High Speed Bankruptcy – The California Way
2012-05-26 · Guest: Adrian Moore (Reason Foundation) · 50:35
California high-speed rail project critique
Bob Zadek and Adrian Moore critique the California high-speed rail project, comparing its likely economic failure to the history of bankrupt railroads. They examine how political “vision” and a desire for cultural engineering often override fiscal reality and actual transportation demand.
Topics: High-speed rail, California, fiscal policy, Reason Magazine, government spending, transportation Speakers: Bob Zadek, Adrian Moore
The Lionel Model of Bankruptcy [00:00]
Bob Zadek: This is the Bob Zadek Show on NewsTalk 910. Call Bob now, 1-800-345-5639. From the Great Atlantic Ocean to the Pacific, welcome to the Bob Zadek Show, being brought in this Sunday by the “Wabash Cannonball.” That might give you a hint of today’s topic. My regular listeners out there will know quite a bit about me. What you didn’t know was I was in my early years involved with a bankrupt railroad. When I was growing up in Queens, my father bought me—and they became a regular source of holiday gifts—a set of Lionel electric trains. They were set up on our ping-pong table in our semi-finished knotty pine basement. And I had great fun playing with my locomotive, my log loader, my coal loader. I had a little village, and I had many, many, many happy hours playing with my Lionel trains. My connection with Lionel was short-lived. As many of you may know, Lionel ultimately went bankrupt, the fate of most of America’s railroads at one time or another. And railroading and the insolvency and the bad economic model of passenger railroads is today’s topic.
The Train from Nowhere to Nowhere [03:15]
Bob Zadek: What happened to Lionel is likely to happen to a railroad being promoted by the state of California with active encouragement by the Obama administration. The subject of high-speed rail is very much in the news these days, and it is an interesting topic because it brings together so many important issues. It brings together—and we will discuss today—the failed European model for high-speed rail and the European model for economic ventures in general. It brings together at its very, very worst, crony capitalism and the intrusion of government into the private market and the infatuation of governmental leaders, both in Sacramento and in Washington, for big projects. All of that in today’s show. This is the Bob Zadek Show. I’m your host, Bob Zadek. 800-345-5639 is the way to reach us. If you’re listening on the web, it’s www.newstalk910.com. To join me with this juicy topic, I am delighted to welcome my friend Adrian Moore from Reason Magazine. Adrian, welcome to the show.
Adrian Moore: Hey, Bob, thanks. Glad to be on.
Bob Zadek: Thanks very much for joining me. And by the way, before we start, I just want to publicly thank Reason Magazine. I spent last weekend with the good folks at Reason at the 2012 Reason Weekend. It happened to be in Puerto Rico. We were privileged to meet the governor of Puerto Rico who is doing marvelous things to privatize the economy of that state. Reason Weekend is a must-attend event. Coming attractions: next year it will be on the weekend of Super Bowl Sunday in Las Vegas, Nevada. Mark your calendars now. Adrian, on the subject of high-speed rail, which most governors—Governor Scott in Florida and the governor in Minnesota—have turned their back on the Obama administration’s invitation to take federal dollars to build high-speed rail. But Governor Jerry Brown in California has welcomed the $3 billion—with a “B”—investment of seed money towards high-speed rail in California to build a train which has been universally dubbed as the “train to nowhere.” The train they ultimately are planning on building is high-speed rail between San Francisco and San Diego, going through Los Angeles. But since they don’t have any money initially, the train is going to go between Borden, California, and Corcoran, California. Corcoran, of course, is greatly in need of high-speed rail because there’s a prison there. And all of the family members in Borden who want to visit their prison inmate family members in Corcoran now can take high-speed rail, compliments of the Obama administration and Jerry Brown. Adrian, what’s the deal? Why is Washington, why is government so infatuated with high-speed rail, and how off is their thinking?
