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Federal Takeover of Subways: Another Blow to Federalism

sam.staley@reason.org (Samuel Staley) — Mon, 16 Nov 2009 11:46:00 EST

The Federal government's approach to its proposed takeover of subway and light rail safety regulation is an all too common way it approaches problem solving: Identify a problem, identify a political solution, but the federal government in charge. Secretary Ron LaHood says as much based on statements reported in the Washington Post:

"Administration officials said they are responding to a growing number of collisions, derailments and worker fatalities on subways -- and in particular to the fatal June 22 crash on Metro's Red Line and failures in oversight that have surfaced in its wake. Those failures have been the subject of an ongoing investigative series in The Washington Post.

"After the [Metro] train crash, we were all sitting around here scratching our heads, saying, 'Hey, we've got to do something about this,' " Transportation Secretary Ray LaHood said in an interview. "And we discovered that there's not much we could do, because the law wouldn't allow us to do it."

"Metro spokeswoman Lisa Farbstein said the agency had not seen details of the proposal. "The bottom line is we welcome additional safety oversight with open arms," she said.

This Administration has shown little tolerance for boundaries established by tradition or Constitutional principle. Perhaps this is because the President is a former law professor who taught Constitutional law; he knows how to get around the law to make the system work for him.

Subways are particularly noteworthy, as both a test case for the breakdown of federalism as well as setting the tone for how local governance will be handled by the Federal Government in the future. Most transit agencies, unlike Amtrak and airlines, are well within state jurisdictional boundaries (Washington, D.C. Metro being a notable exception). The Obama Administration will use its funding precedent--most capital costs for transit agencies are funded by the Federal Government--as the mechanism for taking over rail transit agencies. The trick will be trying to accomplish this, like highway funding, through incentives instead of direct mandates.

Interesting, virtually no one in the media seems to even understand the Constitutional principles involved. Intercity rail and airlines can be regulated by the federal government because they plausibly fall under the interstate commerce regulatory authority of the federal government. That doesn't apply to the vast majority of rail transit systems, including those in Los Angeles, Denver, San Francisco, Dallas and even Chicago.

Yet, this shouldn't be a surprise. Progressive political philosophies show little respect for governing principles that divide or limit the power of government. President Obama is not just a progressive politician, he's also a populist. So, using the Federal government to address an identified political problems is consistent with an overall political philosophy, even if it isn't consistent with principles of federal-state governance embedded in the U.S. Constitution.

Light Rail = Gridlock in Downtown Dallas

sam.staley@reason.org (Samuel Staley) — Thu, 15 Oct 2009 08:17:00 EDT

Light rail transit is lauded as a congestion reliever by proponents, but this column in the Dallas Observer newspaper by Jim Schutz points out a practical problem: Do we have the technology to pull it off?

Rail transit works best--both in terms of speed and cutting downon travel time--when trains work on tracks with dedicated right of way. That's when the trains cruise by cars stuck in gridlock on the highways at peak hours. But, one of the supposed virtues of light rail is that it can also operate at street level. This is where transportation planning gets complicated.

At the street level without grade separation, light rail trains are subject to the same delays as cars--pedestrian walkways, traffic lights, heavy-traffic intersections, etc. To speed up light rail, and further put cars at a disadvantage, planners are increasingly giving trains priority at intersections by letting the trains (or train operators) trigger a green light at the intersection for the trains. So, cars stop, trains go.

This traffic circulation problem is compounded by the fact that mass transit rail networks are (rationally and appropriately) designed on a hub-and-spoke system. The most heavily traveled corridors that are most transit competitive are the spokes leading to the downtown hub.

In Dallas, where the rail system is operated by the Dallas Area Rapid Transit system, or DART, this approach is creating gridlock downtown. As Schutz observes:

"On September 14, when DART opened service on a segment of its new Green Line from Carrollton to Pleasant Grove, all the trains in the entire region slowed to a near standstill, choked by a rail traffic jam in downtown. DART said it was just first-day jitters. Now, they say, everything is back to normal.

"I say we won't see normal again for about seven years.

"I wrote about this last July 23 ("Tracks of My Tears"), and also in April 2008, both times citing DART's own studies predicting havoc if all its new suburban rail lines wind up going through downtown before DART builds a second downtown rail alignment.

In fact, people knew about this when DART first began laying out its rail lines. It was pretty simple. If all of the regional rail lines have to connect through downtown Dallas by passing east and west on the one existing rail corridor on Pacific Avenue, then at some point there will be too many trains trying to get through the bottleneck."

Transportation planners knew about this problem (it's not that hard to forecast), but promised the new lines would be up and running in time to prevent gridlock. They weren't (and aren't). A current DART rail map can be found here.

Schutz has an excellent, if lengthy (the entire article is worth a read), explanation of the problem:

"But the difference is downtown. What I am really looking at is one giant traffic implosion getting ready to happen downtown in December 2011. That's when the final branch of the system, the Orange Line from DFW, comes on line. Here's the deal.

"The trains go up and down Pacific Avenue. Cars go back and forth across Pacific Avenue. If cars can't cross Pacific, vehicular traffic can't cross downtown, especially since our city council in its stupefying un-wisdom has agreed to a pernicious scheme called "signal prioritization."

"DART trains drive on the streets downtown. They have to stop for red lights just like cars. Or they did. Now with signal prioritization the driver of a DART train can push a button and turn the light ahead of him green."

This is all supposed to work because traffic signals delay cars, in theory, about 30 seconds and then give them another full two minutes to restore traffic back to normal. DART is planning on 2.5 second headways for their trains. But, life doesn't work in the real world the way it is planned:

"DART intends for the trains to be sync'd so that two trains—one running east and another running west through downtown—will pass each other at precisely timed moments causing fewer traffic interruptions.

"Morgan Lyons, the spokesperson for DART, explains that to me: "While the traffic signals cycle every 75 seconds (or 1.25 minutes)," he says, "it's often the case that trains in each direction will move through the intersection so you wouldn't always have that many interruptions."

"If everything runs like a Swiss watch.

"But what I've been finding out here the last couple days is that everything is running like musical chairs. In fact, back at the office when I put all of my times in an Excel spreadsheet, this is what I find:

"Trains that are supposed to be running at 10-minute intervals are running at five minutes, seven minutes, nine minutes apart. Trains that are supposed to be running at five minute intervals are running at six, four and three minutes. And almost none of them is hitting the precisely scheduled moment when it is supposed to arrive at a given station.

"If I place myself right by the point where the trains come out of the Central Expressway tunnel and rise to ground level at the east end of downtown, I can see why the timing is so jagged: two-thirds of the trains I am watching slow down and even halt for a few minutes before entering downtown.

"Swiss watch, hell. They're winging it!"

So, if you have light rail coming to your downtown, prepare for gridlock.

High Speed Rail News Links

sam.staley@reason.org (Samuel Staley) — Tue, 13 Oct 2009 09:49:00 EDT

The American Dream Coalition has culled the nation's media outlets for the latest news on high-speed rail:

Will Obama's High-Speed Rail Plan Become a Subsidy for Freight Railroads? – Ron Utt, Heritage
The Hypothetical Hypotheticals of U.S. High Speed Rail – Sam Staley, Reason
$50B in high-speed rail applications submitted for $8B fund – Associated Press, Washington
$11.6B more sought by N.Y. for high-speed rail – Democrat & Chronicle, Rochester
California seeks $4.7-billion high-speed rail grant – L.A. Times
North Carolina wants $5.3 billion for trains – News & Observer, North Carolina
Pennsylvania Applies for $3.1 Billion for High-Speed Rail Projects – PR Newswire
Florida files a formal application for $2.5 billion for HSR – Miami Herald
Price tag climbs for high-speed rail – State Journal-Register, Illinois
Milwaukee-Madison rail route still on track despite Olympic vote – Journal-Sentinel, Wisconsin
Vegas the logical spot for HSR hub, Brookings says – Las Vegas Sun

Reason Foundation's work on high-speed rail can be found here.

