New kind of naysayer cites costs to fit the case

HynesB88X146.JPGBy James G. Hynes
Wendell Cox, who has served three terms on the Los Angeles County Transportation Commission and is currently a visiting professor at the Conservatoire National des Arts et Métiers, Paris, writes that high speed rail is unprofitable according to “generally accepted accounting principles”. What he says is probably quite true, although some HSR services seem to come close to profitability even on this severe basis. What he doesn't say is that this argument is grossly biased, because it implies that the existing road and air services that HSR might replace are somehow profitable themselves. This amounts to saying that Air Canada, for example, would be a profitable entity if it had to pay the entire cost of its Montreal-Toronto service, including building the airports at both ends. Similarly, truck transport companies would supposedly be profitable if they had to build the highways they operate on. And Great Lakes shipping companies would be profitable if they had to build the Seaway themselves. The fact is, no existing transportation system is profitable on this all-in basis, and any analysis of the real cost of, say, driving your own car from Montreal to Toronto would show this to be the most costly and least efficient way to move yourself over this distance. HSR is not supposed to be profitable on this basis any more than building the 401 highway was supposed to be profitable in itself. The profits come from the benefits the more-efficient infrastructure delivers, both economically and environmentally. A great weakness of "generally accepted accounting principles" is that they do not capture these "externalities." This is what allows us to imagine that the real price of oil is US$70 a barrel or thereabouts, completely ignoring the huge environmental costs of producing and consuming the stuff. If we actually required all the elements of our transportation infrastructure to be "profitable" on this basis, we would have very few airports, bridges, tunnels or elevated expressways anywhere, and all of them would have to impose heavy tolls on their users. So, while Mr. Cox seems quite credible at first glance, his argument doesn't really hold water. (I suppose it's significant to note that his column appears on the Website of an ultra-conservative outfit, so his thinking is presumably coloured by the quasi-religious doctrines of the American right, according to which massively subsidizing road and air travel is blessed, but rails are inherently evil.) Click here to read more of Jim Hynes on the compelling case for Canadian high speed rail.

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