Adrian Moore: Well, I love your description of it as the “train to nowhere,” though I would say it’s even better than that. It’s the train from nowhere to nowhere. I mean, usually at least these things start somewhere and maybe they go nowhere. But this one starts nowhere and ends nowhere. So it’s not quite in Bakersfield and ends not quite in Fresno, depending on which end you’re looking at it from. It’s these things—I mean, when you just think about the fact that they’re starting the California high-speed rail there. They’re not starting it in Los Angeles and trying to work their way towards San Francisco or starting in San Francisco trying to work their way towards LA. Instead, they pick the most desolate farmland in the middle of nowhere, and that’s where they’re going to start building it, which I think puts a very clear focus on the fact that this is not primarily about providing transportation. Because if it was, they would start where people are actually transporting. It’s about this vision for the future, this vision for economic development. If you look at Jerry Brown’s recent comments where he’s defending the project against the legislature’s own peer review committee that came out and said this thing is a dog that won’t hunt, you know, “We need to cut our losses”—which is just the latest in a long series of reports that have come out from all different sources saying this thing isn’t going to work—he’s saying, “Look, if we want to be the future, we’ve got to seize the future.” You know, it’s all about vision and big, shiny projects.
Vision vs. Fiscal Responsibility [08:45]
Bob Zadek: It is amazing, Adrian. It is amazing because you said the word “vision” twice, and you played right into my soundbite. I’m going to play it right now, Adrian. It’s as if I set you up. I’m going to give you and my audience a real treat. I have a soundbite here. Now, the soundbite is not about high-speed rail per se, but it is directly relevant. The soundbite you’re going to hear—the speaker is Kate Sears. Kate Sears is an uber-liberal Brown appointee to the Marin Board of Supervisors. And at her very first meeting at the Board of Supervisors of Marin County, in defending the expenditure of sales tax money to build yet another train to nowhere in Marin County, which nobody wants or needs, she discusses, Adrian, both vision and economics. And to show you how the liberal doesn’t care about the money, but it’s the vision, Adrian—you set me up perfectly. Tim, the Kate Sears soundbite.
Kate Sears (Recording): I think it’s very important that we don’t let fiscal challenges, even significant fiscal challenges such as we have here, impede the vision. And I was impressed by what one of the speakers—a couple of the speakers—said about, “Look to the future, look to the children.” What kind of cultural shifts that are important are we trying to accomplish with this train? And what is the long-term vision here? And I think it’s always easy—yeah, fiscal responsibility is important. I am not at all overlooking that, but I think it’s also important not to get too restricted by current fiscal challenges that creative minds are trying to solve so that you lose sight of the bigger picture.
Bob Zadek: Adrian, fiscal responsibility is important, but it’s the vision, Adrian. The vision really matters.
Adrian Moore: Well, and you know what? The thing is, did she say anything about making the economy grow or making it possible for more people to get from here to there? Which is normally, when you’re talking about big transportation investments, it’s about people getting from here to there. No, she said we have to think about the cultural shift that we want to accomplish. Not what do people want, but what they, the elite, want people to do in the future. They want us to make a cultural shift. And so they’re going to refuse to build more roads, which is what we want, and they’re going to build these high-speed rail lines, and basically by not providing us with any other transportation options, force us to use this thing we don’t want.
Bob Zadek: The choice is going to be between subsidized high-speed rail and freeways made out of dirt. Because that’s the ultimate, and they’re going to say, “You see, we’re right. Everybody’s taking the train.” Because the choice is to drive on a dirt road to LA for six hours.
Adrian Moore: Yeah. You know, it’s—and especially because she was talking about a light rail line there in Marin, which is in some ways an even better example of this fallacy. I like to just think in terms of an analogy, and since healthcare is such a hot issue, it’s like if 20 years ago we had decided, “You know, we need more people to have health insurance. And so we’re going to start heavily subsidizing companies that provide health insurance to their employees.” Now, those of you who follow health insurance might recognize, well, that’s not unrealistic. But let’s imagine that after 20 years of doing that, the percentage of workers that had health insurance provided by their employers, in spite of all those subsidies, had gone down.
Adrian Moore: I think most would say, “Well, I think that policy doesn’t work.” Obviously, subsidizing health insurance doesn’t get people to buy it in that case. It’s like this with transportation. For the last 20 years, the big metropolitan areas like the San Francisco Bay Area—and I mean the whole Bay Area, not just the city of San Francisco, the whole Bay Area—has spent about 60 percent of all transportation dollars spent in that area on public transit. And during that time, the percentage of people using public transit in the Bay Area has gone down. And which means we’ve got to spend more because we’re not spending enough? Think about it the other way. That means the 60% of the money is going to public transit, so only 40% is going to the road system. And yet the road system is what more people are using. The road system is still almost 90% of all travel in the Bay Area.