Taxi Regulation Leads to Corruption

sam.staley@reason.org (Samuel Staley) — Sat, 10 Oct 2009 09:33:00 EDT

I weigh in on the intended and untended impacts of restricting the supply of taxi in cities in a commentary for Sunday's Washington Post. When cities limit the supply of taxis, they create powerful incentives for cab companies to influence and steer the regulatory process in their favor. Taxi users, drives, and small cab companies lose out.

Overnight, supply restrictions on taxi companies and cars transform small companies into multimillion-dollar enterprises through regulation-induced paper wealth. In the District of Columbia, dozens of cab companies and drivers have been indicted on taxi bribery charges. The indictments allege that $300,000 was spent over the last two years to influence the process. But this is a small investment given the potential gains.

As I write in the Washington Post commentary:

But it's not just overt bribery that undermines the taxi market.

In city after city, the regulatory system has quickly become captured by the strongest players involved: taxicab company owners, who often act as a bloc and work fiercely to protect their interests. Less well-organized and vocal players, notably drivers, single-car operators and taxi users, become marginalized.

Taxi users and outlying neighborhoods inevitably lose in this scenario, too. As the supply of taxis and new competitors is limited, drivers and companies abandon low-margin, low-dollar fares in "thin" markets such as outlying neighborhoods or fares that arise from meeting the day-to-day needs of residents. Instead, they focus on high-margin, high-dollar fares in downtown areas such as K Street or Capitol Hill, near major event locations such as the convention center or the Kennedy Center, or at the airports.

Other cities should take note.

D.C. Taxi Corruption Scandal Continues to Unfold

sam.staley@reason.org (Samuel Staley) — Tue, 06 Oct 2009 18:41:00 EDT

Twenty-nine men were in a District of Columbis court on Monday to plead "not guilty" to charges of unlawfully influencing the licensing and regulatory process for taxis in the District of Columbia. Thirty nine people, including the chief of staff of a leading proponent of stricter regulation of taxis on city council, have been indicted. (My previous blog on this unfolding scandal can be found here.) According to the Washington Post:

Authorities have said the investigation began two years ago when Leon J. Swain Jr., chairman of the D.C. Taxi Commission, told authorities about a bribery attempt.

Swain began cooperating with federal agents. He collected more than $200,000 in bribes in 2007 and last year from three men hoping to buy licenses to operate multi-vehicle cab companies, prosecutors said.

Authorities said the men were hoping to buy as many licenses as possible in anticipation of a moratorium on the issuance of such permits. They thought they would profit from having the licenses when no one else could get them, authorities said....

Last month, authorities said, Swain collected more than $100,000 from...and 36 men hoping to obtain licenses to operate individual cabs.

Some of the more recent bribes were targeted greasing the palms of those who would promote legislation allowing additional licensing of cabs using hybrid technologies. The city currently has prohibited licensing additional multi-car cab companies and is not licensing new cab drivers.

While all the indicted drivers were Ethiopian immigrants or Ethiopian Americans, all were legal residents.

Clearly, clamping down on issuing new permits raises the stakes for those currently in the taxi market. Given the low-income and revenue potential for individual cabs, the only way to generate larger revenues and personal equity in the business is to expand the size of a cab company. As the District begins to do what other cities have done--restrict the supply of taxis--a rise in corruption should be expected.

Indeed, from a public choice economics perspective, corruption is a rational outcome of attempts to regulate the supply side of any market.

The Hypothetical Hypotheticals of U.S. High Speed Rail

sam.staley@reason.org (Samuel Staley) — Tue, 06 Oct 2009 02:12:00 EDT

A recent blog post at the Daily Kos by BruceMcF (10/4/2009) takes on Randal O'Toole's critiques of high speed rail (HSR). Some of the critiques are worth noting, but a surprising number fall into the same trap the author accuses Randal of falling into.

For example, BruceMcF criticizes Randal for being "hypothetical" and scenario driven, yet virtually all the studies of passenger costs and traffic outside the Northeast corridor are hypothetical and scenario-driven in the sense he uses the term. They aren't based on hard numbers or experience. The United States simply has no meaningful experience with high-speed rail as it exists in Europe and Asia (and that includes the Northeast Corridor which doesn't get above 100 mph for most of the trip). U.S. experience with intercity rail is also dismal. So, any forecasts of ridership, potential fare revenues, or per passenger mile operating costs are largely hypothetical, assumption driven, and based on "best guesses."

In the worst cases, such as the California HSR intiative, the assumptions are wildly optimistic and one could be excused for viewing the commissioned reports as exercises in political gamesmenship. Reason Foundation analyzed the California initiative extensively in its HSR Due Deligence Report and we have pointed out other weaknesses in a U.S. system through our commentary on its job creation potential, relevance to European approaches, its potential cost, and its inability to serve broad-based transportation needs.

The Daily Kos author also engages in some of the same statistical slight of hand he accuses Randal of doing, mixing years and estimates and costs. He talks about operating cost/revenue ratio's but not total costs. He also implies that the only real relevant criteria is whether rail covers its operating costs, even claiming that a 2.5 million riders on the Ohio 3-C (Cincinnati-Columbus-Cleveland) corridor would be a "runaway financial success." No, the 3-C corridor would still not cover its total costs. Nor does he discuss meaningfully the very narrow segment of the traveling market that HSR attracts along this corridor. Based on the projections of an oustide consultant for the Ohio Rail Development Commission, 97 percent of the travel along the corridor would still be by car (2 percent by train, and the remainder by air and bus). See the Ohio Hub ridership and cost forecasts here.

On the whole, I think BruceMcF's post validates many of the arguments made by HSR critics--it reaches a tiny part of the traveling public and will be a huge financial black hole--and tends to talk past the legitimate criticisms.

Nevertheless, I also believe he makes several reasonable arguments about the weaknesses of the HSR critiques. Critics, for example, tend to mix too casually data on intracity passenger rail performance, slow and unreliable conventional intercity rail, and HSR. It would be far more productive to take the best of the Amtrak services--the Downeaster, Keystone Corridor, Hiawatha lines, plus the Acela--to make the points that HSR is unlikely to be successful in the U.S. One of the few examples of this kind of benchmarking analysis was also commissioned by the Ohio Rail Development Commission as part of its due diligence for the Ohio Hub.

In addition, I think BruceMcF is spot on in his critique of the way HSR critics use density. It's not the density of the corridor that matters. Its the employment/population densities at the station stops. The Acela is relatively successful because it links NY, Philly, and DC, not because the corridor is densely populated.

His characterization of the estimates of the potential ridership of the 3-C corridor in Ohio is accurate and more critics should spend time going through these reports. In fact, I generally agree that the Ohio Hub is probably one of the most viable HSR routes (although that should not be implied as a personal or institutional endorsement of the project). The simulations generated for the ORDC, which I believe are about the best we can do in the U.S., suggest that if the entire Midwest Corridor is built out, and various feeder systems provide support for HSR, it might cover its operating costs. None of the reports suggest that system will come anywhere close to covering a significant portion of the capital costs, and Ohio is relying on re-dedicating some existing funds to the corridor's development and the feds pumping the lionshare of the capital funds into the system. The reports are available from the Ohio Rail Development Commission's web site.

The ridership and cost estimates for the 3-C corridor were made by Transportation Economics and Management System (TEMS) and they use an approach that is different from standard methodologies (also critiqued in a report commissioned by the ORDC) which uses a more comprehensive approach to benefits by analysis land use and economic development impacts.

