What would you do with a billion dollars? I bet you would be hard pressed to find a way to spend it all. It would take a while for sure, and even then, unlike Brewster, you would have something to show for it. Probably a lot—houses, cars, boats, land, investments, toys, etc.
Well, Brewster and you have nothing on the government.
On the leaderboard of government boondoggles, California’s high-speed rail system must surely rank near the top. As Cato Institute analyst Marc Joffe documented in 2023, California voters first approved a $10 billion bond for the project in 2008, with the understanding that zippy service between Los Angeles and San Francisco would begin in 2020 at a total cost of just $33 billion. Three years past that deadline, however, the project had ballooned in both scope and cost, while not a single piece of track had been laid—even though state, federal, and local taxpayers had already spent at least $13 billion on the project:
Since then, the news has only gotten worse. The cost estimate has now been upped to $135 billion—more than $100 billion higher than the original proposal!—and, as the Associated Press reported in late April, the CEO of the California High-Speed Rail Authority (CHSRA) said it might take two more decades to complete “most” of the San Francisco-to-Los Angeles segment.
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Put it all together, and you can see why, per the AP, critics believe the project “will never be completed” and will instead leave dozens of “towering and unusable” structures—underpasses, viaducts, bridges, etc.—behind.
Make no mistake, there is a market for high-speed rail as well as success stories in constructing/operating it. One of these is emerging in Florida where, just like how it is on the opposite coast of California, it has proceeded in quite a different fashion. From Scott:
None of this means that there’s no market for intercity rail in the United States, but it does show why we should be skeptical of grandiose, government-led projects that offer low costs and amazing, rapid benefits. In fact, while California’s rail project has been an unmitigated disaster, a smaller, private line in Florida shows that high-speed rail can be done here when it makes economic sense and state involvement is minimized.
Launched in 2023 and now shuttling people between Orlando and Miami at up to 125 mph, the Brightline rail project cost just $5 billion and took about 10 years to complete, despite numerous setbacks (including the pandemic). Assuming California’s system is completed by 2045 as now claimed (a big assumption!), Brightline will travel 61 percent as far, yet be completed in just 27 percent the time at a measly 4 percent the cost. That’s just crazy.
Brightline succeeded where California failed for two big reasons (beyond Florida’s easier regulatory environment). First, and as the AP noted at the time of launch, “Brightline is privately owned and seeking a profit.” This means the company was “more sensitive to getting the project completed quickly to save money,” and its investors were more sensitive to the project’s feasibility because it was their money on the line. As a private, for-profit entity, Brightline also can charge market rates for tickets and amenities, meaning revenues that are more likely to exceed costs, and—because it freely competes with other forms of transportation—will constantly be looking for ways to improve the already-nice customer experience. (“I didn’t meet a passenger who complained about the ride,” New York Times architecture critic Michael Kimmelman said last month.). As of today, the line is still losing money, but ridership is way up, with almost 3 million passengers last year.
And, of course, it’s actually operating—unlike in California.
Second, Brightline’s Florida project abstained from government funds. This meant it was “more insulated from politics” and could “plan a maximally efficient line, rather than, as California did, one that touched as many counties as possible.” It also meant that Brightline wasn’t subject to costly political conditions (e.g., social policies or union mandates). This includes Buy American mandates: While California had to jump through all sorts of ridiculous protectionist hoops, Brightline was free to “import materials from Siemens, a German company” and generally to “use the most cost-effective inputs—and to avoid expensive compliance mandates—mak[ing] their construction work cheaper.”
To be clear, this isn’t just a California problem: Brightline’s other project connecting Las Vegas and L.A. took government money and is now bogged down in Buy American rules, organized labor demands, politics, and “lobbying fights” over federal contracts. By September 2024, the project’s promised completion before the 2028 L.A. Olympics was in doubt because of Buy American-related litigation over which (foreign!) company will provide trains for the project. Now, its best-case scenario is completion by the end of 2028, months after the Olympics conclude.
Anyone wanna bet on whether the new deadline is met?