Bob Zadek: Adrian, we’ve got to go to break now. My engineer is questioning me. We’ve got to go to break. Sorry about that, Adrian. We’ll be back in 90 seconds. This is Bob Zadek talking to Adrian Moore of the Reason Foundation. The subject is high-speed rail, the boondoggle of the 21st century. 800-345-5639. Back in 90 seconds.
The History and Cost of California High-Speed Rail [15:45]
Bob Zadek: Welcome back to the Bob Zadek Show. I’m your host, Bob Zadek, of course, every Sunday at 9:10, News Talk 910 here in the San Francisco Bay Area. We are the leading Libertarian talk radio show in the Bay Area and around the country—the show of ideas, not attitude. I’m talking with Adrian Moore today. We are talking about high-speed rail, the latest, greatest boondoggle.
Just a history of high-speed rail in California, just to set up the issue for those of you who do not turn first in your newspaper to the high-speed rail articles. A quick history of high-speed rail in California is appropriate. Jerry Brown, when he was last governor, initiated a study of high-speed rail. The study was lukewarm about high-speed rail in California. However, these things have a life of their own. The system never died, and California came to promote and embrace a high-speed rail system between the San Francisco Bay Area, down through the Central Valley, into LA, and all the way down to San Diego. The theory being you could go from San Francisco to LA in under two hours and 40 minutes. Why you would want to go to LA to begin with is a different issue. That’s a topic for a future show.
In any event, a couple of years ago, California voters, by a slight margin, approved a bond issue to start financing for this high-speed rail system. The California voters were told at the time the system would cost a mere—a mere—33 billion with a B. So the voters said, “What the heck, 33 billion, mere bag of shells,” and they supported the bond issue. It turns out that the $33 billion is now scheduled to cost $100 billion and counting. And it appears that in California, the voters are turning against the issue and don’t want to spend the money. So Jerry Brown and his beloved high-speed rail is in trouble.
The problem is nobody has a clue where the remaining 97 billion with a B is going to come from. But that doesn’t deter the state of California. They say, “Sure, let’s spend the three billion, let’s buy up a bunch of land, and let’s build this train from Borden to Corcoran, California, at least as a starting point.” Public opinion indicates the voters are turning against this. Jerry Brown, then through the High-Speed Rail Authority, came out with a study—more about the study in a moment—that said 100 billion is a bargain. Bargain with a B, a bargain.
Why is it a bargain? Because the High-Speed Rail Authority said, “We just did a study, and it would cost us $117 billion to cover the transportation that we expect in 30 years to build more roads and freeways and airports.” So this is actually saving 17 billion dollars. It’s a great deal. That study, by a consulting firm who actually stands to benefit from the building of the high-speed rail, has been ridiculed—more about the study in a moment. And there we are with a flawed, phony study showing 100 billion is a bargain. High-speed rail is about to get started with three billion dollars of seed money. California politicians love it.
And since the issue was in trouble, Obama sends Ray LaHood. Ray LaHood, of course, is nominally a Republican; he’s in the Obama administration as Transportation Secretary. Ray LaHood comes to California, meets privately with Jerry Brown, and then says—and this is a quote which I’d like to read to you in support of high-speed rail—Ray LaHood says, “Over the past week I’ve traveled the Golden State and have found,” listen to this, “a strong base of support for the California high-speed rail project. From workers who will build it, manufacturers that will supply the trains and run it, to businesses that will benefit.”
Duh. All the people who make money on it like it, but he didn’t have a lot of support from the taxpayers. Did you ever hear, Adrian—have you ever heard anything more silly than that? The supporters are those who get the checks. Duh. I know most politicians… I mean, look, Ray LaHood is slightly more intelligent than a rock. I mean, his whole career since he became the Secretary of Transportation has been… the only reason why he isn’t made fun of as the gaffe-master is because Joe Biden is Vice President and he’s the master. So Ray LaHood is just the apprentice, but he’s just gotten beat up for gaffe after gaffe. Any smart politician would have had enough sense not to say, “I’ve been all over the state, I found a lot of support, and here’s my list.” Oh, yeah, that’s all the people we’re going to give taxpayer money to for building this thing. Hmm, who’d have thought they might support it? You know, obviously he didn’t spend any time talking to, you know, to regular folks who are going to have to foot the bill.
