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Monday
Jan212013

Pensions: The canary in our coal mine.

Pension funds get the headlines because the numbers are centralized and relatively easy to grasp. Infrastructure systems are more diffuse, the obligations often local and mostly unaccounted for. Both systems are failing as America's Suburban Experiment unwinds. Understanding the numbers behind the pension crisis will help us more completely grasp the depth of the problem.

We're a little over halfway through the month of January and have already passed our record month for unique readers. Thank you, everyone, for being here and for sharing our message with others. We publish this blog generally three days a week (Monday, Wednesday and Friday) and weekly release a new podcast (Thursdays) and a new SID.tv video (Tuesdays). These efforts -- along with the expansion of the Strong Towns Network, our social space for people working to make their place a strong town -- are largely supported by your generosity. We are a 501(c)3 non-profit. If you are in a position to make a donation, we would greatly appreciate your support.

Reading the local newspaper this weekend, I came across an article indicating that Minnesota's pension plans are just 75% funded. This is not a shock. We in Minnesota like to think we are prudent and progressive -- certainly not going to get in the problems that a state like California or Illinois is in -- but the numbers prove otherwise. We're human like everyone else and that makes us just as prone to wishful thinking.

The most revealing, and astonishing, aspect of the report was not the fact that Minnesota is $16.7 billion short of being able to make good on our pension promises -- although that is astounding -- but just how rosy the assumed returns going forward are. From the article:

Legislation passed in 2012 dropped the yearly earnings for investment expectation from 8.5 percent to 8 percent and changed some of the assumptions as to how long workers will live.

In other words, to fund 75% of our obligations, we must assume an astounding 8% annual compounding return on our investment. And that only gets us 3/4ths of the way there.

Click for image attribution.Some people who have delved deeply into the Strong Towns message have struggled with the idea that we can't just simply pay to fix our infrastructure and be done with it. Just raise the damn taxes, already! Certainly, if Mn/DOT has a $2.5 billion annual maintenance deficit (and the feds have a ~$180 billion maintenance deficit) then we just allocate the money. Didn't we just spend a couple trillion on some wars and stuff? In comparison, this infrastructure deficit seems like chump change.

We need to step back and understand what infrastructure is. Infrastructure spending is the platform for advances in growth and productivity. In the post WW II framework, it is the catalyst for growth. We spend money on infrastructure, we get growth. That growth allows us to do all of the things we do, from pay pensions to provide medical care and education.

So, our economy requires new infrastructure spending to create new growth opportunities -- all those new housing subdivisions, strip malls and big box stores. This growth in construction then creates all of these second order effects that we tout when we promote infrastructure spending; all of the people working construction have families, their kids need to be educated, they need to buy milk and toilet paper and get haircuts, all of the people that teach kids, sell milk and toilet paper and give haircuts have families with similar needs. This is a virtuous feedback loop cited by economists, particularly those of the Keynesian variety.

Now step back and realize what's happened. Because our infrastructure spending has been speculative -- it has been used to induce growth and not in support of productive patterns of growth -- we have all of this unproductive investment in the ground. Miles and miles of pipes and STROADs that created a modicum of growth but now are sucking up all of our infrastructure budget. Many times over. 

So now we face three basic choices outside of the Strong Towns approach. They are: (1) raise taxes, (2) borrow more money, and (3) experience a long slow decline. These all come with consequences. In some combination we will certainly try all three.

Raising taxes is the most common recommendation I receive. Chuck, people are just going to have to pay more. Okay, let's pretend it is that simple, although I'll attest that I've seen people who oppose spending money to fix their own sewer system even though fecal coliform bacteria is showing up in their well water (in other words, they are drinking their own excrement). Let's pretend we get serious and raise taxes at all levels of government to maintain all of this unproductive infrastructure.

