Rail series: A capitalist solution for California train travel

This is Part 2 of a series. Click to read Part 1, Part 2, Part 3, Part 4, Part 5 and Part 6.

Dec. 12, 2012

By Stan Brin

Before I go any further, I would like readers to understand that this proposal is strictly a real-world alternative to High-Speed Rail. It isn’t intended to challenge anyone’s worldview.

In making it, I am assuming that there is no other practical answer to a major infrastructure problem, like passenger rail. Every bridge, dam, highway and rail bed requires the taking of private property, and, almost always, the expenditure of tax revenue.

It should also be said that private railroad companies also have the power, through the courts, to take property that they want. In fact, as part of my research for the “double-tracking” section of this story, I discovered that in southern Illinois, seizures of municipal land by private railroads are a major public issue.

Nevertheless, voters clearly want improved rail service. They’ve said so repeatedly, ordering taxes to build subways, light rail and now High-Speed rail.

There might not be a libertarian response to that demand, but there is a capitalist one.

Adam Smith, the master of capitalist economic thought, deeply believed in fostering trade through the development of infrastructure, what he called “public works.” Without safe harbors, sturdy bridges and a system of navigable canals, trade is expensive and unprofitable.

Canal du Midi

Smith’s favorite example of state-financed public works, discussed at length in Book V of the “The Wealth of Nations,” was the great Canal du Midi of France, which was called, in Smith’s day, the Canal of Languedoc. Stretching for 150 miles, passing through mountains and over rivers, the canal was the technological wonder of its age. It united the French Mediterranean provinces with the Atlantic for the first time, allowing the consolidation of the kingdom into a single national economy.

That canal also cost far more than 17th century private capital could provide, so King Louis XIV paid for the bulk of it through taxes. The king then, very wisely, in Smith’s opinion, handed the canal’s keys, and its tolls, to its builder and his heirs. They managed the canal as a profitable business, and in their own interest maintained its complex machinery until the French Revolution took it all away. (The builders had wanted to extend the canal, but King Louis couldn’t afford to help them, as a certain opulent palace had taken his mind off practical matters.)

Smith concluded, in the flowery language of his day, “That the erection and maintenance of the public works which facilitate the commerce of any country, such as good roads, bridges, navigable canals, harbours, etc., must require very different degrees of expense in the different periods of society is evident without any proof.”

Railroads are the modern equivalent of 18th century “navigable canals.” They allow goods and people to move faster, and cheaper, than by roads, but they require substantial taking of private and public land. It’s the only way rails can be laid efficiently.

In that vein, we live in California today because, nearly 150 years ago, Congress did something similar: It provided free public land to railroad companies, inducing them to race each other. The railroad that completed the most track received the most land.

The federal government no longer owns vast tracts of fertile land that it can give away. So it appears that to improve its passenger rail infrastructure, California will have to either go to private capital — which historically hates passenger rail with a passion — or to the taxpayers.

Or do nothing at all.

Let us assume, for the sake of this argument – I’m proposing it as an alternative to the High-Speed Rail, if you recall — that sometimes infrastructure investment works.

As an example…

Freight:  It Works

To argue that point, we need only look at freight, passenger traffic’s rich, and highly profitable, step-brother. (Allow me to digress a little, here. I happen to like trains. People like me are called trainfans, although I barely qualify as one.)

California has an excellent, and improving, rail infrastructure specially developed for the carriage of stuff. In fact, portions of California’s freight rail system are leading-edge and should be a source of immense pride and satisfaction for Californians.

California also happens to be one of the few places in the world where two private railroads, the Union Pacific and the BNSF, actually compete for the same business.

How they manage do it without paralyzing local communities in southern California is a little known infrastructure marvel created by a unique, and very expensive, partnership between business and local governments, called the Alameda Corridor.

Alameda corridor

The Alameda Corridor starts at the gigantic Los Angeles-Long Beach harbor complex, where a local private railroad, the Pacific Harbor Line, assembles as many as 130 cars into trains 10,000 feet long, the legal maximum. The PHL turns these assembled trains over to the Union Pacific or the BNSF, which pull them, non-stop, through a massive set of steel bridges to a deep concrete trench. The trench stretches from the harbor, across the southern LA basin, to rail yards just south of downtown, and eliminates some 200 grade crossings.

Completed in 2002, the Corridor brought an end to the infamous gridlock along the region’s freeways and surface streets — at a cost of $2.4 billion. Cars no longer have to fight vast convoys of trucks bearing harbor freight, or wait as two-mile long trains block streets at crossings.

For drivers and surrounding communities, freight trains are out of sight and earshot, and out of mind. Streets pass right over them. For the railroads, their trains can move at a steady, uninterrupted speed of 45 mph, north and south, without fear of plowing into a school bus or derailing into a shopping center. At the end of the line, southeast of downtown, the cars are reorganized and sent on long, steady and slow journeys throughout North America.

A rail passenger, or a car owner, might look at the 45 mph speed of trains passing through the Alameda Corridor and sneer, but to the freight railroads and their customers, that speed, constantly and evenly maintained, is a really big deal, a massive boon to their bottom line. Half of the cost was paid by a federal grant, the rest by shippers. (In my humble opinion, all of it should have been paid by shippers — most of the goods that the Alameda Corridor transports are imported. I see no reason to subsidize imports.)

The railroads and their local government partners plan to expand the corridor with a new line through the San Gabriel Valley to Ontario.

The Alameda Corridor also illustrates the problem of passenger rail. Freight railroads have no need for the kind of tracks and other infrastructure that would make passenger traffic more convenient. Their customers have no need to move containers that took months to cross the Pacific at speeds that cause drivers to leave their cars at home.

Their concern is cost, and rightly so.

Railroads are not in the passenger hauling business. They haven’t been for a long time, and they’re glad of it. That business was a loser, a money pit, and they want nothing to do with it.

Consequently, they have failed to invest in the one thing that would make inter-urban passenger traffic competitive again: speed.

Traffic permitting, you can drive between Los Angeles and San Diego as fast as you can travel by train, with a pit stop in San Juan Capistrano included. Only Third World trains are that slow, and even that condescending fact is coming to an end. A friend of mine hails from a town north of Lagos, Nigeria that will be connected to the sea, in two years, by a brand-new, ultra-modern, double-tracked railroad built by a Chinese company. The government is paying for it with oil revenue. A private Nigerian company will operate it.

Adam Smith would definitely approve.