Adrian Moore: Of course not. And it’s ironic too, because, you know, he’s representing Obama who has promised to put up three percent of the funding, which is really rich when back in 2007 when the plan for the high-speed rail project said it was going to cost, like you said, a mere give or take 40 billion. The plan called for 20 billion of that to come from the federal government. Now that the cost has ballooned to 100 billion, presumably the federal government’s going to… I mean, the plan is only the state’s going to provide 10 billion from that bond measure that we knucklehead Californians approved. They think that local governments are going to cough up six billion, because we all know that, you know, local governments are just flushed with cash these days, and the private sector is going to come in with about 15 to 20 billion. Well, my math says that gets us to somewhere around 30 billion, so the feds are going to have to come up with 70 billion. So far, they’ve been willing to give us three billion.
Bob Zadek: And Brown doesn’t care because he’s going to be in assisted living somewhere by the time the bill comes through.
Adrian Moore: Exactly. He doesn’t care.
Bob Zadek: Exactly. Adrian, we have a caller from San Jose who I’d like to hear from. Dee from San Jose, welcome to the show.
Dee: Hey, Joe, how are you? Great show as always. Thank you.
Bob Zadek: Oh, my name is Bob. That’s okay.
Dee: Pardon me?
Bob Zadek: Bob, but go ahead.
Dee: Oh, Bob, I’m so sorry. I’m so sorry. I was thinking of something else. I’m so sorry. Yes, I was calling because I really love the topic, and whenever these kind of conversations come up, I actually get really upset because nobody ever brings up what the overall plan is on why all of these ridiculous things get put into place in the first place. And that’s the whole UN Agenda 21, the whole sustainable development, the smart growth, the smart train, all the buzzwords. And basically, it started here in Santa Cruz, oh, 20 years ago or so, and everybody fell for it and they started social engineering where people are going to live, building all these high-rise apartments, rezoning multiple-use everything, putting retail on the bottom, living up above, and it’s all supposed to be where the train stations are. And that’s why they’re putting in all the bike lanes and the bike roads and trying to get people to stop driving, and it’s the whole Agenda 21. And this is a fabulous video, it’s called “The Con of Sustainable Development,” and what happened was in Santa Cruz when they realized that it was all about attacking private property rights, rezoning things, limiting what people could do…
Adrian Moore: It incorporates the whole, the whole park thing—turning like the Golden Gate Park national park issue that Nancy Pelosi’s been involved in. Turning it to a national park so that human—so that people activity within that park can be restricted. The whole dog law thing that blew up up there in the city. And it’s this whole entire social re-engineering, and California is ahead of everybody at it. So now we’re going to be able to do that. I was going to say it’s, it’s ironic that you call from San Jose, and that’s—you’re making a great point because not only is California a leader, but San Jose is the leader nationwide.
Between 1980 and 2000—because we tend to measure most of our really big data every 10 years—between 1980 and 2000, San Jose increased its density, which is the primary measure we use of all that smart growth stuff. The whole, the whole—all of what smart growth policies are designed to do is get more people to live in smaller space. And they’ll argue: make the—make it more livable, make the transportation work better, you know, mix, mix the uses. We’re all gonna be living in higher—we’re all gonna be living in morgue drawers by the time we’re over. But, but San Jose increased its density in those two decades more than any other place in the United States of America. So they succeeded at smart growth policies more by that measure more than any other place in America. And during that time, the percentage of people who use public transit fell, and the percentage of people who drive their car went up. So it is an utter failure.
This—this idea… You know, Bob, you mentioned at the opening of the segment that study that the state put out that the high-speed rail is a good bargain because we—if we’d have to spend even more money to build the road system that we would need to accommodate all the growth. What they’re ignoring is we could spend $100 billion on a train system that will carry five percent of all the travel, roughly. Or we could spend $120 billion on a road system that’ll carry ninety percent of all the travel.
Bob Zadek: And that’s what people want.
Adrian Moore: And that’s what people want, God forbid.
Bob Zadek: You can spend a little more on 90% of the people, or you can spend almost as much on 20%. And by the way, D, I’m gonna make a promise to you. You mentioned Agenda 21, which is a wonderful but independent topic—UN Agenda 21. And I’m gonna cover that on a future show. So please stay tuned. Agenda 21 is a major, uh, one-world issue, which I promised to cover, D. Thanks so much for your call.
