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Pro: High-speed rail essential to winning America’s future

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Alexander J. Field
March 19, 2011
EDITOR’S NOTE: The writer is addressing the question, Can high-speed rail boost the U.S. economy?

Would high-speed rail spending add jobs in the United States? Of course.


Even if some of the rolling stock for the trains were imported, structures and other permanent way would still have to be built in the United States. Under current conditions, any government spending—for rails, for bridges, for highways, for the military—would contribute to job creation.


Fears that government spending might displace or crowd out private-sector capital formation would be justified were we at or close to capacity. But we are not.


The unemployment rate remains almost 10 percent, and this doesn’t account for those who, discouraged, have simply left the workforce.


Even more telling is the ratio of employment to population, which has fallen from its all-time high of over 64 percent in 1999 to 58 percent today. In spite of large “supply side” tax cuts tilted toward the wealthy, the record of the George W. Bush presidency on job creation was in fact quite poor.


For a variety of reasons, including the recent financial crisis, the U.S. economy remains in a serious slump. High-speed rail spending could stimulate job growth and help jump start the economy.


These projects would, of course, add to the deficit and concerns about its long-term growth, particularly that attributable to health care, are merited.


Looking back over the last three decades, however, Republicans’ interests in deficit reduction seems to have waxed and waned depending upon who occupied the White House.


The deficit ballooned under Bush, due largely to tax cuts but also to increases in military spending and a new unfunded prescription drug benefit. The resulting run-up in the debt was regrettable, but the time to cut government spending is when the economy is strong, not when it is weak.


If the country is going to incur new debt, it is better to do so to acquire well-chosen infrastructure and equipment than to fund consumption.


Would high-speed rail represent well-chosen infrastructure? In other words, would it help the U.S. “win the future?” This is a more complex question. It requires us to consider not simply whether such projects would help close the output gap, but whether and how effectively they would expand the potential output of the economy.


Here there are legitimate concerns about whether the U.S. has enough high-density corridors—such as that between Boston and Washington—to yield large benefits.


And building in dense areas can be costly. For example, the proposed Los Angeles to San Francisco route would go right through my backyard in Palo Alto, and the extent to which that part of the route will or will not be put underground has become a contentious political issue.


That said, state and federal governments have a long and largely successful record of supporting infrastructure development, from the Erie Canal to regional and transcontinental railroads to the Interstate Highway System and, more recently, to the Internet.


The build-out of the surface road network during the Great Depression generated large private-sector benefits, contributing to very fast productivity growth in transportation—railroads and trucking—as well as in wholesale and retail distribution.


High-speed rail projects could certainly create jobs and stimulate the economy in the short run. Whether they would generate benefits similar to those of other government funded infrastructure projects is uncertain. History suggests, however, that there’s a good chance they would.


Alexander J. Field is a professor of economics at Santa Clara University. Readers may write him at Santa Clara University, 500 El Camino Real, Santa Clara, Calif. 95053.

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