Monday, August 1, 2011

Trains Helped Kill the Greek Economy – They’ll Kill Hawaii’s too

“Some years back a Greek finance minister, fed up with his country's waste and extravagance claimed that he could save money by shutting down the national railway and driving around its passengers in taxis.” [1]

Too bad he didn't execute his plan for the closure of the railways. In 2009 the Greek railways collected $250 million in fares and posted a net loss of $1.4 Billion. A Billion wasted here, and a Billion wasted there … the rest is history for the Greek economy. Greece is now in a debt crisis.

In 2000 a Greek colleague and I conducted research on Greek railroads and we developed models which predicted that the rail freight service would soon carry nothing [2]. No way, they said. Four years later the freight operations of Greek shut down for good. Unfortunately, investment on Obama-like medium-speed rail passenger service continued unabated in Greece. So the budget hole got even bigger.

The lesson here is that public investment in non-performing infrastructure will eventually swamp the budget and saddle current and future generations with a heavy debt burden. Non-performing is any infrastructure in constant need of subsidy whose contribution to the economy is less than its true cost. Roads cost a lot, but contribute much more to the economy, health and safety of the population. Trains cost even more, but offer much much less.

What do you think the future holds for our tiny island that "wants" a five to seven Billion dollar train?

What do you think the future holds for the car-dependent, and highway and airport vested state of California which still plans for a $35 Billion “high speed rail”? A lot of good answers can be found in the article: High Speed Rail and Social Equity. Basically, the only high speed rail that makes sense (and money) is the 340-mile Shinkansen. All the rest, including California's, are A Fast Track to Nowhere.

The lessons about trains "modern" trains can be summarized by three common sense idioms, as follows.

You can’t teach an old dog new tricks. Trains went obsolete for a reason. You can’t solve 21st century mobility problems with 19th century technology. There are always a few exceptions, but Greece, California and Hawaii trains have nothing exceptional.

Those who refuse to do arithmetic are doomed to talk nonsense. One can write a book on this but I will mention only three rail related “math” of Honolulu mayor Peter Carlisle: (1) Get Honolulu’s financial house in order ... by spending over five billion on rail, (2) HART will cost us nothing, and (3) The Ansaldo contract will save Honolulu tens of millions in rail costs. All of them pure nonsense.

They are taking Honolulu for a (train) ride. Biased politicians, biased government officials and their paid consultants deceive the public in order to get elected, become chief of a new division and make millions, respectively.

[1] The Economist, July 2, 2011, p.8.
[2] Paravantis, John A. and Panos D. Prevedouros, Railroads in Greece: History, Characteristics and Forecasts. Transportation Research Record, No. 1742: 34-44, 2001.


Gabriel Roth said...

Similar situation with British Railways, that have not shown a profit since World War II — some say since World War I.

In addition to being a heavy drain on the national budget, they inhibit the development of a modern road system.

John said...

Taxing aviation to death while subsidising loss making high speed rail is crazy. We can now get a flight across Europe for about £50, but pay as much again in taxes, and as much again in taxis (to the airport)! I'm always amazed how many catch the train from London to Paris when its actually cheaper by air, even though the aircraft are not environmentally ideal for such a short hop. A 250 knot aircraft with ducted fans could do the job with less emissions than the trains, and no huge infrastructure costs. Unfortunately, slot space at airports is squeezing out short haul (theres an answer to that, and its not building more airports). Just for the record, the break-even on British Railways came about 1963, and could have been later if the government had not set up investment criteria strongly biased towards roads.

Chris Green said...

Aviation fuel is not taxed. I do not accept your description taxed to death. High Speed Rail offers the only civilized future in a dense highly developed European country such as the UK. I can see why you might be concerned elsewhere. Its arcane working practice killing the Greek economy, not railways per se.
Funnily enough, the much maligned British Rail had the lowest subsidy in Europe when "sectorised" some time before privatisation, nothing like a bit of political ideology though.