Caller: Thank you so much, Bobby. Have a good day.
Bob Zadek: Thanks for being a listener. You know, Adrian—and we’re gonna go to break in a second—but the issue of, of high-speed rail is yet another example of where private business will detect a need and then fill it. Government, by its expenditures, creates—fills the need that doesn’t even exist and that nobody wants. It’s the imposition of a need.
Adrian Moore: About sixty-five percent of people said the latter: that it should be the private sector building it when they see a market. And that’s nationwide. That’s what people think. So they may like the idea of high-speed rail, but they don’t like the idea of the government taking all of our money and cramming it down our throats, which is the California approach.
High-Speed Rail and Ridership Realities [26:15]
Bob Zadek: This is Bob Zadek. I’m talking with Adrian Moore of the Reason—Reason Magazine. We are talking about high-speed rail, Jerry Brown, and President Obama’s fantasy. Is it as bad a deal as it seems? 800-345-5639. There’s the way to reach myself or Adrian.
Hi everybody. Welcome back to the Bob Zadek Show. I’m your host, Bob Zadek. Today’s topic is high-speed rail: the railroad to doom. I’m joined by Adrian Moore of Reason Magazine.
California has embraced high-speed rail. It is the only state in the country to really embrace high-speed rail. Of course, high-speed rail, uh, has been moderately successful in the Northeast. The Acela line that runs in the Northeast Corridor between Boston through New York City and Philadelphia and Baltimore down to Washington, D.C.—it is often looked at as being the success of high-speed rail. But the difference between the Acela line that runs in the Northeast and other high-speed rail ventures is very, very important.
The statistics show that most of the riders of high-speed rail are those people who used to ride slow-speed rail. So it’s rail riders who say, “Well, if I can still ride a train and get there faster, I’m all for it.” But the statistics, therefore, in the Northeast Corridor—when people were generally taking trains from Boston to New York to Philadelphia to Washington, D.C., they were taking slow trains, so now they take fast trains. Duh, of course they’re gonna do that. But where people are given the alternative between high-speed rail and cars, high-speed rail does not get people out of their cars.
Therefore, there—the ridership projections… more about that in a moment. The ridership projections are absurd because it doesn’t alter behavior. Most people who look at the prospect of taking high-speed rail realize they have to somehow get to the train station, usually by car. When they take the train and they get off the train, they have to rent the car to get to their destination. And the whole thing just seems like just too much trouble. So the behavior patterns are that high-speed rail does not get people out of cars.
Also, the other strange thing that I’d like—I’d like you to speak to is the fuel that motivates high-speed rail is usually diesel, or if it’s electricity, it’s electricity generated by fossil-fuel electrical generating plants. So what is the advantage of high-speed rail? Uh, the—I, I think the pollution per passenger mile is about the same or higher than that of automobiles. Adrian?
Adrian Moore: Yeah, it’s, um… You can get, uh, uh… If your—if your trains run very full—and this is true of light rail systems as well—if you’re carrying a lot of passengers all the time, then the per passenger emissions can be less than it is in automobiles. Um, but as anybody in the Bay Area knows, you know, there are times when the trains run full, and then there’s lots of times when they run nearly empty. And so on average, you don’t do much better than cars. Uh, in some places like San Francisco, the BART system maybe does a little better than cars because it’s a fairly highly utilized system. With the high-speed rail lines, uh, certainly the Acela you were talking about in the Northeast Corridor, uh, doesn’t do much better than cars. And cars are getting cleaner. Every, every model year of cars is cleaner than the previous. And this is not nearly as true of, of trains. Diesel trains have been getting slightly cleaner, but not nearly as fast as cars are. So, you know, the trend is—the trend is beating, uh, in terms of air pollution, the trend is beating trains, clearly.
The Dishonesty of the High-Speed Rail Authority [32:40]
Bob Zadek: Now, just to show you the level, uh, of dishonesty, which really borders on panic, by the California High-Speed Rail Authority. Uh, what happened was the State Auditor of California, which is an independent arm of state government—nobody accuses the State Auditor of California of being—of having any political agenda—they just trashed, they trashed all of the projections of the California High-Speed Rail Authority. They said, as Adrian pointed out earlier, they have not indicated where they’re gonna get most of their money from. They haven’t done a good job on projecting ridership. They just said the whole thing is phony.