We go to the average family in their single family home and inform them that their local taxes are going to increase to pay for the street and pipe in front of their home. While the initial $30,000 cost was wrapped into their mortgage, they are now going to pay an additional $1,500 to $3,000 annually for the maintenance. On top of that, there is going to be additional thousands for maintaining the common infrastructure of the community; all of the water towers, sewage treatment plants, pumps,wells, etc... 

Then the state shows up. The gas tax increase necessary to maintain all of the stuff we've built is going to be in the $1 per gallon range. That is just for the state and that assumes that nobody reduces the amount they drive and/or switches to a more fuel efficient car. The more likely number when these natural responses are calculated in is somewhere between $2 and $3 per gallon. 

Then the Feds step in. That $2.2 trillion magic number from the Infrastructure Cult is ~$28,000 for a family of four. Now the Feds would make the taxes progressive and so the entire cost would not fall on that working family, but it is hard to see how their taxes would not increase additional thousands per year, especially if the goal was to get caught up in five years as ASCE has suggested (an infrastructure "surge" to borrow popular political rhetoric).

So we've done it. We've made the hard choices and raised the taxes necessary to simply maintain our unproductive infrastructure. Our families now have a lot less disposable income and we're simply treading water. What happens next?

Let's return to our pension assumption of 8% annual growth. How's our economy doing after all these tax increases? How much of that virtuous feedback loop is taking place? We were recently flipping out over a fiscal cliff that would look like a speed bump compared to getting serious on infrastructure; the idea that our economy would continue to grow after such a tax increase at a rate that would support 8% gains in a state pension fund is absurd.

And I think it needs to be repeated because it is the critical insight: this is just to maintain infrastructure systems that are largely unproductive. In a family equivalent, this isn't paying for college. This isn't fixing the roof. This is installing granite counter tops. If we actually did these tax increases, we would finally be paying for the extravagance of our lifestyle, not funding the essential foundation that infrastructure is widely believed to be.

I believe we will raise taxes, although not much. Certainly not anywhere near the levels needed to make a dent in this problem. We will most likely continue with the second and third  options. We'll borrow money to keep up the illusion that everything is okay (while people like Paul Krugman tell us it is okay a moral imperative that we do so) and we'll slowly grow accustomed to a long, slow decline (we already are, actually). 

I've written in the past about deficit spending and don't want to get tangled in those weeds again today. I think we all intuitively get the notion that we're not going to be able to indefinitely support bloated American lifestyles with borrowed money. At some point -- and I'm not going to pretend I know where that point is -- people will stop buying our paper. The fact that 60%-80% of new federal government debt issuances are currently being purchased by the Federal Reserve is a predictable point in that decline narrative. The return of all those (devalued) dollars into our market is another (aka: inflation). History has seen this many times

So we will continue to grow used to decline; roads that are not fixed, sewer lines that break, watermains that rupture, bridges that close, etc, etc, etc.... I think one of the tragic tales of the end game of the Suburban Experiment is how the poor will be left isolated in suburban communities while the wealthier among us congregate in urban areas or something akin to walkable communities, places that have (or can create) a productive environment that will be resilient to the general austerity. If you look around the world or back through history you will see that this is a natural order of things. Only in America during the Suburban Experiment was this artificially reversed for a time.

Let's get back to the pension account, which was the original inspiration for this piece. Without the ability to juice growth through speculative investments, how is 8% growth possible? How is 3% growth possible? With the Baby Boom generation on retirement's doorstep, the state pension funds should have the bulk of their revenues invested in ultra safe securities. That has historically meant T-bills, but 90 day paper is currently yielding 0.08%. That's not 8%. That is 8/100ths of a percent. To get anywhere near an 8% return, the managers of these funds will need to invest in very risky and speculative ways. That should not make you sleep well if you are a government employee or a taxpayer.

With the Suburban Experiment, prosperity multiplies on the way up and despair multiplies on the way down. New growth creates the illusion of wealth and prosperity while long term commitments are put off a generation or more. We could have faced up to those obligations when they came due, adjusted our expectations and learned from our folly, but we didn't. We tried to keep it all going with debt. Sure, you can raise taxes now to pay for infrastructure, but this is about so much more than infrastructure. It is the American model of growth. And it doesn't work.