Anyway you slice it, however, IMO HSR benefits are underwhelming under the best scenarios. They certainly don't justify making HSR the cornerstone of US DOT policy.

For those interested, the post in the Daily Kos was targeted at a study Randal wrote for the Show Me Institute in Missouri, but replicated with state specific data for a number of other states including Indiana (Indiana Policy Review), Ohio (The Buckeye Institute), Colorado (The Independence Institute, and Florida (American Dream Coalition). Most of this work is based on Randal's work for the Cato Institute and the two most relevant (and widely cited) studies can be found here and here.

D.C. Council Official Nabbed on Taxi Regulation Bribery Charges

sam.staley@reason.org (Samuel Staley) — Fri, 25 Sep 2009 09:32:00 EDT

The chief of staff of a prominent Washington, D.C. councilman was arrested on Thursday for bribery charges involving legislation that would cap the number of taxicabs in the city. (See also here.) It's another example of how corruption is rife throughout the taxicab industry, and how regulation abets corrupt behavior.

In this case, the aide to the city councilman leading the charge to limit the number of taxicabs in the district, was indicted (not yet convicted) for taking $1,500 in bribes to ease legislation (introduced in July 2009) into law. The bill would effectively cap the number of licenses through a medallion or certification system (with an exception for hybrid vehicles), and the city currently has a moratorium on licensing new drivers.

Leaving aside the bizarre idea that a city the size of the District of Columbis is overserved by taxis, one of the striking aspects of this case is the low price of bribery. If the legislation goes into effect, medallions (licenses) could easily go for hundreds of thousands of dollars. In New York City, taxicab medallions sell for upwards of $500,000. This artificial value (or "rent" in public choice economics terms), is created soley by regulation, not market demand.

Imagine the financial gain an existing cab owner would get from a medallion system that artificially creates a value for the company in the hundreds of thousands of dollars? A couple thousand dollars to pay off a public official becomes a financial no brainer once the rate of return on this investment is calculated.

Moreover, once these madallions are in place, they become a powerful obstacle to reforms that benefit consumers and the riding public. The artifical value evolves into an entitlement for the owner, and attempts to open up the market to new entrepreneurs become nearly impossible because regulators don't want to "erode" the "value" of the existing businesses.

As we have written elsewhere (see here, here, and here), economists who have studied this issue generally believe that taxicab regulations interfere with an efficient market for taxicabs and fail to achieve significant benefits.

The purpose of any industry is to provide high quality and cost effective services to consumers. Taxicab regulation, as this case is showing, exists to serve the interests of the few company owners at the expense of drivers (who cannot open their own independent businesses) and riders (who must depend on a cumbersome regulatory bureaucracy to defend their interests).

Fiscal Reality Check Stops Louisiana Rail Boondoggle in Its Tracks

leonard.gilroy@reason.org (Leonard Gilroy) — Thu, 24 Sep 2009 16:27:00 EDT

Having lived in New Orleans for several years and having visited Baton Rouge periodically this year, when I first heard that rail advocates were pushing a new passenger line between the two cities, my first reaction was, "why?" It only takes 75-90 minutes to drive it by car, and if Amtrak would have thought there was any serious demand they would not have routed their Sunset Limited rail route out of New Orleans to bypass Baton Rouge entirely on its way to Lafayette, Houston and beyond.

Further, why would a state facing a massive, looming budget deficit invest precious resources into a heavily subsidized transportation project that will only benefit relatively few people at a tremendously high cost? And set the stage for an even bigger potential boondoggle if that new segment ultimately became part of the utopian Gulf Coast high speed rail project.

That's apparently the conclusion Louisiana Governor Bobby Jindal's administration came to as well, according to The Advocate. Despite rail backers' fanciful claims that "if you build it, they will come," the administration is acknowledging the larger fiscal handwriting on the wall—"if we build it, the state would have to subsidize it and there's no money."

Backers of a push to revive passenger rail service between Baton Rouge and New Orleans made a pitch for the project to Gov. Bobby Jindal’s aides but failed to change any minds.

The Jindal administration said on Aug. 21 the state was dropping possible plans to seek about $300 million in special federal aid for the rail line.

"Nothing has changed from our perspective," Stephen Waguespack, Jindal’s deputy chief of staff, said Wednesday. [...]

Jindal's office has said no money would be sought because it would be a waste of tax dollars. [...][W]illiam Ankner, secretary for the state Transportation and Development, said in August the state could not figure out how to come up with $18 million in yearly operating costs amid continuing state budget problems. [...]

Waguespack noted that the $18 million in annual state costs would have been in addition to the revenue raised by a $20 per ticket cost to ride the train. "And I assume that the number would only go up," he said of the $18 million.

That's a safe assumption. We've done a great deal of research on mass transit and high-speed rail, and despite the allure of "free" federal money on the upfront capital cost side, there is no rail system in the U.S. where fare box collections cover operational and maintenance costs. Just ask New Orleans how much it's subsidizing its streetcar (light-rail) system, then scale it up from there.

However, rail backers are a persistent lot. This and other rail ideas (like a fantasy MagLev train across Lake Pontchartrain about a decade ago) have been floating around in Louisiana for a long time and never seem to die away. The point that rail makes utterly no sense and would be a fiscal drain in a fiscal crisis doesn't seem to dawn on proponents however, who are vowing to fight on despite this latest setback:

[State Rep. Michael] Jackson said U.S. Rep. Anh "Joseph" Cao, a New Orleans Republican, who had a representative at the meeting, planned to see if a request for aid could be filed by someone other than the Jindal administration or if the deadline for applications could be extended. Cao is a member of the U.S. House Transportation and Infrastructure Committee.

Helping to pay for railroad operational costs through higher property taxes along the corridor is another option, Jackson said.

"They are putting a great deal of the burden on the locals, on somebody else other than the state," he said of Jindal’s office.

This assertion is laughable—who exactly is putting a "great deal of burden on the locals"? Is it the Governor who says no because this would be a waste of taxpayer money, or is it the rail backers so bent on this boondoggle that they are proposing to hike the property taxes of folks along the corridor to help subsidize it? In the words of Homer Simpson, "Doh!"

There's a similar tale from Georgia that's relevant here, where a few years ago Atlanta-area southern exurbs were clamoring for state rail dollars to extend rail service to their unpopulated areas. But when the state said no and told the locals to pay for it themselves if they really wanted it, local officials balked. See my 2005 blog post on this here.

Here's a thought—if there's such a demand for BR-to-NOLA rail, then let the locals make the decision to fund it themselves. If it's that high of a priority, they'll certainly be willing to find the funds to make it happen, right? Doubtful at best. When the rubber meets the road, local officials know that if they were to cast a vote for a property tax hike, they would face an irate citizenry demanding to know why their property taxes were going up in a recession to fund a unnecessary project that they will rarely, if ever, use.

Let's hope that more policymakers (like those in Iowa, per Sam's post yesterday) realize that rail is not just bad transportation and mobility policy, generally speaking, it's also bad fiscal policy.

UPDATE: Sam and I must be on the same page today. Here's what he had to say about Transportation Secretary Ray LaHood's "if you built it they will come" comments yesterday, which are as relevant in Louisiana as they are anywhere else:

Secretary LaHood should read the reports from his own agency, or, more specifically, the Federal Transit Administration. In a 2007 "Contractor Performance Assessment Report," the FTA found that 40 percent of New Starts transit project ridership was below two thirds of the forecast used to justify federal investment. About half were within 80 percent of forecasted ridership or higher. This is an incredibly high "margin of error" and really reflects the dismal performance of most of these projects (the lionshare of which are rail projects). Five were within 10 percent (over or under) of their forecasted ridership. Only one (St. Louis St. Clair rail extension) was significantly over forecasted ridership.

