Scott Sumner  

Why can't we have nice things?

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If you travel to other countries you might occasionally notice something that you wish the US had. The one I notice most often is good subways. This article caught my eye:

Stan Paul, who begins his morning ride to UCLA in Riverside, experimented a few times with public transit, but an hour-plus ride on a commuter train ends near downtown Los Angeles, and to get from there to his office would take at least another hour by subway, bus and foot.

Eventually, a subway extension will connect the city's Union Station to UCLA, so Paul could transfer from the train. The only catch: By the extension's expected 2036 completion date, he'll be retired.

In the US there is a debate over whether we should spend more on mass transit, or whether our cities are too spread out for a subway system to make sense. But what if there is a third option:

Chinese firms are building Tehran's metro, two harbours in Egypt and a high-speed railway between Saudi Arabia's holy cities of Mecca and Medina.
The LA subway discussed above has already been in development for several decades, and it's still not clear if it will be finished by 2036. Meanwhile Chinese cities like Beijing and Shanghai open new subway lines about once a year. The authorities in Tehran wisely chose the Chinese to build their subway system.

The US media often likes to frame issues along a narrow ideological spectrum, without considering third options. Often the two options are aligned with the two political parties. One party may support more government, while the other wants to protect the interests of powerful special interest groups. But what if there is a third option?

1. Instead of debating whether to have the antitrust authorities crack down on the airlines, why not make it legal for foreign airlines to fly between US cities? Why not allow foreign ships to go between US ports?

2. Instead of debating whether to spend more money on fixing the FAA, why not privatize the organization, as many other countries have done?

3. Instead of debating whether to have the government or the private sector deliver extremely expensive health case, why not allow foreign health professionals to freely operate in the US, producing cheap health care.

4. Instead of debating whether or not to spend tens of billions on new subway systems, why not allow foreign firms to build them much more rapidly, and at dramatically lower cost?

5. Instead of debating whether to "allow" gays to get married, why not entirely remove the government from the issue of marriage, leaving it as a private arrangement?

6. These third options need not be libertarian. Instead of debating whether or not to raise the minimum wage, choose a third option---higher minimums but paid for with government wage subsidies.

You may or may not agree with any of my suggestions, but surely there is a need for all of us (especially the news media) to stop framing issues so narrowly and allow more "thinking outside the box."

PS. Although LA may not be densely populated enough to support a subway system, the specific line being discussed would go from downtown toward Santa Monica, paralleling the relatively densely developed Wilshire blvd. If any line could work, it would be that one.

PPS. I sometimes have a fantasy where either the liberals or the conservatives were given 100% control of the US for 20 years, so that each side could see that its ideas don't work, and that third options are needed.

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COMMENTS (27 to date)
Mike Linksvayer writes:

I'm all for cutting knots in ways that appall both 'sides'. But in the case of expensive subway construction, how would hiring a firm that has low costs elsewhere help with the myriad and not well understood causes of high construction costs in the US?

Regarding your fantasy, if we can't learn from dominance of various jurisdictions separated by distance by parties further left and right than the US ones, how can we be expected to learn from different experiences with vast (at contemporary rates of change) temporal separation?

Scott Sumner writes:

Mike, You are probably right that my fantasy is unrealistic. But I feel like local failures are simply blamed on not having control at the Federal level. You and I can probably agree that that's naive on their part, but total control would make the failure more clear.

For instance, the current French government tried socialistic policies, they failed, and now it's done a 180 degree shift toward deregulation.

Chinese firms have lots of cost advantages, obviously including low wages. But don't discount the importance of experience. So few subways are built in the US that each firm is very inexperienced. Even in Europe (which has high wages) subway construction costs are barely a third of US levels, as their firms are far more experienced. In China costs are far lower than that.

I'd guess the government in Tehran quickly discovered that the Chinese could build the line much more cheaply than they could.

Andrew_FL writes:

On 5, I've been tossing around the idea of "denationalization of marriage" for a while now. I think it's the right "solution" but I also think it isn't what people really want. People want to force other people to recognize their personal relationships as legitimate, not to be able to call themselves married.