So what can be done? What is Strong Towns approach? In a nutshell, we actually need to start talking about a managed contraction. There are many paved roads that should be turned to gravel. Some gravel roads turned to private trails. Our police and fire departments -- along with our school districts and their busing -- must tighten up their service areas, having high service and low service (or fee for service) areas. We're going to have to abandon some pipe and close some bridges. Taxes will go up in many places and our dwindling revenues need to directed to high productivity investments. This will mean a bottom up approach -- many modest improvements over a broad area -- instead of the large, centralized, bureaucracy-driven, build-it-and-they-will-come type of speculation we have grown accustomed to.

It won't be easy culturally, but we do this and we can once again have a strong America full of strong towns.

This conversation is continuing right now with bonus material that didn't make this post at the Strong Towns Network.

 

 

If you'd like more from Chuck Marohn, you should really get a copy of his recent book, Thoughts on Building Strong Towns (Volume 1). It is a primer on thr Strong Towns movement and an essential read for those wanting to get up to speed quickly.

You can also chat with Chuck, Nate Hood, Andrew Burleson, Justin Burslie and many others over at the Strong Towns Network. Join the conversation on how to make yours a strong town.

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Reader Comments (24)

I think you are using the term, "speculative," inappropriately. All investments carry with them a certain amount of risk. That fact does not mean that they are without merit, and said risk certainly doesn't make them "speculative."

Speculative investing is the kind that tries to take advantage of fluctuations in securities markets, the housing market, etc. Day traders and house flippers are among the most notorious people engaging in the practice.

Investments in the right infrastructure do create economic growth, but the type of infrastructure pursued is the key. Those highways and arterials that generate the big-box stores, housing subdivisions, and strip malls are not the same as the high-speed rail systems that create the agglomeration economies that are increasingly important to knowledge-based industries.

The lumping together of all of these systems as "infrastructure" is really the core of the problem. The criticism of highways and arterials is valid, but not as a rejection of countercyclical government spending that is intended to address the central issue, which is a lack of aggregate demand in the economy. Keynesians are right that employing people to dig ditches and to refill them is beneficial, albeit absurd, because we have a backlog of worthy infrastructure projects to pursue that will meet both the short-term demand deficiencies while also laying the groundwork, so to speak, for growth over the long term. In fact, growth is absolutely necessary to reduce budget deficits and government debt.

Let's remember what the "fiscal cliff" actually was. Congressional Republicans threatened to default on debts already incurred by the federal government if the rest of the body would not agree to the ticking time bomb that they, themselves, set. And, that time bomb was, by definition, Keynesian. Taxes would have been increased, especially among lower- and middle-income people who are so necessary to provide spending and consumer demand. And, government spending would have been reduced, further lowering aggregate demand. If immediately reducing the debt through austerity is so wonderful, everyone should have applauded the prospect of going over the "cliff."

Around the world, those countries that pursued austerity policies after the Great Recession created a second recession. In the United States, however, we could be borrowing at negative interest rates, so why aren't we taking the cash and putting people to work with it building and rebuilding those pieces of infrastructure that make sense and that will lead to long-term economic growth?

January 21, 2013 | Unregistered CommenterMatt Korner

@Matt Korner

Sorry, but I have to disagree.

There is no evidence that high speed rail creates an agglomeration, as you suggest. That is a theory, yes, but certainly not practice here in the US. I'm personally not willing to gamble billions to test this theory. That is speculative.

I also think you are confused about the central issue of the economy being lack of aggregate demand. I realize that fits the narrative from the model, but I don't think it fits reality. I would refer you to the first chapter in Jane Jacobs' Cities and the Wealth of Nations. We can stimulate our way to short term faux prosperity, but we can't continue to build an economy out of unproductive investments. Stimulating aggregate demand is like giving pain killers but not dealing with the underlying disease.