Operating within an incentive and information structure that is not aligned with project success, which is the core weakness of central planning, unsurprisingly results in very expensive failure. Burdening projects with goals that are incidental or at worse contrary to the project’s success, as government so often does, creates obstacles that further hinder the ostensible goal—e.g., actually building a functioning high-speed rail system.
Moving from specific projects to general city planning finds the same problems at play.
American cities are dysfunctional. Housing costs now absorb nearly all the economic surplus that used to spread prosperity in exchange for old, small, and often ugly housing. Large swathes of our cities are enervated by parking,highways and stroads. Public transit infrastructure is lacking and hasn’t significantly expanded in decades. Attempts at constructing more have sucked up decades of time and billions of dollars. American cities also have aberrantly high rates of crime, traffic deaths, homelessness, and drug use.
That is from Maxwell Tabarrok in a post on fixing American Cities where he shows how simple rules for a complex society can let great solutions emerge. He demonstrates that Jane Jacobs’ true vision is Hayekian, and he boils it down to two general rules:
Jacobs’ four positive obligations can actually be compressed down to two rules.
Don’t regulate land use on private plots.
The density and mixed uses called for in obligations 1 and 4 are fulfilled automatically when urban planners do not artificially separate land uses and reduce density. Let diverse, mixed uses and high densities arise where they may in cities. If extreme negative externalities result, address them case-by-case rather than through blanket zoning.
Encourage incremental development and infill.
The dynamic street patterns and varied building ages called for in obligations 2 and 3 also arise naturally when cities develop incrementally, rather than in giant lurches as new neighborhoods are demolished and built all at once. Let winding streets with frequent breaks and wide-ranging building ages emerge naturally as developments stack up in an unplanned, organic pattern. This means lowering the regulatory fixed costs of development so that small projects can arise easily, and abandoning master plans.
Of course, all of this is somewhat dependent upon there being good intentions and good policies to align intentions with behavior—in other words to prevent corruption.
Many American cities have corruption problems—from Chicago and New York to Scranton and Harrisburg. In these cities, politicians and bureaucrats abuse their discretionary powers over licensing, permitting, zoning, contracting, and other activities. They shake down individuals and businesses to gain bribes, campaign aid, and other personal benefits in return for providing special approvals, exemptions, and handouts.
Big government subsidy and regulatory schemes fuel corruption, as we see, for example, with housing tax credits, alcohol licensing, and marijuana licensing. It also appears that political structures make some cities more scandal-prone than others. Chicago’s system of “alderman privilege,” for example, has been a driver of corruption for decades.
New York City has long suffered from corruption in building permitting, inspections, gun permitting, and many other things. Recently, the city has been rocked by scandal at the New York City Housing Authority (NYCHA). Last year, prosecutors charged 70 current and former NYCHA employees with bribery and extortion. It was the “Largest Number of Federal Bribery Charges on a Single Day in Department of Justice History.”
[from The City]:
One year after a sweeping corruption takedown at the New York City Housing Authority, law enforcement’s scorecard reads like this: 64 convictions out of the 70 housing authority employees arrested on charges of taking cash bribes to hand out contracts to vendors performing public housing repairs.
… Since the big sweep on Feb. 6, 2024, billed as the biggest one-day takedown in Department of Justice history, NYCHA has awarded hundreds of contracts worth a total of $7.8 million to eight companies whose operators have publicly confessed to participating in the decade-long bribery conspiracy.
All of these corrupt contractors have admitted under oath that they regularly handed over cash bribes from $500 to $2,000 in the basements and stairwells of NYCHA developments to dozens of NYCHA staffers, sometimes for years. None of the vendors were charged with a crime. All were granted immunity from prosecution in exchange for their testimony against the NYCHA employees they paid off.
… The eight bribe-paying vendors that The City discovered are still getting NYCHA work have, over the years, racked up $70 million in taxpayer-funded contracts for everything from installing vinyl tile to performing minor repairs to painting apartments, an analysis of contract records found.
… NYCHA staffers came to regularly demand cash to either award a no-bid contract or sign off on individual jobs under a blanket contract. All told, they pocketed more than $2 million in bribes over the last 10 years, prosecutors alleged.
I don’t know. Maybe we just can’t have nice things. At least we shouldn’t expect they will come from the government.
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