Real-world performance certainly doesn't support the idea that if cities and states build new rails systems the riders will simply materialize to take advantage of them (even with massive public subsidies).

Of course, most of these projects are intracity rail projects, but intercity train ridership has fared even worse historically.

LaHood on Trains: If You Build It, They Will Ride

sam.staley@reason.org (Samuel Staley) — Thu, 24 Sep 2009 13:49:00 EDT

U.S. Department of Transportation Secretary Ray LaHood took his rail evangelism on the road to Columbus, Ohio this week, saying: "If you build it, they will come." A conventional intercity passenger rail service proposal in Ohio is estimated to cost $581 million and require a subsidy of about $35 per train passenger.

According to the Columbus Dispatch:

Although not endorsing Ohio's bid over 39 other states', LaHood said passenger rail would be a success here.

"If you build it, they will come," he said of riders.

"People like to ride trains," LaHood told The Dispatch editorial board. "You don't build these trains to travel faster, although you sometimes do."

He said people could read books, work on their computers, eat and perform other tasks on trains that are difficult or illegal to do while driving.

Secretary LaHood should read the reports from his own agency, or, more specifically, the Federal Transit Administration. In a 2007 "Contractor Performance Assessment Report," the FTA found that 40 percent of New Starts transit project ridership was below two thirds of the forecast used to justify federal investment. About half were within 80 percent of forecasted ridership or higher. This is an incredibly high "margin of error" and really reflects the dismal performance of most of these projects (the lionshare of which are rail projects). Five were within 10 percent (over or under) of their forecasted ridership. Only one (St. Louis St. Clair rail extension) was significantly over forecasted ridership.

Real-world performance certainly doesn't support the idea that if cities and states build new rails systems the riders will simply materialize to take advantage of them (even with massive public subsidies).

Of course, most of these projects are intracity rail projects, but intercity train ridership has fared even worse historically.

High Speed Rail...in Iowa?

sam.staley@reason.org (Samuel Staley) — Wed, 23 Sep 2009 07:52:00 EDT

If anyone is interested in seeing how far intercity rail silliness can get when federal dollars dangle, take a look at what's being proposed in Iowa. According to the Des Moines (Iowa) Register, the state's governor is on a "whistle stop tour" of the state to drum up support for new intercity rail service. The state is applying for $46 million in stimulus money to plan and work toward establishing intercity rail service from Iowa's biggest cities and Chicago. The mayors of Iowa City and Des Moines are on board as well as the chamber of commerce.

The only problem is that 1) Iowa-Chicago intercity rail service was dropped decades ago by Amtrak because practically no one road the trains, and 2) it is now faster to drive to major cities than take the conventional trains. According to the Register:

"The proposed train between Iowa City and Chicago, via the Quad Cities, would take 4 hours 58 minutes over 222 miles. The train could reach a peak speed of 79 mph, Amtrak officials said, but its average would be 45 mph.

"Travelers could drive from Iowa City to Chicago via interstates in 3 hours 43 minutes, more than an hour faster than the train."

and

"The Iowa City train would require $32.5 million for Iowa track improvements on the Iowa Interstate Railroad, plus equipment costs of $1.9 million and annual operating subsidies of $1.6 million, state officials said. Upgrading tracks between Iowa City and Des Moines for passenger trains would cost an additional $106 million.

"The proposed route between Dubuque and Chicago on Canadian National tracks would be even slower than the Iowa City train, requiring 5 hours 10 minutes for a 178-mile trip. That's an average speed of 35 mph."

But, rail advocates note, this is really just a start. The goal is to get to high-speed rail, and they are blatant in their recognition of the political nature (rather than economic justification) for the service.

"Richard Harnish, director of the Midwest High-Speed Rail Coalition, a Chicago advocacy group, said the new rail service proposed for Iowa should be viewed as "quick-start" projects that can be running quickly.

"The passenger trains could eventually operate at much faster speeds "if Iowans make it clear to their legislators that they want it to be as good as it can be," he said.

"Tammy Nicholson, director of the Iowa Department of Transportation's Office of Rail Transportation, said passenger rail service should be viewed as a key component of the state's overall transportation system.

"In order to deal with growing highway congestion for both freight and passengers, we have to utilize these other corridors that we have for transportation," she said.

Sorry, it's hard to buy the idea that the highway corridor between Iowa City or Des Moines to Chicago is so congested that passenger rail--whether conventional or high speed--is justified as an alternative to a cheap intercity express bus, the automobile, or flying. Business travelers, the primary market for intercity rail, will alost always choose flying.

I doubt this proposal would go anywhere if the state had to front the full costs, let alone depend on passengers to cover the operating costs through their fares.

Phoenix Light Rail Ridership Hits Forecast, Sort Of

sam.staley@reason.org (Samuel Staley) — Tue, 22 Sep 2009 10:21:00 EDT

The New York Times recently reported on the success of the Phoenix light-rail line exceeding its forecast ridership. Of course, it's telling that the fact the light-rail line exceeded its forecast is newsworthy. Most don't. In fact, it's now considered a "success" if actual ridership falls 20% short of the forecasts used to justify the investment.

A Federal Transit Administration report published in 2007 titled "Contractor Performance Assessment" tracked 19 fixed guideway (mostly rail) transit projects. Based on ridership forecasts from the initial planning documents (Alternatives Analysis), just three (the San Diego El Cajun line, the St. Louis Initial system, and St. Louis Clair Extension) exceeded their forecasted ridership. Three others were within 20 percent of their forecasted ridership: BART Colma line, Denver's SW light rail, and the Salt Lake City south light rail line.

Notably, the FTA report lauds the improvement in the forecasts, even though systemic biases in over estimating ridership are clear:

"Overall, almost 60 percent of the projects studied [in the FTA report] can be expected to achieve at least two-thirds of their forecast ridership by their forecast year. Comparing these results to the projects analyzed in the [earlier] 1990 study reveals that more than half of ridership forecasts for the recent projects performed better than the best forecast of the older study."

In other words, the record of forecasted ridership is still dismal--few, if any are even expected to meet their original ridership forecasts. The benchmark, in fact, appears to be whether these forecasts are within 20 percent (on fifth) of the forecast used to justify a public commitment to the project. (So, as a rule of thumb, take projected ridership and discount it by 20 percent for new projects.)

But, still, give Phoenix it's due. Average weekday boardings are running at 33,000, higher than the forecast of 26,000. Unfortunately, a few cautionary flags are evident in the actual ridership numbers. According to the New York Times:

"The light rail here, which opened in December, has been a greater success than its proponents thought it would be, but not quite the way they envisioned. Unlike the rest of the country’s public transportation systems, which are used principally by commuters, the 20 miles of light rail here stretching from central Phoenix to Mesa and Tempe is used largely by people going to restaurants, bars, ball games and cultural events downtown.

"The rail was projected to attract 26,000 riders per day, but the number is closer to 33,000, boosted in large part by weekend riders. Only 27 percent use the train for work, according to its operator, compared with 60 percent of other public transit users on average nationwide."

This should be troubling for light-rail supporters. Fixed guideway transit works best when it moves people from one high density place to another. That's why they tend to work better on hub-and-spoke transportation systems that key in around a downtown or Central Business District. With such a low commuter share of travel, Phoenex's light rail system doesn't appear to be competitive with its more important travel market: downtown commuters.

Back to the Intercity Bus

sam.staley@reason.org (Samuel Staley) — Mon, 31 Aug 2009 15:17:00 EDT

The Washington Post has a revealing report on the rise of intercity bus lines on the East Coast. In just a few years, perhaps as many as a dozen bus lines have started up as riders take advantage of reliable service and low costs.