I also think the jury is out on America's response to recession versus Europe. It is too simplistic by far to say that we did stimulus and had growth and they did austerity and had recession. The world is not so linear. Their banks and lending system is in a much different state than ours. And it is hard to say that our situation has played itself out. No doubt, we bought time (painkillers), but show me any evidence that the underlying causes of our economic contraction have been addressed.

Let's also not pretend that negative interest rates are a market phenomenon. When the Federal Reserve is buying 60-80% of all debt, they are manipulating the value of money. We can't say with any confidence what anything is really worth today, what demand really is or what makes a good/bad investment.

Finally, I would be interested to know how you would go about identifying investments in infrastructure that "make sense". I feel like I'm a relatively intelligent person, yet I have no confidence that I could identify how to spend those billions in the best way possible. How should this be done and who should do it?

January 21, 2013 | Registered CommenterCharles Marohn

Oh boy, Chuck. Will I ever be happy if you start talking about a "managed contraction" in a really serious way.

Here is an article that blew my mind. Life, at What Price?

It talks about a health care system in Oregon that used rationing to control spending. They looked at every medical procedure and drug, and assigned it a rank by effectiveness and improvement in quality of life, then they ranked all these from top to bottom.

And then they drew a line where the money ran out.

The thing I love about this is how beautifully simple it is. "Here is the line. If you want to pay more taxes, we can move the line down. If you want to pay less taxes, the line moves up."

I also love how transparent it is--free from meddling politicians and bureaucrats. I would love to see some form of this used for every realm of our Long Descent.

January 21, 2013 | Unregistered CommenterRuben

On a limited-access road, the segments where infrastructure investments make sense are those where the toll revenue exceeds the total costs of the segment (amortization, maintenance, opportunity costs, depreciation, and so on). No, you can't use gas tax revenue as a proxy because gas tax revenue alone is unlikely to justify the cost of bridges, and you already know why you can't use "time spent waiting in traffic" as as proxy.

If a limited-access road is not tolled, then it must not get congested (or the owner doesn't understand supply & demand) and so it doesn't need widening.

January 21, 2013 | Unregistered CommenterDerek

Chuck,

Regarding HSR, I think if you had to pick one transit option (only one, disregard the consequences to regional trade) to get people around from region to region, which would support a better growth pattern at the population centers and everywhere in between? A city with no cars (but would still have streets) would spend less space per dwelling unit on access for cars. Cuts in to the street for driveways, yard space spent on driveways, home footprint (therefore cost) spent on garages, larger yards per dwelling unit because people have cars to get to destinations (therefore increasing utility/infrastructure cost per unit), etc. A city with HSR terminus would likely have less of those and more development around the transportation hub in a smarter pattern.

Ok, I sound like a total transit mook here, obviously it's not a one versus the other discussion. HSR will likely never have the frequency, capacity, or flexibility to take every person to every destination, The great value of cars. I don't think everyone should live without cars, but a city that has access to a regional (and from there to a high speed) rail network would more likely follow a better development pattern. That doesn't mean you don't have freeways or highways. You allude to this in your mobility post that most European cities with rail connecting them are like American cities pre WW-II.

I don't think HSR creates agglomeration (we shouldn't be talking about CREATING anything unless it's incremental investments in what we have and possibly letting others go away entirely). But it sure supports it far more than designing for the car to be the primary mode of transportation. That's my opinion and you're right not to bet billions on it, especially if it can't pay for itself. But isn't there a pretty good model for how to do it in several European countries?

January 21, 2013 | Unregistered CommenterAlex

I have several comments about the article and the other posts.

First, I think there are a lot of misconceptions about high speed rail. Europe did not start out by building HSR, they first had a slow speed rail network, and over time increased the speeds on some lines. They still have a slow speed rail network. The US has a few slow speed rail lines and a few higher speed rail lines (one (Acela) at the moment, another one coming on the Chicago-St. Louis corridor soon). It's not a very good network, however, and there are a lot of gaps in the system.

