The California "Bullet Train"

Pull the plug

As Lily Tomlin once said, “No matter how cynical you get, you just can’t keep up!”

Other countries have very fast trains: France, Japan, China. So why can’t we? We’ll call that statement “Train Envy.” In 2008, California voters succumbed to Train Envy and approved $10 billion in bonds for a high-speed train between Los Angeles and San Francisco, with the promise that $10 billion would be about a third of the total, and it would be operational in 2020.

That money is all gone and there are no rails yet, although to be fair, it hasn’t all gone into the pockets of politically-connected consultants. AI tells us they’ve built, “bridges, viaducts, tunnels, grade separations, and other foundational infrastructure” necessary for the rails. Here’s their progress map:

The High-Speed Rail Project’s executive summary says:

The California High-Speed Rail Authority (the Authority) is delivering the nation’s first high-speed train project (the Program), a major infrastructure investment that is generating economic impacts in California through the Program’s substantial expenditures on planning and construction. The economic activity associated with the expenditures attributable to the Program supports tens of thousands of jobs across all functions, from planning and environmental clearance to engineering and construction. This significant employment, along with substantial expenditures for goods and services across industries, generates considerable economic impacts throughout California and beyond. Importantly, the impacts are felt throughout many Disadvantaged Communities (DACs) in California including the Central Valley.

Measures of the economic impacts associated with the Authority’s investments have been measured and documented since 2017, with the first report detailing the economic impacts that resulted from the cumulative investment in highspeed rail (HSR) from July 2006 through June 2016 (referred to henceforth as the Historical Analysis). Updated reports have been produced annually since 2017.

This report, the 2024 Economic Impact Analysis Technical Supporting Document, provides an updated snapshot of the economic impacts resulting from Authority spending that took place over the time period of July 2023 through June 2024. The direct spending for the Program has resulted in significant indirect spending on goods and services provided by supporting industries throughout California. Further, the wages and salaries generated across these industries has generated additional induced spending by thousands of households. The magnitude of these economic impacts is estimated using the Impact Analysis for Planning (IMPLAN) input-output model, which quantifies impacts on supporting industries, generated wages and salaries, and overall employment. Starting with a detailed analysis of Program direct spending, these costs are aggregated and assigned to appropriate industry sectors to calculate the associated economic impacts at the statewide level. Then, utilizing contract-level historical invoice cost data from the past three (3) fiscal years, geographic spending profiles that allocate share of spend by zip code and professional service contract are created and applied to the full contract spend amounts in Fiscal Year (FY) 2023-24. This approach relies on previous detailed invoice reviews that comprise the total contract spending.

If you decipher this turgid bureaucratic prose, it’s saying, “If you build stuff, you employ people. We’re building stuff and we’re employing people and they’re spending money. And you, Mr. State Legislator, have some in your district!”

Let’s do a thought experiment: suppose the State devoted a small portion of that money for more reservoirs to hold excess water in the winter, and aqueducts to connect them? That would employ a lot of people, too. In fact, any big construction project would do that.

Perplexity.ai says;

Over $11 billion had been spent by the end of 2023, with 119 miles under active construction in the Central Valley. This includes building bridges, viaducts, tunnels, grade separations, and other foundational infrastructure necessary before track can be laid.

That works out to $57,291,667 per mile, and it’s not finished yet. There are also no mountains in the way, as there will be to get to LA and SF, so those per-mile costs will be much higher. In fact, there’s supposed to be a tunnel to get through the mountains to the Bay Area.

RedState says:

The project’s price tag now exceeds $100 billion, more than triple the initial estimate. It has mostly been funded by the state through the voter-approved bond and money from the state’s cap-and-trade program. A little less than a quarter of the money has come from the federal government.

The authority has already spent about $13 billion. The state is now out of bond money, and officials need to come up with a financing plan for the Central Valley segment by mid-2026, according to the inspector general’s office overseeing the project.

“Well, we can’t just walk away from it now!” you’re saying. ‘Then it will all have been for nothing.” That’s called the Sunk Cost Fallacy. We’ve sunk over $11 billion into this. It has to be worth something!

No, the question is, right now, would you sink almost $90 billion (but likely much more) into a train that, assuming it goes at 220 mph, will take about 2 1/2 hours? What you’ve already paid is irrelevant.

That time is usually compared favorably to an airplane flight, where the time to get to and from the airport is added in but not the time to get to and from the train stations. Unlike in European cities, most travelers to LA or SF are not going to the city centers. They’re going to need a rental car, too.

Saul Goodman (of Better Call Saul), explains the Sunk Cost Fallacy to Kim. That money is gone. You can’t get it back.

Summing Up

Let’s suppose the voters pass a “pull the plug” referendum, which is the only way this would ever happen. Or maybe the Trump Administration refuses to keep funding it, and it just dies?

Would the politicians who’ve steadfastly cheered on the Bullet Train have their careers ended? Two answers:

1. Yes, and they richly deserve to.

2. No, because big politicians are incredibly adept at avoiding blame.

There are cases where the plug was pulled on half-completed projects. It’s not unheard of.

The Satsop Nuclear Power Plant.

The Satsop disaster ended some lower-level careers, but no high-ranking politician suffered much.

Inner Belt Highway – Boston, Massachusetts

This was cancelled in 1971 after intense protests. Some parts were actually built. Did anyone get forced into retirement for their bad judgment? I don’t think so.

Conclusion

You got to know when to hold 'em

Know when to fold 'em

Know when to walk away

And know when to run

This is a time to fold ‘em, and walk away.