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July 10, 2013

Transforming Transportation (and the Economy)
High Speed Rail, Infrastructure and Job Creation


Source:  Counterpunch

In our present world of religiously held economic beliefs, agnosticism might be
prudent.  On the one side, advocates just want to cut taxes and reduce spending; on
the other we have seen a stimulus package of dole-outs and “shovel-ready” projects
that has done little to move the unemployment rate.  It remains stubbornly high.

In the meantime, the Fed has been busy pumping money at a rate that has the dollar
hitting new lows in the currency markets and gold reaching new highs until very
recently — the latter aided by near-zero T-Bill rates thereby negating the opportunity
cost of owning it.

It all works to some extent — we are not in a tail-spin — but like Japan for a quarter-
century, we can also imagine decades of life in the doldrums. The Keynesian answer
to lack of aggregate demand has always been a stimulus package of monetary and
fiscal measures.  On the monetary front, the near-zero interest rates are about as far
as the Fed can go.  And since the $787 billion stimulus package wound down (late
2010), the economy has not yet picked up fast enough (quarterly growth rate last
quarter now revised down to 1.8 percent) for necessary job growth although the Fed
is unconvincingly hopeful.

Keynes, however, was particularly keen on investment in infrastructure.  In difficult
times with stubborn unemployment, the government becomes an employer of last
resort. Government hiring injects income which starts a chain of events where the
total effect is multiples of the original investment.  The process is akin to seeding.  
Spending by the newly hired injects life into businesses, small and large, and over
time propagates hiring in the private sector; all this activity in turn generates
additional government revenue.  GDP is over two-thirds consumer expenditures, and
we need extensive seeding to create enough jobs and spending to move a stagnant

It so happens, we have before us the possibility of a marriage between vast numbers
of unemployed and a disintegrating infrastructure.  The American Society of Civil
Engineers (ASCE) has now again issued its quadrennial report card on
infrastructure.  Almost everything (aviation, dams, drinking water, roads, schools,
transit, waterways, waste water) received a grade of D-, D or D+.  Slightly better were
bridges (C+) and rail (C-).  Nothing received a grade of A or even B.

ASCE calls for “bold leadership and a compelling national vision”, reminding us that
our greatest infrastructure projects stem from Federal programs like the New Deal,
the Interstate Highway System and the Clean Water Act.  It calls for the Federal
government to take the lead in developing a strategic vision that can be supported by
other levels of government and the private sector.

Looking to the future, modernizing our obsolete passenger railroad system is a
unique development opportunity.  High speed rail makes journey times, city center to
city center, competitive with airplanes up to a 1000 mile trip.  The railroads are
quicker for journeys less than 500 miles.  This is a project that can transform the
economic landscape creating a giant suburb of the Eastern Seaboard with expanded
job, education and business opportunities.  For the rust belt, connecting to Chicago
and New York would take the pressure off urban centers and spur regional

Rail travel also has a smaller carbon footprint.  According to the International Energy
Agency, transport pumps 6.4 billion metric tons of carbon dioxide into the
atmosphere.  Road traffic is among the highest contributors, electric rail substantially
less.  Reputable sources like Greengauge 21 seeking to advance high speed rail,
claim its carbon emissions are roughly one-third of automobile and one-quarter of air

High speed rail has also been an unqualified commercial success.  Japan’s
Shinkansen is one example, the French TGV another.  According to Michel Leboef,
the head of major projects at SNCF the French national railroad,  TGV is a victim of its
own success with capacity problems on nearly all its routes.  He advises setting aside
spare space alongside the tracks for future expansion because, in his experience,
usage has always overwhelmed forecasts.

China’s current high speed rail network is
already the world’s largest. But it plans to invest a further $500 billion in present
valuation.  The goal is to have four north-south and four east-west lines comprising a
1200 km network by 2015.  There is little reason for the U.S. to continue to lag far
behind Europe, China and Japan, and suffer the consequences, other than a lack of
will and leadership.

 A joint study by Siemens and the U.S. Conference of Mayors
highlighted some of the benefits.  The small links planned in California, Illinois, New
York and Florida are expected to generate another 150,000 jobs, take 5000
commuters off California roads, and pluck 12.3 million passengers out of the skies by

Chinese trains have already topped 300 mph though regular running speeds
are closer to 200 mph.  But the next generation technology being planned and
installed now are maglev trains.  These float on cushions of air, are quieter, quicker,
accelerate and decelerate much faster — so can reach optimum speed even on
frequent-stop routes — and require much less maintenance.

About 200 years ago George Stephenson’s Rocket pulled the world’s first trains from
Manchester to the port of Liverpool.  The purpose?  To speed up the transport of
manufactured goods heretofore, carried on barges drawn by draft horses along
canals.  The age of steam had begun.  The factories could now run at full speed, and
the eventual returns of industry and a new infrastructure transformed the British
economy into a world leader.  George Stephenson became the first president of the
world’s oldest engineering professional association, The Institution of Mechanical

The Manchester-Liverpool line was the brainchild of business leaders who foresaw its
economic potential.  This time it will require visionary leadership from the public and
private sectors to plan a true high-speed rail network of the latest trains, but it can
transform and galvanize the United States much like the age of steam did in the 19th

Arshad Khan is a former engineering Professor and a Fellow of the Institution of
Mechanical Engineers.