I would agree that we need more and better rail networks . For one thing, our population is aging, which means that more and more of our population will be without cars (or should be). Overall rail has a place in our transportation system. Per passenger mile, rail is much less expensive to maintain than roadways. Yes, the initial construction costs are higher, but not significantly higher for slower-speed rail. But HSR alone will not solve our transportation problems, and it is exponentially more expensive to build than a slower-speed rail line. Only in very high density transit will HSR make economic sense. Higher speed rail (110mph) will still be enormously beneficial at a much lower cost.

But maybe we will invest in robotic cars and more roadways instead. Time will tell.

Second, I think it is correct to say that the US is already in decline. And as with pensions, our politicians generally are in denial. I agree that we need to manage that decline. Detroit and Youngstown, Ohio have had some discussions about just that. Part of creating a strong town seems to include acknowledging our infrastructure (and benefits) costs and prioritizing what infrastructure will be retained and what infrastructure has to be downgraded.

Finally, consider more carefully what Paul Krugman has proposed over the years. He hasn't said that deficit spending is always good or that spending on any infrastructure is the magic bullet to our problems. As I understand it, he is suggesting that we need to put people to work during the recession to reduce unemployment, as the public works programs did in the 1930s. If we continue to spend as much as we do on the military, then that probably means some temporary deficit spending to make up for the lack of private sector spending during the recession. It is a moral imperative that we take care of our less-fortunate citizens until they can stand on their feet in the private sector. Once the recession ends, Krugman has said that government spending needs to be sharply reduced to pay down the incurred debt and to build a reserve for the inevitable next recession. I can't see Congress ever going along with that plan, but I think Krugman's policies are more nuanced than just government shouldn't ever worry about deficits or that it is a moral imperative that government always run deficits.

We all need our towns to be more self-sufficient, and not rely on state or federal funding for their infrastructure maintenance needs.

January 22, 2013 | Unregistered CommenterForaker

Alex and Foraker, every HSR line in the world makes a profit within a few years after it opens, so any claim that it can't pay for itself or that it doesn't make economic sense are without merit.

January 22, 2013 | Unregistered CommenterDerek

Derek, though I can't assess the absolute validity of your statement, there's an important clause that you missed in your original comment: Every HSR line in the world that has been deemed a responsible enough investment to build makes a profit within a few years after it opens. There is also the issue that Foraker brings up regarding how HSR was not just plopped down between communities that didn't already have heavily-used slower speed rail networks, and that the HSR lines rely on these extensive slower speed rail networks to connect passengers to their final destinations (essentially turning the HSR lines into high-capacity trunks a la telecom infrastructure). So no, building HSR is not always a prudent investment - the amount of money necessary to build a HSR line makes it extremely important to weigh the outside factors that would limit or bolster the line's success.

January 24, 2013 | Unregistered CommenterSkyler Yost

Chuck,
you should read Paul Krugman's book to understand why he believes that we are currently in a situation with low aggregate demand.
can you point me towards a reliable resource that challenges the aggregate demand scenario?

also, be careful about quoting that 60-80% of debt is bought by the Fed. you linked to a rant, not a reputable source. Here is Krugman discussing the end of QE2 and federal interest rates
http://krugman.blogs.nytimes.com/2012/09/20/the-fed-purchase-test/
http://krugman.blogs.nytimes.com/2012/12/24/the-fed-and-interest-rates/

January 24, 2013 | Unregistered CommenterPhil Jonat

Skyler, intercity HSR doesn't need heavily-used slower speed rail networks at the endpoints to be viable any more than intercity air routes need them.

January 24, 2013 | Unregistered CommenterDerek

Game on, Phil. I'm in.

You name a book and I'll read it. I'll name a book and you'll read it. When we're both done, we'll do one or the other or both.

1. A blog critique/discussion. We each post on the other book and the central topic and then we each get a rebuttal post.
and/or

2. We do a podcast discussion.

You in? Could be fun and educational too.