Dan Carroll writes:

It's not the construction time that is delaying that project, it's the environmental approval process along with any other regulatory issues particular to California and the affected municipalities.
So unless you can get the USA to completely ignore those rules, the last Chinese worker to have built a railroad in California will remain those from the 1800's.

E. Harding writes:

The U.S. never really needed subways except in very few areas because it could always build out (and automakers didn't like it). So, unlike in densely populated China, the only reason to build subways in the U.S. are mountains. Which California has a lot of. But building restrictions and lack of experience in subway construction make the cost of quick subway construction burdensome for CA. Thus is life. And I'm not sure how even foreign-run firms could speed up CA's subway construction without building restrictions being removed.

SeanV writes:

It's a great point - the very best policies are those that are non-ideological, or at least can appeal to both the left and the right.
Most infrastructure projects should be that way. Much policy should be thought of as engineering problems using the tools of economics rather than ideology. After all what to do with a broken arm or how to build a bridge are simple engineering problems that have essentially been solved without recourse to ideology.
As always, and in all things the answer to all the worlds problems is found in Singapore. Ask "What would/does Singapore do?" The answer is "solve societal/economic/cultural problems without recourse to ideology".
Wash, rinse, and repeat!

John Smith writes:

Not a good idea. You might literally be dead as result of these policies after 20 years.

How confident are you that these dictators would stop after massive die-offs rather than continuing as per the Cultural Revolution?

Lewis writes:

One purpose of all US infrastructure construction is to make work: specifically, to distribute money to people who cannot earn middle-class salaries in the service sector, and to do so in such a way as to give them the dignity of working on something apparently useful. Chinese firms will never be allowed to build our infrastructure because it would not accomplish this goal.

The other purpose of US infrastructure construction is to make salient gestures about social problems. For example, climate change is a problem, and so we build subways and light rail. These things have an intuitive association with the problem of climate change, because ~1/5 of co2 emissions are from cars, and they ostensibly compete with the car. However, whether a particular infrastructure project saves more carbon than spending a vastly smaller amount of money on, say, clean energy subsidies/research/vehicle efficiency is unrelated to their memorability and intuitive appeal. And since the results of the project are not very important, I don't think anyone is interested in whether or not the Chinese could do them well.

Finally, another reason we build rail is pride. If you go read any literature from california high-speed rail authority, one of the things you will notice is the constant mention of how other countries have high-speed rail but we do not. Since the purpose of the high-speed rail is to show that we can build something, that we are just as good as other countries, it would defeat the purpose to have the Chinese do it for us.

maynardGkeynes writes:

Capital entry barriers are already quite low for airlines, so allowing foreign carriers wouldn't do much. The primary problems appear to be a scarcity of available slots at the busiest hubs, and network effects arising from hub and spoke system we have today. Of course, we also have the NIMBY problem with building more airports.

Brett Champion writes:

And those Chinese firms would likely throw up their hands and quit once they experience the ridiculousness that are American laws and regulations governing such activity.

Scott Sumner writes:

Andrew, I'm not sure I see that. I certainly don't feel "forced" to call anyone's relationship legitimate. (On the other hand I've never felt the urge to call a relationship illegitimate, so perhaps I am missing something.)

Dan, It's actually a NIMBY lawsuit from rich people on the westside of LA who don't want poor people taking a subway into their area--nothing to do with the environment. But construction times are also a big problem in the US, hence the 2036 date of completion.

Harding, As you said, lack of experience is a problem for US firms. Not a problem for Chinese firms, which move much faster.

John, You lost me somewhere. What dictators?

Lewis, I don't think many people earn middle class salaries building subways in the US.

I agree that we don't have any good reason to build high speed rail in California.

Maynard, Some foreign carriers are more efficient than US carriers, but I agree that landing slots is a problem that needs to be addressed. However just the threat of foreign competition would keep the US market pretty competitive. The idea is called "contestable markets."