"Between 2005 and 2007, according to the American Bus Association, nationwide ridership surged by 20 percent, increasing from 631 million passenger trips to 751 million. "We move about the same numbers as domestic [air] carriers each year," said ABA spokesman Eron Shosteck, a bus rider himself, "and more people in two weeks than Amtrak does all year."

"As Shosteck put it, "This is Transportation 2.0."

Bus companies include Greyhound, Megabus, Bolt, Hola, Chinatown, Tripper Bus, Double Happiness and others. The "pioneer" was Fung Wa bus line which ferried immigrant Chinese workers and students between Chinatowns in Boston and New York in the late 1990s. Now, the cheap fares (plus high gas prices) have given intercity bus service a new lease on life.

"Credit [for the intercity bus line growth] goes mainly to the new convoy of buses, which appropriated the [low cost budget] Chinatown model, then gave it a substantial upgrade. This new species offers curbside pickup and drop-offs, cheap fares, clean restrooms, express service, online reservations, free WiFi and loyalty programs. Neither Amtrak, currently exploring WiFi service on trains, nor my car can make such declarations.

"The bus fares undercut Amtrak and, depending on the number of passengers, personal vehicles. One-way fares on the train start at $49, compared with $1 to $30 on the bus. As for my car, Townsend determined that gas for my make and model would add up to $43.78, plus about $20 for tolls. The buses also earn hugs from carbon-emission watchers. According to such experts as Schwieterman and the ABA, one bus can potentially eliminate 55 cars from the road. The Union of Concerned Scientists' "Getting There Greener" guide notes that a couple can halve their carbon output by taking the bus and leaving their hybrid car in the garage."

Of course, this is the same corridor that already has extensive intercity rail, including "high speed" rail in the form of the Acela trains. Yet, bus lines are growing and becoming more competitive with each other, and consumers benefit as a result.

Washington Post Columnist Blasts High-Speed Rail

sam.staley@reason.org (Samuel Staley) — Mon, 24 Aug 2009 13:18:00 EDT

Washington Post columnist Robert J. Samuelson takes on high-speed rail in his most recent commentary, calling its support based on "mythology" and "not just misinformed" but "antisocial." With transit systems falling apart across the nation, putting billions of dollars into high-speed rail simply doesn't make sense.

Given this [the U.S. experience with Amtrak], you'd think even the dullest politician wouldn't expand rail subsidies, especially considering the almost $11 trillion in projected federal budget deficits between now and 2019. But no, the administration has made high-speed rail a top priority. It's already proposed spending $13 billion ($8 billion in the "stimulus" package and $1 billion annually for five years) as a down payment on high-speed rail in 10 "corridors," including Philadelphia to Pittsburgh and Houston to New Orleans.

The White House promises fabulous benefits. High-speed rail "will loosen the congestion suffocating our highways and skyways," says Vice President Biden. A high-speed rail system would eliminate carbon dioxide emissions "equal to removing 1 million cars from our roads," adds the president. Relieve congestion. Fight global warming. Reduce oil imports. The vision is seductive. The audience is willing. Many Americans love trains and regard other countries' systems (say, Spain's rapid trains between Madrid and Barcelona, running at about 150 mph) as evidence of U.S. technological inferiority.

There's only one catch: The vision is a mirage. The costs of high-speed rail would be huge, and the public benefits meager.

It's also nice to see Harvard economist Ed Glaeser and the Cato Institute's Randal O'Toole cited in the same article in the Washington Post.

Reason Foundation's work on high-speed rail can be found on our transportation page.

Taxi Drivers Protest Franchise Policy in Los Angeles

sam.staley@reason.org (Samuel Staley) — Wed, 19 Aug 2009 11:23:00 EDT

Los Angeles taxi drivers, many of them immigrants, are protesting the city's reform efforts, arguing there should have been a public hearing before granting a contract to an outside consultant. The consultant is tasked with researching and making recommendations for reform.

On one level, the taxi drivers are right to be suspicous of outside consultants on taxi reform. Most consultants tend to favor the status quo and a tightly regulated taxi industry that inherently limits opportunities for drivers. Thus, many of these reports end up supporting caps on taxis, heavy regulation of companies, and regulating fares.

And Los Angeles has a particularly onerous regulatory process, significantly limiting competition and the ability to start a business and build equity. We highlighted this in a Reason Foundation study on "boostrap entrepreneurship" and economic opportunity in several U.S. cities (including LA). We devoted an entire chapter of the report to taxi regulation.

The current LA taxi driver protest is a bit different, however. I suspect the contract itself is not the real issue. Rather, its the fact the taxi drivers don't have a voice in the process. In particular, they see the city's franchise system as limiting their ability to make a decent living and wage.

But taxi drivers fear the whole process may now be "compromised," said Hamid Khan of the Los Angeles Taxi Workers Alliance, an activist group.

Under the current city-regulated system, protesters say, most of L.A.'s 2,300 cabbies barely clear the minimum wage, even after working up to 16 hours a day, sometimes seven days a week. Many cabbies suffer work-related health problems and stress, the drivers say.

Still, the drivers said, most of the millions of dollars generated annually in fare revenue ends up in the hands of nine cab companies awarded franchises by the city.

Activists liken the "exploitation" of cabbies, who are mostly immigrants, to the plight of janitors, carwash employees and other low-wage workers whose predicaments have triggered highly publicized labor campaigns in recent years.

The Taxi Workers alliance is putting pressure on the city to revise the current franchise system, which is scheduled to expire at the end of next year. Critics call the system rife with opportunities for corruption and fraud, including few protections for drivers. The shortcomings were identified in a 2006 UCLA study.

Based on my research and experience working with cities on taxi deregulation, I think the taxi drivers have a point. The key, however, is not to go toward a medallion system, but to adopt a permitting process that grants licenses to drivers and companies based on performance. Performance criteria would center on issues such as fraud, abuse, and customer complaints, and be quantified with clear consequences based on findings of fact.

An example of how this might work in the real world can be found in my report to the Village of Port Chester, New York.

Will High Speed Rail Encourage Sprawl?

sam.staley@reason.org (Samuel Staley) — Tue, 18 Aug 2009 23:06:00 EDT

Harvard economist Ed Glaeser has yet another article on high-speed rail in the New York Times' Economix blog. This time, Ed takes his aim at the economic development claims of high speed rail advocates. (I also discussed this at length in a commentary "High Speed Rail Fails as a Jobs Program" published this week on reason.org)

Specifically, Ed points out:

"Any transportation investment can create large economic ripples only if it significantly increases the speed at which an area with cheap real-estate gains access to a booming place that doesn’t have any comparable, closer available land area. For example, in Spain, the city of Ciudad Real seems to have gotten a big lift thanks to high-speed rail because people can now live in Ciudad Real, where housing is cheaper, and commute into Madrid.

"This logic has led some to think that high-speed rail will do wonders transforming Buffalo into a back office for Manhattan. Buffalo is 376 miles from Manhattan, so a 150-mile-an-hour rail line will take two and a half hours, which is not going to be significantly faster than air. Moreover, vast amounts of low-cost space are closer to Manhattan than the shores of Lake Erie. Faster connections between Buffalo and Toronto might do more, but in that case speed is hampered by the burdens of border crossing.

"Philadelphia is the more natural beneficiary of high-speed rail access to Manhattan; there are already people who live in Philadelphia and commute to New York. Yet even in this most propitious setting, the coming of Acela seems to have had little impact on the population decline of Philadelphia or growth of Wilmington. Perhaps the absence of any trend break in population growth around 2000 just reflects the incremental nature of the Acela investment, but there is little here to bring confidence that rail lines revitalize cities."

Indeed, benchmark data I helped analyze for intercity rail for the Ohio Hub (Chapter 6 of the report) suggested that any economic benefits (excluding costs) would be from direct expenditures on personnel and equipment. A comparison of economic development and land use around Amtrak stations with daily boardings similar to those forecast for Ohio high-speed rail stations found negligible impacts, even though the lines analyzed (Hiawatha, Keystone, and Downeaster) were among the highest performing ones in the Amtrak system.