January 24, 2013 | Registered CommenterCharles Marohn

Derek -- I don't think you really mean that. What your describing would be like having an airport in Brooklyn and another in Manhattan with flights going back and forth. If we want to build HSR between Sacramento and LA then why have all the stops in between? Wouldn't it be far better to test the concept with a regular rail line, establish service and demand (and productive land use) and then start experimenting with HSR?

January 24, 2013 | Registered CommenterCharles Marohn

"A regular rail line" between Sacramento and LA-- well, what does that mean? There are of course some fairly well-used lines in California (several of the most popular Amtrak routes in the nation, in fact). The biggest problem with these is that they're slow-- 12 hours or so from SF to LA, which is a bit ridiculous, plus the usual Amtrak delays. You get a choice of the San Joaquin, which goes from Oakland to Bakersfield through the central valley 12 times a day, with a 3-hour bus connection to LA, or the Coast Starlight, which winds its way down the coast, with one departure a day. Both take 12 hours. Between the slow speed and the bus connections you need to take, it's not really competitive with buses on anything but comfort. For what it is it has impressive ridership numbers. There's also the Pacific Surfliner (south coast) and the Capitol Corridor (SF-Sac).

If it were possible to get the trip down to six hours, and to do it at a reasonable cost, that would be something. But my understanding is that the tracks are owned by freight rail companies, which aren't interested in anything going much over 60 mph, and the amount of freight traffic precludes better passenger service anyway. I'm not sure how you'd plan to experiment with HSR without doing more or less what they're doing now.

Not that it's brilliantly planned or something-- there's plenty to criticize in the specifics. But I think the idea is basically sound. It would, as you say, help drive productive land use in the areas around the stations-- I think it's helpful in establishing natural centers in cities which have been the poster-children for sprawl, where many people will be arriving and departing without a car.

I don't understand why you use the example of Manhattan and Brooklyn-- they are very close together, so of course you wouldn't have HSR (or flights) between them. If you already have intercity HSR, however, it might make sense to have stops in both Manhattan and Brooklyn, if it didn't require a big additional investment. Same for the stops between Scaramento and LA. If you're going through, of course you put a stations there. Consider that the current transportation options for Fresno, a city of half a million, are $300 flights from a regional airport or hours-long bus rides (or Amtrak rides!), or driving, through often terrible traffic.

January 25, 2013 | Unregistered CommenterAlai

Charles, it doesn't matter how many stations are built between Sacramento and LA, because limited-stop express trains will only stop at a couple of them.

And no, it would be meaningless to test the route with regular trains. People don't take regular trains long distances because they are too slow. A meaningful analog for HSR is the air traffic itself between Sacramento and LA and the airports in-between (San Jose, etc.) because HSR will capture at least 50% of that market as it does everywhere else.

January 27, 2013 | Unregistered CommenterDerek

Okay, then I'm not understanding your idea of HSR in California. The maps I've seen would have between 8 and 10 stops just between San Diego and LA. I've driven that many times -- I don't see how any train, high speed or not, can beat a plane between those two destinations, let alone a car, with that many stops.

My experience in California also makes me more than a little skeptical that a station could be located somewhere where productive land uses either exist or could take hold. I highly suspect we will see some large parking garages and possibly something like the LA Convention Center as a stop. Am I wrong there? I hope so.

What am I missing here?

January 27, 2013 | Registered CommenterCharles Marohn

The plan is for the initial route to be San Francisco - Los Angeles, through the Central Valley, passing through San Jose, Fresno, and Bakersfield. Sacramento and San Diego come after. A nonstop train from SF to LA is required (by the text of the proposition passed to start funding it) to take two hours and forty minutes. Of course this doesn't beat a plane in point to point speed, but the idea is that once you consider the time to travel to the airport, pass through security, go through boarding, taxi, takeoff, and then the reverse, the time factor will be roughly even; and the train trip will be a lot more pleasant-- less cramped, smoother, and more reliable. The experience from other countries with similar distances has been that people prefer HSR to flying-- and there are a lot of people who fly that route.