So the High-Speed Rail Authority—and this is fascinating—they hire, uh, Parsons Brinckerhoff, which is a consulting firm which was instrumental in getting the first bond issue passed, and which will make buckets of money once high-speed rail starts. They get Parsons to do a study, and they issued a report which said it’s a bargain. I mentioned that earlier: we’re gonna spend otherwise $171 billion. All of that was phony. But this will indicate the level of political dishonesty.
The report, which was embraced by Jerry Brown and embraced by the High-Speed Rail Authority, said it’ll basically—it’ll, it’ll be supported and it’ll cover itself because of the—based on the following assumptions. First of all, Parsons Brinckerhoff assumes—made an assumption—that the trains will have a thousand passengers each. However, the trains are being built to hold 500 passengers. So I guess they imagine there’s gonna be 500 people in every train standing for two and a half hours. Then they assume trains will run—and I’m not making this up—every three minutes between San Francisco and LA, every three minutes for 19 hours a day.
The Failure of the High-Speed Rail Authority [32:01]
Bob Zadek: And then on top of that, they conclude that if we don’t build this train, we’re gonna have to double the size of the freeways from three lanes in each direction to six. So the whole report was ridiculed, even by the folks—by columnists on the political left. And they said this is an embarrassment. I mentioned the report to show you the level of political dishonesty and how these leaders cannot let go of this boondoggle, which is great for unions and great for train builders and great for operators and great for political appointees, but it’s horrible for everybody who’s gonna have to pay for it. Adrian?
Adrian Moore: Absolutely. I mean, we passed that bond measure at a time when the High-Speed Rail Authority did not have a plan. And most of the opponents, like me, of that bond measure said, “Look, guys, why are we approving giving them $10 billion when they haven’t even put together their plan?” Well, we approved it, and then they spent years more producing a plan. When they finally produced their plan, everyone from UC Berkeley on the left, all the way across the spectrum, and including the Legislative Analyst’s Office and the State Auditor’s Office, piled on to say, “Boy, this just is not adding up. This just doesn’t make sense.”
And they’re so desperate to keep their jobs and they’re so desperate to defend the vision that they’ll do anything. And the fact that they keep getting called out on their lies, they just poo-poo it. If you look at the press releases from the High-Speed Rail Authority, they’re just amazing. Every time one of these reports comes out, they just say, “Oh, we don’t have to pay any attention to that because we have our own research that says everything’s gonna be great.” It’s just their lack of accountability, their lack of willingness. And the legislature so far has not been willing to drop the hammer on them. And they’re really the only ones that can. They’re the only ones that can hold this group accountable to the taxpayers.
And so they passed a law that created an independent review board to look at this and recommend to the legislature what should happen. And in January, that independent review board put out its report and they said these guys have no concept of how to get money. They have no plan for how they’re going to solve the problems they have. They haven’t even begun to wrestle with the problem of all the land they’re gonna have to use eminent domain on up and down the state, all the opposition they’re getting as local government after local government votes to oppose the high-speed rail passing through their jurisdiction. Everything’s falling apart. They’re not showing the capability to plan a project on this scale. Therefore, the state should not spend any more money on this until these guys get their ducks in a row. And that’s the legislature’s own creation that said this. So I’m waiting for the legislature to say, “Oh, okay, well, we created this to give us some advice. Let’s act on it.”
Vision vs. Logic [35:45]
Bob Zadek: And the irony gets up there so far. And the irony is that Jerry Brown 30 years ago, he started this whole conversation when he was last governor by commissioning a study. Well, there are so many studies, objective studies, that say this is a bad idea, and how easy it is for politicians to dismiss studies in favor of the vision. Thank you, Kate Sears. The vision. So the studies only matter when they support your proposition. And I say to myself so often that here you have Jerry Brown saying, “We better spend this hundred billion in a hurry before we spend 117 billion on roads when half of the world moves to California and we have to transport them because everybody in San Francisco is gonna want to go to LA for two and a half hours and then come back.”
Adrian Moore: Yeah, it’s just even—yeah, their measure of how many people are gonna want to travel between the two cities. You know, I live in this fantasy of saying why can’t the government just say we’re not gonna do it? We just—we’ll pass on it.
Bob Zadek: No, no. Because that’s a vision.