My only quibble with Ed's analysis is that I don't think high-speed rail will encourage sprawl. The economic impacts in the U.S. (unlike other nations such as Japan, Spain, or even China) will be so small that land use and urban development patterns will not be influenced in a meaningful way.

High-Speed Rail Fails As a Jobs Program

sam.staley@reason.org (Samuel Staley) — Mon, 17 Aug 2009 00:00:00 EDT

The only major transportation program inserted into the $787 billion federal stimulus package was $8 billion for so-called high-speed rail. The Obama administration later added another $5 billion to the passenger rail kitty, bringing the federal commitment to $13 billion. The administration’s initiative, however, may soon become a potent symbol of the economic stimulus program’s failures.

In April, President Obama claimed “my high speed rail proposal will lead to innovations in the way we travel” and new rail lines “will generate many thousands of construction jobs over several years, as well as permanent jobs for rail employees and increased economic activity in the destinations these trains serve.”

Even House Minority Whip Eric Cantor, who voted against the stimulus bill, now wildly praises rail’s job-creation potential, writing, “It is estimated that creating a high-speed railway through Virginia will generate as many as 185,500 jobs, as much as $21.2 billion in economic development, and pull nearly 6.5 million cars off the road annually. Providing a high-speed rail service from Washington, D.C. to Richmond will drive economic development throughout our region for many years to come.”

Michigan Gov. Jennifer Granholm calls the Midwest high-speed rail corridor a “one-of-a-kind partnership that will create jobs for Michigan workers, enhance transportation options for citizens, and provide significant economic development opportunities for communities.”

Parroting estimates made by the Association of American Railroads, Gov. Granholm claims that a one billion dollar investment in rail will generate 20,000 jobs. The $1 billion estimate for “investment” refers to construction, maintenance, and the purchase of equipment such as locomotives and train cars to run on rail lines.

Setting aside Rep. Cantor’s ludicrous 185,000 job creation claims, which are so unreasonably high as to strain credibility let alone plausibility, even the 20,000 jobs per billion dollars spent figure cited by Gov. Granholm would represent a very expensive public jobs program. At the most basic level, that works out to $50,000 per job and would likely represent a subsidy higher than the wages paid to the typical worker.

There are, in fact, better and cheaper ways to create jobs. For example, the federal government could give tax credits to private firms that create new jobs. This type of new jobs subsidy would run about $20,000 per worker and spur up to 1.3 million jobs according analysis by the Upjohn Institute for Employment Research in Michigan.

Of course, rail proponents argue that spending money now on high-speed rail is a long-term investment that will pay off in higher economic productivity over the long-haul. But these job creation and income estimates they use are based on spending for freight rail, not passenger rail.

Freight rail in America is a crucial part of our transportation infrastructure, accounting for 43 percent of the shipment of goods and services from one city to the other. Thus, investments in freight rail have a direct impact on the bottom line for American businesses, increasing the speed and reliability of goods shipment and improving productivity.

Passenger rail in the U.S. is a different story. Passenger rail currently carries a very small portion of city-to-city travel—the market targeted by high-speed rail—and it’s likely to remain modest well into the future. In 2008, Amtrak carried 28.7 million passengers. By comparison, there were 687 million airline passengers in 2008, in part because air service provides frequent high-speed travel to geographically distant cities. Then there’s our well-developed highway network that makes automobiles very competitive with rail for distances under 200 miles. In most cases, once travel and wait times to train stations are factored in, travelers will spend as much time in route on the train as they will in a car.

Consider a trip from Los Angeles to San Francisco, or Chicago to St. Louis, for a typical high-speed train traveler. You’ll likely have to drive to the train station and pay to park. Once arriving in downtown St. Louis or San Francisco, you will like have to take a taxi or rent a car to get to your hotel or meeting place (which is likely to be outside the central business district). The reliable, diverse, and nimble transit system that many advocates envision surrounding high-speed rail stations simply doesn’t exist in most cities today, limiting the appeal of trains. To compensate for these disadvantages, taxpayers will have to steeply subsidize train ticket prices for the business travelers and tourists that are most likely to use them.

Ultimately, high-speed rail’s impacts on American travel patterns and employment productivity are going to be negligible, and the actual job creation potential for high speed rail is much more modest than proponents admit.

Take, for example, the Ohio Hub corridor linking Cincinnati, Cleveland, Columbus, and Toledo to regional destinations such as Chicago and Toronto. Ohio is one of the nation’s largest state economies, employing 5.3 million people. As an old-line manufacturing state, Ohio has lost 300,000 jobs just in the past year. Needless to say, Ohioans will be attracted to the optimistic rhetoric of rail’s job creation potential. Moreover, preliminary estimates by independent consultants suggest the Ohio Hub may actually cover its annual operating costs (although supporters are counting on the federal government covering 80 percent of capital costs of the $3.7 billion project).

Yet, even with these federal subsidies the consultant reports suggest that a $2.3 billion investment in building the rail corridor would generate only 54,540 jobs over the projected nine-year construction phase. That works out to 2,635 jobs per year at a cost of $42,170 per job. Further analysis found 16,700 permanent jobs would be created by the system once the system was up and running, assuming optimistically that ridership reaches forecasted levels and fares are set to cover its operating costs. While that might seem like a lot of jobs, the effort will do little to stem the economic tide turning against Ohio and other states facing the headwinds of global competition and a rising services-based economy.

For transportation investments to have a meaningful economic impact, they will need to cost-effectively improve America’s ability to move goods, services, and people from one place to another. High-speed rail doesn’t do that. It is an extremely costly way to achieve limited portions of these goals, and it inevitably fails as a broad-based solution to the country’s transportation challenges.

In the end, high-speed rail’s contribution to the economic recovery and the nation’s economic productivity is being oversold. Elected officials, from Rep. Cantor to President Obama, would do a far greater service to the public’s understanding of the economy if they would focus on economic fundamentals, not glitzy boutique policy programs that will inevitably fail to meet grandiose expectations they have created for them.

Sam Staley, Ph.D., is director of urban growth and land use policy for Reason Foundation and co-author of Mobility First: A New Vision for Transportation in a Globally Competitive 21st Century (Rowman & Littlefield).

China's Amazing Bullet Train

sam.staley@reason.org (Samuel Staley) — Tue, 11 Aug 2009 10:43:00 EDT

CNN and Money magazine spotlight China's "amazing" bullet trains and their role in knitting together the emerging economic giant. The story emphasizes the economic development potential of the bullet train, a theme that resonates well in the U.S. given the Obama Administration's interest in the idea for 10 U.S. rail corridors.

"Creating a rail system in a country of 1.3 billion people guarantees that the scale will be gargantuan. Almost 16,000 miles of new track will have been laid when the build-out is done in 2020. China will consume about 117 million tons of concrete just to construct the buttresses on which the tracks will be carried. The total amount of rolled steel on the Beijing-to-Shanghai line alone would be enough to construct 120 copies of the "Bird's Nest" -- the iconic Olympic stadium in Beijing. The top speed on trains that will run from Beijing to Shanghai will approach 220 miles an hour. Last year passengers in China made 1.4 billion rail journeys, and Chinese railroad officials expect that in a nation whose major cities are already choked with traffic, the figure could easily double over the next decade.

"Construction on the vast multibillion-dollar project commenced in 2005 and will run through 2020. This year China will invest $50 billion in its new high-speed passenger rail system, more than double the amount spent in 2008. By the time the project is completed, Beijing will have pumped $300 billion into it. This effort is of more than passing historical interest. It can be seen properly as part and parcel of China's economic rise as a developing nation modernizing at warp speed, catching up with the rich world and in some instances -- like high-speed rail -- leapfrogging it entirely.

