David R. Henderson  

A Private Non-Subsidized U.S. 21st Century Passenger Railroad

Multiple Bandits are Roving Ba... Drowning Redheads is Wrong Eve...

You read that headline right.

This last Wednesday, I sat for over an hour in a waiting room while my wife was having a medical procedure. On the way to the outpatient facility early that morning, I picked up my Wall Street Journal from the curb, and while she was being treated, I read it through much more thoroughly than usual, as thoroughly as I used to do in the late 1980s.

The editorial page isn't always excellent, especially when the writers talk about U.S. foreign policy, but on domestic policy, especially on regulation, government spending, and taxation, the editorial page is often excellent. Wednesday was a good day for the Wall Street Journal. Why do I introduce the topic in such a lengthy way? Because some of my younger friends on Facebook have been trashing the Journal editorial page lately, in a way that causes me to suspect that they don't actually read it.

I could easily highlight 3 or 4 articles. I'll mention two briefly and then discuss another extensively.

Two articles, an unsigned editorial titled "Net Neutralized," and a guest editorial, "A Victory for an Unfettered Internet," were excellent.

The one I want to focus on, though, is Holman W. Jenkins, Jr.'s article, "A Private Railroad is Born."

Jenkins writes:

One obvious risk of playing this game [the game of high-speed rail that is being played, very expensively, I might add, in California] too long is that some poor state's taxpayers might end up with a white-elephant rail system that will require operating subsidies till the end of time. Florida was one of several states that waved off the initial dollop for exactly this reason, for what most knew was a nonsensical Tampa-Orlando bullet train. Thereupon something interesting happened: Private investors stepped up with a rail vision of their own, aimed at making money rather than spending it.

Their brainchild, All Aboard Florida (the train will get a new name this year), is not designed to push political buttons. It won't go to Tampa. It will zip past several aggrieved towns on Florida's Treasure Coast without stopping.

Nor will the train qualify as "high speed," except on a stretch where it will hit 125 miles an hour. Instead of running on a dedicated line, the new service will mostly share existing track with slower freight trains operated by its sister company, the Florida East Coast Railway.

But the sponsoring companies, all owned by the private-equity outfit Fortress Investment Group, FIG -0.55% appear to have done their sums. By minimizing stops, the line will be competitive with road and air in connecting the beaches, casinos and resorts of Miami and Fort Lauderdale with the big airport and theme-park destination of Orlando. Capturing a small percentage of the 50 million people who travel between these fleshpots, especially European visitors accustomed to intercity rail at home, would let the train cover its costs and then some.

I love it.

COMMENTS (4 to date)
Chris writes:

I think that much of the reason this could work is that roads are tolled for most of the stretch that this train would compete against.

That's been the issue with rail for 60+ years - we destroyed passenger rail by massively subsidizing roads, then decided to "save" passenger rail by massively subsidizing Amtrak. Allow both subsidies to lapse and we'd likely see some great privately run rail networks pop up again between all sorts of city-pairs.

Schepp writes:

This is a good proposal that we should see if it is a winner or loser. It will still be tempting for both governments and the company to put in the subsidy when the company just barely does not make it. Leading me not to celebrate its success until there are clear profits or losses and if a loss then it is followed by a shutdown.

Going back to a California High Speed Rail, after the superior court loss the rail authority has a new shell game. In the House Railroad Subcommittee Meeting, Dan Richard laid out the following with ice water in his veins: If they lease the initial construction segment to Amtrak and Amtrak pays CHSRA a small sum from the Amtrak subsidized operation, then the initial operating system has utility.

Leading eventually to the new standard of utility that you can spend $1 trillion on a project as long as it has $1 of utility to an random entity unrelated to the original objective.

Entirely appropriate that a state that was mostly a swamp until, late in the 19th century, it was developed by John D. Rockefeller's partner, Henry Flagler, using his knowledge of railroading.

Mark Bahner writes:


My suggestion is not to invest in that railroad venture. I predict that, within 2 decades, travel on roads between cities in Florida will routinely occur in computer-driven vehicles moving more than 100 mph:

The future of transportation

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