Adrian Moore: Bob, you’re accusing—we know that they’re focused on the vision, and yet we’re shocked though that they don’t act logically. Vision isn’t about logic. Vision isn’t about facts. Vision isn’t about acknowledging substantive studies. I mean, I find it deeply ironic that when we were voting on that $10 billion ballot measure here in California, we put out a very lengthy study that looked at all the details of the project and pointed out problems with ridership, problems with financing, problems with the environmental impacts, all these things.
And one of the things we predicted was that really the cost would be about $90 to $95 billion. And of course the High-Speed Rail Authority said, “Oh, everything in this report is wrong.” They poo-pooed all of it. The fact that we turned out to actually slightly underestimate the real cost, and the fact that they wound up having to dramatically reduce their ridership projections—nowhere, still nowhere near reality. But no sense that, “Well, look, guys, we predicted this. You know, these independent studies can get some of this stuff right. You might pay attention.” No willingness there at all. They’re stuck in the vision and they’re not gonna let it go no matter what.
Bob Zadek: Jerry Brown in his State of the State message analogized favorably this project to the pharaohs building the pyramids, all built by my ancestors who were slaves. Thank you very much. He analogized it to the opening of the West by the railroads, one of the biggest boondoggles and mistakes the country ever made. We gave so much money to the railroads. And he analogized it to, of all things, the Boston Big Dig—a project that cost seven times what it was projected to cost. So I think I buy his analogies exactly, and that proves my point. This is Bob Zadek talking to Adrian Moore happily on the subject of high-speed rail in California.
The Myth of the Self-Sustaining Rail [39:15]
Bob Zadek: Welcome back to the Bob Zadek Show. I’m your host, Bob Zadek. Every Sunday at noon on News Talk 910. We are the leading libertarian talk radio show in the Bay Area and around the country. Today’s topic is high-speed rail. I’m joined by Adrian Moore of Reason magazine. Thank you so much for staying with me for the whole hour, Adrian.
Adrian Moore: No problem.
Bob Zadek: The liberals in our country always look longingly at the European and to some degree the Asian model. And Europe and Asia have been the site of many high-speed rail projects, both in the planning stage and operationally. And what’s interesting is there are only two lines, two high-speed rail lines in the world, which are not subsidized. One is, I think, in Osaka, and the other one goes between, if I’m not mistaken, Paris and Lyon in France. So almost all high-speed rail systems end up receiving subsidy, which means I will pay for something I don’t want.
Now, what’s wrong with—if it’s a good idea, private business will acquire the right of way and will build it because it models out economically to make a profit without subsidy. But instead, we don’t learn from the European model, and we are willing to go deeply, deeply, deeply into debt for a project that cannot prove out economically. Why are we always left holding the bag? And by the time we discover it, all the politicians will be in assisted living, and they won’t be around anymore.
Adrian Moore: You know, and that’s exactly it. It’s the current benefits and future costs—it’s the sweetest deal around for politicians. That’s what they live for. You know, the subsidy thing is interesting. It can be somewhat complex. Even those two lines—every high-speed rail line so far built in the world has not had to charge its riders the full cost. So the Osaka and Paris-Lyon lines make enough money off of riders to pay for operating the train, but they do not pay for the cost of building the train in the first place. That was paid for by the taxpayers in those countries.
So other train lines in Japan and China and Europe aren’t even able to make enough money from riders to pay their operating costs. So they’re subsidized on an ongoing basis. So the interesting thing is that the California state government, who we all know are masters of financial management—one of the tightest run ships in the world, right? I hope everybody out there listening gets my sarcasm there.
Unions and Project Labor Agreements [42:53]
Adrian Moore: They are saying they are going to build the first-ever high-speed rail line in the world that’s going to pay—the riders are going to pay enough to pay for all the costs of building it and all the cost of running it—because it’s going to be the most efficient high-speed rail line ever built, the most cost-effective, because California knows how to do that kind of thing better than anybody else in the world. And what—and how they say—I’ve got my skeptical glasses off—and how they’re going to control the unions is another issue.
Bob Zadek: And while we’re on the subject of unions, uh, Matt in Concord, do you have a union issue, if I’m not mistaken?