Like in the U.S. (and elswhere, such as Spain), the high-speed rail investments are intended to be a boon to economic development. More than 110,000 Chinese are working on its rail project, and the state-owned rail companies may be scooping up 20,000 university graduates to manage and engineer the project. The project is becoming a symbol of how a stimulus package "should" work.

"But this project symbolizes even more than that. This monumental infrastructure build-out has become the centerpiece of China's effort to navigate the global financial crisis and the ensuing recession."

Unfortunately, this would be the wrong lesson to apply to the U.S. from this project in China.

The high-speed rail train system in China may well make sense given China's current state of economic development. China is not a high-income economy and mobility is a significant challenge for the vast majority of the urban and business population. Trains are still highly utilized, and air travel is very expensive by Chinese income standards. In short, high-speed trains may indeed be an alternative form of mass intercity transit in China. A bullet-train may well become a relatively inexpensive substitute for intercity travel for the middle class. Moreover, air travel is very undeveloped for connections among smaller and mid-size cities (those with populations under 5 millioni in population).

These conditions do not exist in highly mobile, high income nations like the U.S. Cheap air travel connects our major cities, most of which are well below the megacity status, and our major cities are geographically closer together. They don't even seem to exist in Europe, Japan, or even Taiwan.

And it's useful to remind ourselves (in the West) that China is still not a politically free country, giving it certain implementation "advantages" that nations such as the U.S. that respect personal liberities don't.

"The other key thing to remember is that China's brand-new high-speed rail network will be the product of the country's economic system. For all the free-market progress China has made in the past 30 years, a heavy "command and control" component still exists. The central government in Beijing holds all the key levers of power. The Railroad Ministry sets the plans, state-owned banks lend the money, and state-owned companies get the projects rolling. In the meantime many private businesses struggle to get bank loans.

"Indeed, "command and control" is an especially fitting metaphor for the high-speed railway build-out. Until 1984 the Ministry of Railroads and what are now the construction companies were all part of China's People's Liberation Army. To this day, many of the senior and middle management ranks are made up of former army officers -- conservative executives who are very good at following orders.

"The result is that when plans are made, they also get executed. In America, jokes Sean Maloney, the No. 3 executive at Intel, "NIMBY-ism [Not in My Backyard] is still an issue. In China, it's more like IMBY-ism. They plan, they build things, and they move fast."

Critiquing Transit and the Job Creation Claims of High-Speed Rail

sam.staley@reason.org (Samuel Staley) — Sun, 09 Aug 2009 08:45:00 EDT

The Illinois Policy Institute has published an article by policy analyst (and Chicago talk radio personality) Jerry Agar examining the job creation and economic development benefits of high-speed rail. The article features a dual interview with the Cato Institute's Randal O'Toole and me (Sam Staley).

Here's a quick sample:

IPI: [Michigan] Gov. Granholm says that high-speed rail will create 59,000 permanent jobs in the Midwest. She is quoting the U.S. Department of Commerce which claims that, "every dollar spent on investments in our freight railroads — tracks, equipment, locomotives, bridges — yields $3 in economic output. In addition, each $1 billion of rail investment creates 20,000 jobs." Is she (and the Commerce Department) correct?

RO: I do not believe so. They are freely adding all sorts of multipliers that are unlikely in the extreme. Besides, an investment in rail freight is not the same as an investment in passenger rail. Rail freight is highly efficient, pays for itself, and saves energy over highway freight. Passenger rail is highly inefficient, requires gargantuan subsidies, and saves no energy over highway travel (in fact, it is far less energy-efficient than intercity buses).

SS: Virtually all regional economists recognize that freight rail provides important economic benefits because it (in a competitive environment) reduces transportation costs and improves productivity for industry and facilitates commerce.

Passenger rail does not have similar benefits. Passenger rail riders typically spend more time traveling (not less) and travel greater distances than automobile travelers. Moreover, passenger rail is much more highly subsidized than either private freight rail or passenger automobiles. So, the net impact of public subsidies is to take money out of the productive economy, not add to it.

Passenger rail's benefits are an assumption, not a fact, and the estimates for freight multipliers are not comparable to passenger rail. (Even assuming the freight rail multipliers are valid, which is an arguable point as well.)

I also took this opportunity to highlight a rarely discussed item: transit agency mismanagement and poorly aligned incentives.

IPI: Gov. Granholm is proposing to cut Amtrak funding. Amtrak bleeds tax dollars. Why do they need more money when ridership is up? And why have they never made money?

SS: The transit business model is fundamentally broken. This is self-evident if we look at transit operations objectively. No business can operate when every new customer represents a net loss to the operation. This is where transit ridership is. Since only 20-30% of costs are covered by fares, every new passenger represents costs 3-4 times greater than the revenue she/he generates. That's why transit agencies are even in worse trouble now. They don't have a business model that makes the customer valuable. Their success is based on chasing federal (and state) grant money, and spending dedicated local options sales taxes on capital projects (or expanded routes) that add little to the overall value of the transit systems or productivity of the agency.

This is unsustainable. Rather than focusing on getting more money from Washington, DC, we should be using these events to broker a new discussion on the role of transit in our cities, and how we can fundamentally reform transit planning, operations, and management to make it a viable option again.

This means moving toward a more traditional business model that puts the transit user at the center of the business model.

Transit could have a much bigger impact if management practices were fundamentally re-aligned to focus on the customer--the rider. This can't happen, however, as long as the fare box "recovery" ratio is a paltry 20-25 percent for most transit systems. Broad, institutional reform, including federal deregulation of labor practices, will be crucial for building a productive and sustainable transit industry in the U.S.

Harvard Economist Glaeser on the Costs of High Speed Rail

sam.staley@reason.org (Samuel Staley) — Wed, 05 Aug 2009 15:09:00 EDT

Harvard University economist has a useful thumbnail cost assessment of high-speed rail in his most recent contribution to the New York Times Blog Economix. It's the second installment of a four part series Prof. Glaeser plans to publish.

Glaeser makes several assumptions to calculate the costs and benefits of a stylized high-speed rail link between Houston and Dallas to make his point. This is a good choice, because this is exactly the kind of corridor that would most likely benefit from high-speed rail. The employment centers are far enough away (yet close enough) that trains might effectively compete with air travel, and the metro areas are very large--about 6 million people (in the top 10 for U.S. urban areas). Moreover, most of his assumptions and stylized facts favor rail. For example, he assumes that the Houston-Dallas high-speed rail corridor would attract as many riders as current air travel between the two cities. (Unfortunately, he doesn't mention whether these air travelers are flying to their final destination or continuing on to other national destinations; Dallas is an American Airlines Hub and Houston is a Continental Airlines hub.)

Still, the results are sobering for high-speed rail advocates. Concludes Glaeser:

"Now it’s just down to multiplying: 1.5 million trips times $68 a trip means $102 million for benefits minus operating costs. Annual capital costs came in $648 million, more than six times that amount. If you think that the right number is three million trips, then the benefits rise to $200 million, and the ratio between the per rider net benefits and costs drops to one-to-three. This is the cruel arithmetic faced by people, like myself, who would love to be pro-rail."

Prof. Glaeser's first article focused on the general question of whether high-speed reail was a good public investment. The third and fourth blog contributions will focus on congestion and the environment.

The analysis is not definitive by any stretch, but it's a useful and highly relevant illustration using good rules of thumb from the academic, research, and policy literature.