The US airlines have recently asked Congress to ban certain foreign carriers from the US, which tells you what they are afraid of.

Brett, You'd be surprised what Chinese firms are used to putting up with.

Jon writes:

Of course what it really took to get started on the purple line was for Henry Waxman to stop being a one-man show in congress stopping it. Unrelatedly, but ironically, construction started on 2014 Nov 10, the first Monday following the election of Ted Lieu to replace Waxman in the US House (CA-33).

sam writes:

The reason why we don't have cheap efficient subways, polite airport screeners, or other modern conveniences in the US is simple:

The US is a first-world country with a third world government.

US government employees tend to be innumerate liberal arts majors selected to fill demographic quotas. Promotion is based on length of service, ability to complete online post-graduate "degrees", and again, demographic quotas. It is a patronage system similar to that in the third world, and thus we have third world results.

America's best and brightest do not work for the government, and even if they did, they'd never be promoted.

Mr. Econotarian writes:

Many parts of Los Angeles have population densities of 10,000 per square mile and even 20,000 per square mile.

I believe the lack of density is more in terms of office density rather than density of where people live.

Andrew_FL writes:

That's fair Scott. Not everyone has to be forced to accept things, some people want to anyway. Even if you worked in, say, the wedding cake business, you're a man of fairly "progressive" opinion about the subject, I'm sure you wouldn't feel any loss from an inability to limit your customer base.

mico writes:

I think it's overly optimistic to assume that the Chinese contractor is more competent than the US contractor. What's more likely is that China is, currently, relatively free of governmental obstructions to development. When you could just buy the land and build what you wanted on it, development was quick in the West too.

Though it may be less that China has gilded age laws on its books, and more that the laws that do exist are held in so little regard that they can be easily waved aside with money.

Shane L writes:

I have no data but I wonder if subways can be built cheaply in developing countries because those states have less trouble in overriding property rights. Where in a developed country there may be expensive negotiations to build when it affects local peoples, in some places I imagine the government just does it, relocating people by force with little red tape?

JG writes:

@Andrew_FL I often hear these arguments with no practical considerations. Who should be allowed to visit a patient in a hospital? Anybody? Any one who considers themselves a friend? How does the hospital verify this?

If a couple who have adopted a child (could be same-sex or opposite-sex couple) and one parent dies, how does the state determine who can receive custody of the child?

Marriage is the most successfully standardized contract. Imagine if we could agree to standardize so many great contracts with great standard terms. Legal rights will always have to have some government recognition because presumably we need some way to enforce those rights. Yes, the government need only recognize "civil" marriage, but to those of us who are not religious it's the only marriage we care about anyways. Most of the people arguing in favor of civil marriage only from government would have the government exclude others if they politically could. I know this because their arguments against SSM are not dependent on religious connotations, but instead on social ones.

Nathan W writes:

It's the classic story of that town in New York that once had a train that everyone wanted to run, but too many people drove to get much money out of it and eventually the train stopped running. I think there are a couple/few textbooks that use this example.

Ensuring that drivers face the full cost of roads with a sensible additional surcharge to address congestion would go a long way in supporting sustainable mass transit in American cities.

Floccina writes:

A good thing about #5 is it would cause a little cleanup of the income and inheritance taxes.

Floccina writes:

A better solution than mast transit would be self driving small narrow vehicles.

And/or safer motor scooters:

Autonomous vehicles seems too close to start building subways now.

Privately run buses (like I experienced living in Honduras 25 years ago) with congestion pricing might be good in the mean time.

Andrew_FL writes:

@JG-On hospitals, that's for the hospital to decide.

On children, that's something that should be part of the adoption papers.

And yes government does need to protect rights. I'm not sure what you think it means to "enforce" rights however, but it probably explains why you think having people agree with what you want to call a marriage is a right. There are no rights that allow you to place obligations on other human beings.

Glenn writes:

I'm not sure the disparate development paces for major urban infrastructure projects have anything to do with the origin of the firm. Bechtel must compete with Chinese builders abroad, if not at home, creating a powerful incentive to be efficient.