As for station locations, the SF terminus is at 1st and Mission, in the center of the city, with no parking whatsoever planned, and a huge number of destinations in walking distance, plus extensive local transit links. The terminal is under construction now, though the tunnel to it is yet to be begun. Commuter trains from the Peninsula to the south are also planned to go the same way. http://transbaycenter.org/

In LA it will use the classic Los Angeles Union Station (a gorgeous, historic station, by the way), which is near downtown. Although the area immediately around it is not the best for pedestrians, the station is currently the terminus of two subway lines and several commuter rail lines (as well as lots of buses).

The intermediate stops are less exciting-- the stations are generally planned to be close to the centers, where productive land uses could certainly take hold, but these are sprawling cities which don't currently have much transit or even real centers to speak of. Garages are planned, but some attention is being paid to making the areas walkable and accessible--remains to be seen how much it translates to more productive land uses. Eg here: http://www.cahsrblog.com/2011/02/fresno-releases-first-draft-of-hsr-station-plans/

January 28, 2013 | Unregistered CommenterAlai

@Alai et. al.

I'm sorry. I understand your enthusiasm and support for the project. I understand the theory. I'm not on board.

What you are describing is a large, enormously expensive, speculative investment. It is speculative because it is being made in the hopes that may other things will occur over the coming DECADES to make the investment a success. As an economy, we're not in a position to gamble at this level, especially when there is so much low hanging fruit that is less speculative and has vastly higher returns.

We need to focus on fixing our neighborhoods. Built-it-and-they-will-come is a bad strategy for highways and an equally bad strategy for HSR (although perhaps acceptable for baseball in a cornfield).

January 28, 2013 | Registered CommenterCharles Marohn

Let's say you're a businessman in downtown Los Angeles and you need to get to downtown San Francisco. How do you travel?

By plane: take a taxi 25-35 minutes to LAX, be there 60 minutes early to get through security, fly 1h 15m to SFO, take a taxi 20 minutes to downtown San Francisco. Total time: 3 hours to 3h 10m, and very little of that is productive time.

By HSR: take a taxi 5 minutes to the station, buy a ticket at the station and board the train (15 minutes total), take the train 2 hours 40 minutes to San Francisco, and exit the station right into downtown. Total time: 3 hours, and you can use your laptop and cell phone the whole time.

And if there's a thick fog or or a heavy thunderstorm at either end, a train can still run when the airport is closed.

This is why business travelers love high speed rail. Where bullet trains are built, people ask themselves why anyone would fly.

Based on air traffic, we already know the demand exists for fast travel between northern and southern California, and we know that spending $68 billion on HSR will fulfill the same transportation demand as spending $158 billion on freeways and airports, and we know that HSR is always profitable, so there's really no good reason not to build HSR in California.

January 28, 2013 | Unregistered CommenterDerek

@Derek

I would love high speed rail between Minneapolis and Brainerd. My desire does not make it a good investment.

Are we talking about divesting in air transportation than along with this parallel investment? You're suggesting HSR as a replacement and taking demand figures from one to justify the other. Is it possible that they split demand and both simply fail? They both are, after all, enormous investments that rely on all kinds of secondary/tertiary investments for their success.

You don't have to convince me it would be nice. You don't have to convince me people would like it. You do have to convince me that all of the private sector investment would align to support such a massive investment because it is not so aligned today. That's why I called it speculative. It's not a strong towns approach.

Transportation and infrastructure investments should be the result of productive land use patterns, not an aspiration for them. What I'm advocating for is a lot less sexy, but a lot more effective.

January 28, 2013 | Registered CommenterCharles Marohn

HSR is one way to add needed transportation capacity between northern and southern California. This same goal can be achieved, at much greater expense, by expanding airports and freeways. Isn't it the Strong Towns approach to choose the option that provides the greatest benefit for the lowest cost?

January 28, 2013 | Unregistered CommenterDerek
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