Oberstar Misleads on Light Rail, Highway Costs

bob.poole@reason.org (Robert Poole) — Fri, 24 Jul 2009 14:53:00 EDT

Rep. James Oberstar (D-MN) is perhaps the most influential player in the debate on reshaping the federal program for highways and transit. He’s a strong advocate for spending more highway user taxes on mass transit systems, yet he continues to propagate misinformation about the relative cost and performance of freeways and rail transit.

The other day, in an interview with Blueprint America, Rep. Oberstar said the following:

“In an urban setting, a mile of freeway may cost in the range of $46 to $50 million. The same mile of urban light rail will cost $26 million and move twice as many people—or three times as many people.”

What is this man smoking?

His figures on freeway costs, at least for the largest urban areas, are in the right ballpark. At today’s construction costs, a four-lane freeway can cost $40 to $60 million to build. But his light rail figure is completely wrong. In a news release in early 2005, the Federal Transit Administration provided figures on nine light rail projects for which it had approved “full funding grant agreements.” The cost per mile ranged from a low of $44.5 million (Charlotte) to a high of $254 million (Pittsburgh). The average of these—and these are costs as of five years ago—was $124 million per mile. That’s five times what Oberstar claimed. And the highly touted Central Link light rail that opened just the other day in Seattle weighs in at $171 million per mile, four to five times more than a mile of freeway.

But what about people-moving capacity?

Freeways typically move about 2,200 vehicles/lane/hour during peak periods. So a four-lane freeway would move about 9,000 people per hour. Assuming six hours of peak conditions per weekday and that’s 54,000 vehicles moved just during rush hours. If the freeway averages only 1,000 vehicles/lane/hour for the remaining 18 hours a day, that’s another 72,000 vehicles, for a daily total of 126,000. And at the typical weekday average of 1.2 people/car, that’s a bit over 150,000 people per day on the freeway.

What about the light rail lines? The FTA’s estimates for light rail ridership by 2020 average just over 25,000 riders per day. In other words, the four-lane freeway that Oberstar compares light rail to will handle six times as many people as the rail line. That’s about as opposite as you can get to his claim that the rail will handle two or three times more people than the freeway.

Oberstar has been making this kind of comparison in interviews for years; I suspect he really believes it. And there are a lot of people who think it’s just fine for him to believe and propagate this nonsense. But nonsense is no basis for making national transportation policy. Every billion dollars of highway user tax money spent on serving a handful of people via light rail is a billion dollars that could do vastly more good adding high-occupancy toll (HOT) and bus rapid transit (BRT) lanes to our congested freeways.

Public Transit Association Report Transit is a Bad Deal

adrian.moore@reason.org (Adrian Moore) — Thu, 16 Jul 2009 15:42:00 EDT

The American Public Transit Association released a statement saying "According to the 2009 Urban Mobility Report, public transportation saved 646 million hours in travel time and 398 million gallons of fuel. Without public transportation, the report states that congestion costs would have risen 16 percent to an additional $13.7 billion since 2005."

Well, since total transit spending is $44.3 billion per year, this means we are spending $3.23 for every $1.00 purportedly saved from congestion costs by transit. What a deal!! A few more "values" like that and we will be flat broke.

New York City Transit Users Strike Back

sam.staley@reason.org (Samuel Staley) — Thu, 16 Jul 2009 11:04:00 EDT

I just ran into an exceedingly useful web site sponsored by New York City "straphangers" organization. Straphangers is a local term for transit users. The organization is also a project of the New York Public Interest Research Group, an organization usually associated with liberal causes and activism.

The Straphangers Campaign just recently released their annual report card on the city's subway system, comparing performance subway line by subway line. As they describe it:

"What do subway riders want?

"They want short waits, trains that arrive regularly, a chance for a seat, a clean car and understandable announcements that tell them what they need to know. That’s what MTA New York City Transit’s own polling of its riders shows.¹

"This "State of the Subways" Report Card tells riders how their lines do on these key aspects of service. We look at six measures of subway performance for the city’s 22 major subway lines, using recent data compiled by MTA New York City Transit.² Much of the information has not been released publicly before on a line-by-line basis. Most of the measures are for all or the last half of 2008.

It's well worth a read.

Phoenix Light Rail Ridership Tanks

sam.staley@reason.org (Samuel Staley) — Wed, 15 Jul 2009 15:16:00 EDT

Phoneix light rail ridership has hit a low for the year, averaging just 29,469 boardings per day on an average weekday in June according to the transit authority. That's down from 30,617 in January and the 2009 peak of 37,386 in April. Overall boardings were 815,566 for June, down from the peak of over 1 million in April.

Transit agency folks say this isn't that much of a surprise. Temperatures are exceeding 100 degrees, Arizona State University is out for the summer, and there are fewer special events driving one time riders.

The real point, however, is that transit systems are not immune to the normal swings in demand that effect transportation choices. Indeed, in Phoenix, it's interesting that the system seems to be maxing out at 1 million boardings (not round trips) per month, and about 35,000 average weekday boardings. That's not a trivial number, but it's hardly large enough to impact traffic congestion or environmental quality.

These numbers reflect the first six months of operation for the line and, technically, exceed Metro's forecast of 26,000 average weekday boardings. I'm interested in knowing, however, what the forecast was when Metro committed to the project. Forecasted boardings often reduced between the initial planning/commitment stages of the project and the actual opening of the system.

The transit agency's web site can be found here.

Market for DC Taxicabs Under Assault

sam.staley@reason.org (Samuel Staley) — Wed, 08 Jul 2009 13:04:00 EDT

Washington, D.C. is known for its accessible taxis and cheap fares. Apparently, that's a bad thing. Now, a D.C. city council member is agitating to reduce the number of cabs.

"The soaring number of taxicab operators in D.C. -- roughly 8,000, most of whom own their own cars -- is a "pressing and urgent problem," [Ward 1 Councilman Jim] Graham said. There are more licensed drivers in D.C. per capita than any place in the world, he said, and new applicants continue to take the required class, giving them access to the driver exam administered by the D.C. Taxicab Commission. A glut of drivers could jeopardize the chances of any cabbies making an adequate living, Graham has said.

"Whatever system we use, we need to limit the number of operators or this boat is going to sink by its own weight in terms of the number of taxicab operators that we have," Graham said. "We're going to determine which of these two approaches we should take, but we're going to have one or the other."

This is an unfortunate turn of events and all too common. The goal of regulation is to ensure high-quality services to customers, not protect the economic interests of service providers.

Graham wants to install a medallion system that rations the number of cabs. This is a recipe for disaster for consumers--higher costs, less service, and a much bigger bureaucracy.

For a review of the academic literature on taxicab regulation, take a look at the article by Ted Balaker and Adrian Moore in EconJournal Watch.

For a review of the unintended consequences of capping the number of taxis, take a look at this consultant's report I prepared independently for the Village of Port Chester.

Japan Bullet Train Ridership Down

sam.staley@reason.org (Samuel Staley) — Wed, 08 Jul 2009 07:58:00 EDT

A little noticed trend in ridership on the Japanese bullet trains: down. Central Japan Railways, the largest operator of bullet trains in Japan, is reporting steadily dropping ridership (as is the East Japan Railway Company). The economic recession and the swine flu are getting the blame.

"April 21 (Bloomberg) -- Central Japan Railway Co., the country’s largest operator of bullet trains, posted a fifth straight monthly drop in high-speed train passengers in March as companies slashed travel amid the deepest recession in over three decades.

"The railway operator, dependent on bullet train travel for about 70 percent of its sales, had 6 percent fewer high-speed rail passengers last month, spokeswoman Michiko Ishizu said in a telephone interview in Tokyo today. It had an 11 percent drop for high-speed train passengers from April 1 to April 20, she said."

Despite the glitz, bullet trains are not immune to larger market forces.

The economic recession will eventually turn around, but swin flu? Hopefully, but many riders may be longing for less public forms of transportation (or less travel overall).