Is Japan’s Economic Stagnation Due to Construction of Subsidized High-Speed Rail Lines?

Japanese high speed train

By Randal O’Toole

On January 23, the Wall Street Journal reviewed my recent book, Romance of the Rails, calling it an “exhaustively researched exploration of America’s passenger-rail story.” Naturally, this brought a response from a rail enthusiast named Benjamin Turon chiding me for “failing to point out how poorly and unimaginatively trains in the U.S. are run compared with innovative and efficient rail systems in Europe and East Asia.”

If Mr. Turon read the book, he would know that it devotes an entire chapter to looking at passenger service around the world. The sad truth is that passenger trains don’t work much better in Europe or Asia than they do in the United States.

Both Europe and east Asian countries are highly celebrated for building high-speed rail lines. But these efforts have to be judged by their results. Are they making money or at least covering their operating costs? Are they attracting people out of their cars or airplanes? Are doing anything other than putting their countries deeply in debt?

The answers to all of these questions are “No!” Spain and Italy are jeopardizing their entire economies by going so heavily into debt for high-speed rail. A case can be made that Japan’s economic stagnation since 1990 is due to that country’s continued construction of subsidized high-speed rail lines. Despite growing high-speed rail systems, air travel in Europe and auto travel in Asia are both growing much faster than rail travel.

Instead of high-speed rail, Turon’s letter points out that commuter railways “in Japan and Hong Kong are for-profit publicly traded companies.” But this isn’t because they are innovative but because Tokyo and Hong Kong have far higher population densities than any U.S. urban area. With the possible exception of New York City, those results just don’t apply here.

Turon also cites privatized passenger trains in Britain. As I discuss in the book, privatization has certainly made a difference for British passenger trains, as they are the only trains in Europe outside of Switzerland whose market share of travel is growing. But only some of the privatized trains are operationally profitable and all depend on taxpayer subsidies to infrastructure maintenance. The book notes that we could privatize Amtrak, but it is likely that only the Northeast Corridor would survive and only if taxpayers provided more than $50 billion in infrastructure subsidies.

All around the world, rail travel is more expensive than driving or flying. By heavily subsidizing rail, European governments have managed to persuade the average European to ride urban and intercity trains about 500 miles per year more than the average American. In contrast, Americans chose modes of transport that are less expensive, more convenient, and faster, and the average American travels 10,000 miles a year by air and auto more than the average European. As much as I love passenger trains, I think we chose wisely.

The above originally appeared at cato.org.