Matt: Yes, uh, Bob. Like the Big Dig, unions basically commandeer all of that money through a vehicle called the Project Labor Agreement. And basically what that is, is a—is the, uh, authority basically says all—all this taxpayer-funded money has to go through the unions to bid the work. And it’s—it’s basically—these PLAs are kind of taking over California, uh, on—on the local level also, through school districts and so forth. But that’s why the unions are pushing, uh, for this rail project, because basically all the money is going to be mandated to go to union-only, uh, companies. Which means way above, uh, the prevailing, w—non-union wage level, which means all the people who are not in unions, but who just want a job and are willing to learn a trade but they’re not in the union, will not be able to bid down the labor cost, even though there are a lot of people who will work for very little money because of the monopoly of the unions.
Bob Zadek: Well, let me just clarify that because that—that’s actually a very good point. Prevailing wage technically levels the playing field when there’s taxpayer money funding something; you—you don’t want, uh, the wages to be undercut. So what—what the prevailing wage does is level the playing field, but in reality, 85% of all workers are non-union, and—and a majority of those workers choose not to be union. And so the prevailing wage, uh, is—is a good vehicle that was developed in—in the thirties through the Davis-Bacon Act, which, uh, which levels the play—levels the playing field. What happens is a majority of the contractors can’t bid the work because they—they have no union affiliation.
Matt: That’s correct.
Bob Zadek: And—and for my listeners, I’ve—I’ve discussed Davis-Bacon before. Davis-Bacon was an anti-black statute passed in about 1930. Bacon was a congressman from Long Island in—in the New York City metropolitan area who was offended by the fact that, uh, Southern blacks were migrating to Long Island and they were willing to work for very low wages, below the union wages. So, in order to prevent the blacks from getting these jobs, uh, Representative Bacon enacted a statute that said on any government contracts, if the contract is let, the person bidding the contract must pay workers the prevailing—which means the union—wage, which prevented blacks who were not in the unions from working for cheap and getting the job.
So, like the minimum wage law, which also was an anti-black labor statute, the Davis-Bacon was insidious and was designed to prevent somebody who just wants the job real bad and is willing to work for less—prevented that person who was willing to work for less from getting the job. It just prevented the marketplace from affecting labor la—uh, wages. Matt, thank you so much for the point. It’s a great point.
Matt: One other thing, yeah. So the unions are now using, instead of Davis-Bacon, the union—they’re using the, uh, Project Labor Agreements, and it’s worth another show. But, uh, good topic, gentlemen. Uh, good luck on your—on our battle today.
Bob Zadek: Matt, thanks so much for the call. Thanks for being a listener.
Matt: Thank you.
Bob Zadek: Adrian, of course, the unions are the 800-pound gorilla in all of this.
Adrian Moore: And, uh, right. They—I mean, they’ve obviously been big supporters. I mean, the primary supporters of this, if you go back to say when we voted on this, and you know, who really advocated for this project? There was a lot of politicians who have this vision for all of us getting out of our cars, living downtown, and traveling between cities on this high-speed rail line. So there’s the vision.
Then there’s, uh, a block of people who stand to benefit directly from the money that’s spent on the project. So, uh, that’s the Parsons Brinckerhoff and all the various consultants, contractors, train builders, uh, uh, you know, electronics equipment—everybody who’s going to get to get contracts to do this job. Unions being a big part of that. And then the third group are sort of a lot of economic development folks. So people who wouldn’t benefit directly, but local governments, county governments, development authorities and so forth, who say, “Ooh, if they build a train through our county, that’s going to create jobs in our county.” And so it’s going to be good for economic development.
The fact that they’re taxing everybody to pay for it sort of escapes them. Those are—those are the big supporting groups for this thing. And so unions are firmly embedded, just like the—the contractors are in—they want this money spent so they can get a piece of the action.
Bob Zadek: And we have one minute left, Adrian. Uh, I just want to remind, uh, the California list—my California listeners out there that the legislature will be voting in this session on whether to actually spend—start spending—the money that was allocated from the bond to start to work on this rail line. This will be the test of the level of insanity that predominates in Sacramento. Watch for this vote; it will tell you how to vote this fall.
This is Bob Zadek. I want special thanks to Adrian Moore and Reason magazine for joining me on today’s show. The topic has been high-speed rail, the big California boondoggle, our own Big Dig. Thanks so much for listening. I’ll be back next Sunday, uh, for the new show. Thanks so much, Adrian.
Adrian Moore: Thank you.