China’s Bullet Train Fiasco: A Warning to America

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Well, the Chinese finally have a green-energy idea worth stealing: arrest government officials who foist overpriced, underperforming, debt-ballooning, money-losing projects on taxpayers.

Earlier this year, Liu Zhijun, Minister of Railways in the People’s Republic of China, was arrested following investigations into cost overruns and poor performance of the ministry’s showcase bullet trains. To be fair, the arrests were made when the investigations uncovered potential corruption in addition to the mismanagement. But the corruption problems likely would have gone unnoticed had the bullet train program not become such a boondoggle. (The railway debt alone is about 5 percent of China’s GDP.)

According to Charles Lane of The Washington Post, the bullet-train fiasco was not stopped earlier because “Liu exploited the communist leadership’s fascination with bigness and national prestige.”

Rail-Rider-in-Chief Joe Biden recently promoted the Obama Administration’s $53 billion high-speed rail package with his own appeal to national prestige: “If we don’t seize this future, how will America ever have the opportunity to lead the world in the 21st century?” Here’s an alternative the Vice President might want to consider: allow entrepreneurs to seek the opportunities without subsidies and without burdensome regulation. It worked pretty well in the 20th century.

Bullet-train cheerleaders at the Center for American Progress also seem swayed by bigness and national prestige: “Today, it is China that is leading the world in a key next-generation transportation technology: high-speed rail. … China already boasts a rail network that, including both standard and high-speed rail, is more than 53,000 miles long.”

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Lane had additional insight regarding the process that led to such a hugely costly mistake: “Rather than demonstrating the advantages of centrally planned long-term investment, as its foreign admirers sometimes suggested, China’s bullet-train experience shows what can go wrong when an unelected elite, influenced by corrupt opportunists, gives orders that all must follow—without the robust public discussion we would have in the states.”

How much better the process would be with honest opportunists is not clear, but President Obama has praised bullet trains, and the 1,000-page stimulus package included an $8 billion deposit for our own bullet-train network. For the next installment, the Obama Administration proposes the $53 billion mentioned by Vice President Biden.

Of course, we shouldn’t criminalize mere incompetence, but is it too much to ask of Congress that they quit subsidizing inefficient energy projects? If consumers will not cover the costs of production, it means the product is wasting resources better employed elsewhere.

Source material can be found at this site.

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