But do you suppose Tehran has the same zoning, environmental, and labor regulations as LA? Or do you suppose that the contribution of these factors to major urban infrastructure projects is trivial?

Couple this with the aggressive practice of the Chinese investment banks to bid below-cost on foreign development projects, as a means of buying political goodwill, and the outcomes described in this post are not at all surprising.

Daublin writes:

I question the premise. What do you like about those subways so much, Scott? My impression is that American cities are building out all manner of light rail that then doesn't get used very much.

I've lived in multiple cities that have well developed light rail and/or subway, and it's not what it's cracked up to be.

The first issue is that you end up spending most of your time on the bus, unless you are rich enough to live right by a train stop. Thus to the extend public transit gets funded, I would rather see the bus network improved than the train network. Busses help everyone, not just the well to do.

The second issue is that you have to live by the constraints of the network and its schedule. In most American cities, you can go anywhere you like, any time you like. If you try to get around on public trans, you have to plan your life around the trans schedule. As well, you end up strongly preferring destinations that are right on the train line; you can't exactly take the train to go on a camping trip, or even much of a picnic.

The third issue is that it's just slow. Even if you hit the perfecto of taking a trip that is train-only, and has no transfers, it will often still be slower than if you get in a car and drive. Outside the perfecto, you have to think about switches and about time on busses, and it gets even slower.

david condon writes:

"I sometimes have a fantasy where either the liberals or the conservatives were given 100% control of the US for 20 years, so that each side could see that its ideas don't work, and that third options are needed."

That's already happened. The Republicans at the turn of the 20th, the Democrats in the 30s-60s, other than a brief stint with Eisenhower. Third parties only briefly gained a platform and the biggest one was just Roosevelt's Republican party junior.

Mark Bahner writes:
Capital entry barriers are already quite low for airlines, so allowing foreign carriers wouldn't do much. The primary problems appear to be a scarcity of available slots at the busiest hubs, and network effects arising from hub and spoke system we have today. Of course, we also have the NIMBY problem with building more airports.

One aspect of any building any major infrastructure project that I think is often neglected is the progress of alternatives that eliminate or reduce the need for the infrastructure under debate.

For example, it seems very likely to me that computer-driven vehicles will greatly reduce or eliminate the need for subways. I can easily envision computer-driven vehicles increasing the capacity of roads by a factor of 3 or more.

And computer-driven planes should allow for VTOL (vertical takeoff and landing) to become routine. Right now, VTOL aircraft are very difficult for humans to fly:

Difficulty of flying VTOL aircraft

This could suddenly (in less than a decade or two) allow the number of "airports" in the U.S. to increase by even an order of magnitude, because any large (or medium-size) parking lot could become an airport. Passengers could go straight from plane to a bus, to a computer-driven car. There would be no need for a terminal or airport parking.

guthrie writes:

As someone who must take public transit in Los Angeles, I must say the picture you're painting (hiring a Chinese builder to expand LA's rail transit system more cheaply) is tantalizing. However, as others have suggested, I'm afraid it's not much more than a pipe dream.

According to a personal friend who's also a development consultant here in LA, new tunnels run around 'one billion dollars a mile' (and the Purple Line down Wilshire would absolutely be underground the entire distance from downtown to UCLA). I believe grade-level lines such as the Blue line, or raised lines like the Expo are 'cheaper', but because many of these lines run at traffic level they're subject to the same traffic restrictions as, say, buses (so what's the point?).

Full disclosure, I must take public transit from Sherman Oaks to El Segundo. In a car the trip takes anywhere between a half-hour to an hour depending on traffic (and the 405 is notorious).

My travel time on public transit requires taking two different buses and two different rail lines, and *usually* takes an hour and a half. Add to this some fairly significant time penalties for discrepancies of less than 5 minutes, and that transit time can easily (and has) exceed two hours (confirming what Daublin above has diagnosed).

Needless to say I am not a fan of public transit in Los Angeles. Not in the least.

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