost between two fixed points. Airlines give consumers a choice of carriers and airports on either end of that route, will deliver passengers more quickly, and probably with a much wider choice of departure and arrival times.
In China the problem — beyond the idea of spending untold billions on the antiquated technology of static choo-choo trains — is that the three people making all these wonderful decisions now have a high-speed rail system plagued by failure, corruption, out-of-control costs and legitimate safety concerns
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.