It’s probably dead on arrival, but President Obama’s recent proposal to spend $53 billion on passenger trains and high-speed rail projects over the next six years strikes me as a particularly bad investment. Improving the rail infrastructure for freight, however, could have a real payback.
High-speed rail is almost always designed for passenger travel (one exception is the French mail service La Poste which owns a few special trains for carrying postal freight). Ideally, if high-speed rail is developed here in the US, it should be designed to transport both freight and passengers. Every reduction in logistics costs as a percentage of GDP means that consumer dollars go further, which is perhaps the best measure of the ROI associated with these kinds of investments.
Obama also laid out a plan last summer, as part of a six-year transportation bill, to invest in highways, bridges, and airports. Congress didn’t act on the proposal before adjourning last year, but the administration says lawmakers will take up the measure again and deliver a bill to Obama by August.
Repairing bridges makes a great deal of sense. However, I also don’t believe more roads will do much to lower our nation’s total logistics costs. Having traveled in Singapore, with its advanced electronic toll system, I have seen a different model. The toll system in Singapore is based on variable pricing by time of day to discourage some vehicle use during peak congestion times and places. Raising revenues is secondary to reducing congestion. Electronic message signs are used to indicate whether the toll is in effect. Thanks to congestion pricing, traffic flows noticeably more freely in Singapore than in the US. Further, the transponder system in Singapore does not require vehicles to go through toll booths or even slow down.
Carl Bialek of the Wall Street Journal wrote an interesting article on traffic congestion several months ago (see “The Inconvenient Truth About Traffic Math: Progress is Slow”). Here is an excerpt:
“The Texas Transportation Institute, a research group at Texas A&M University, has tracked traffic in hundreds of U.S. urban areas since the 1980s. One measure, the Travel Time Index, indicates how much longer a trip takes during peak travel time—generally, rush hour—than when there is free flow. In 1982, a rush-hour trip took 9% longer, on average. A quarter century later, after steady increases, the peak trip took 25% longer than when the road was clear.”
However, according to traffic engineers, adding more roads often only has a fleeting impact on easing congestion. “Many drivers who had shifted their trips to off-peak hours, or to different roads, or to public transit, resume their previous pattern and converge onto the new highway.”
“Tax” is a dirty work to many voters, and congestion pricing is certainly a tax. However, these taxes would serve to make an existing infrastructure work better while providing funds to pay for truly long overdue maintenance. In my opinion, this would be the fiscally prudent way to make “investments.”
