California’s High Speed Rail Is A 20 Year, $100 Billion Joke. Ethereum’s Founder Knows What To Do

Underground rail in Europe and Japan costs start at $100 million per mile, while in New York it’s $2.7 billion per mile. That’s a lot, but billion dollar costs aren’t uncommon in the U.S., we’ve seen it in LA and San Francisco too. And the LAX people mover, part of the Landside Access Modernization Project there, costs a billion per mile and that’s not even underground.

The U.S. is simply bad at large-scale infrastructure projects, taking longer and costing more than in the rest of the world. It’s a combination of veto points in the process built into the National Environmental Policy Act and politics that allow interest groups to extract rents. Nowhere is this more on display than California’s high speed rail efforts, which has been in planning for twenty years with little to show for it, as a New York Times expose’ shows in “How California’s Bullet Train Went Off the Rails.”.

Eight years ago James Fallows wrote in The Atlantic that California high speed rail “will cost too much, take too long, use up too much land, go to the wrong places, and in the end won’t be fast or convenient enough to do that much good anyway.” Now the Times is pointing out that:

  • Voters approved an astronomical $33 billion for high speed rail 14 years ago. It was supposed to be complete in 2020.

  • All that has been done is a start to construction “connecting a few cities in the middle of California, which has been promised for 2030” but that deadline will never be met.

  • The current cost estimate has risen to $118 billion, and at the project’s current pace “according to projections widely used by engineers and project managers, the train could not be completed in this century.” And no one knows where the $118 billion will come from.

First proposed in the 1980s, high speed rail was meant to connect LA and San Francisco in 2 hours 40 minutes. In 1999, engineers produced a ‘final report’ recommending a straightforward route along the I-5 freeway. In one example of dysfunction politicians forced a diversion through desert communities ‘to get more riders’ that meant “38 miles of tunnels and 16 miles of elevated structures” that, according to the Times, was a backroom deal for other reasons,

“I said it was ridiculous,” said Mr. Tennenbaum, the former rail authority chairman. “It was wasteful. It was just another example of added expense.”

The horse-trading in this case involved an influential land developer and major campaign contributor from Los Angeles, Jerry Epstein.

Mr. Epstein, who died in 2019, was a developer in the seaside community of Marina del Rey who, along with other investors, was courting the Los Angeles County Board of Supervisors for a 40-year lease extension on a huge residential, commercial and boat dock development.

Mr. Epstein was also a member of the rail authority board, and he became a strong backer of Mr. Antonovich’s proposal for a Mojave Desert diversion on the bullet train.

“The Palmdale route was borne of a deal between Epstein and Antonovich, absolutely,” said Art Bauer, the chief staff member on the State Senate Transportation Committee, speaking publicly on the matter for the first time.

“If I get my lease, you get my vote was the deal,” Mr. Bauer said. Though Mr. Epstein was only one member of the board, his lobbying of other board members proved critical, he said. “Epstein got the votes. The staff didn’t get the votes. The staff didn’t want to go that way.”

Instead of running directly along the I-5 freeway, the project was further diverted to run through Merced, Fresno and Bakersfield as a jobs program for those cities which meant “more delays, more complications over acquiring land, more environmental problems.”

This was pitched as being an ‘equity’ play, to serve more people in the state they’d turn the whole thing into a milk run… but then it was no longer a high speed project to connect the two major population centers. It’s how the plan morphed under then-Governor Jerry Brown and Obama transportation secretary Ray LaHood.

France’s state-owned railway company, which knows a thing or two, finally walked away from the project in disgust a decade ago:

“There were so many things that went wrong,” Mr. McNamara said. “SNCF was very angry. They told the state they were leaving for North Africa, which was less politically dysfunctional. They went to Morocco and helped them build a rail system.”

Morocco’s bullet train started service in 2018.

At this point it’s not clear whether high speed rail will ever come to California, other than a wasted demonstration project of track in the middle of the state that doesn’t connect major population centers.

Ethereum’s founder reacted to the New York Times on how challenging (impossible) the politics of large-scale infrastructure has made it to actually build a train in California – he calls it a heterodox take, but it seems self-evidently correct:

Senator Joe Manchin cut a deal to support the so-called Inflation Reduction Act in exchange for permitting reform that was supposed to speed up infrastructure investment. The Inflation Reduction Act only claimed to reach that goal by raising more in taxes in the future than it added in new spending, which is being fully offset by subsequently-announced spending on student loan forgiveness.

Meanwhile, permitting reform legislative language probably wouldn’t have gone far enough and was killed for now by Republicans whom you’d expect to support it but were reluctant to give Democrats a centrist win prior to the elections.

While environmental review was once seen as a tool to protect the environment, it’s become a sledge hammer that delays environmentally-friendly projects indefinitely, raises their costs, and derails their environmental purposes. It makes green energy nearly impossible to build, and makes high speed rail projects replacing cars a pipe dream. Anyone who wants to build a greener future now sees their own tools turned against them through NIMBYism and cronyism and that’s as clear in California as anywhere else.

In the long-run, though, even doubling down on air travel we could be stuck with infrastructure problems again depending on the tech: a new for better runways and improved air traffic control flow-through, and the FAA is terrible at managing technology upgrades to boot.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. Only a matter of time that some US city just contracts one of these large-scale infrastructure projects out to the Chinese. They will bring their own labor and get it done in 1 year.

  2. the LA – SF corridor ensures that airplanes will be the dominant form of public transportation…. by the time any meaningful amount of rail will be built, CA will be half the population it is now because of state tax and economic policies – but the half that will be left won’t use public transportation

  3. Exactly right. The reasons why the United States will never have high speed rail or other modern rail infrastructure isn’t remotely a technological problem but a purely political one hampered by total government dysfunction and endemic normalized corruption. There are so many political interests skimming off of infrastructure projects in the USA that no amount of money, increased taxation, higher fares, etc., can possibly accomplish them because the higher the budget the more money is shoveled to special interests. No US city – and especially not corrupt, politically backward, and incompetent places like New York, Los Angeles, San Francisco, Chicago, or D.C. – will ever have the infrastructure of say Kuala Lumpur, São Paulo, or Chengdu, much less the world beating infrastructure of places like Shanghai, Zurich, Tokyo, Paris, Munich, Singapore, etc. Our political system has simply rendered this outside the realm of possibility, and guaranteed the perpetual decline of quality of life in the United States compared to the rest of the world. The only chance to fix this is to separate government and its malign political/economic incentives from infrastructure as they do elsewhere, but this will never happen in the United States.

  4. Mike, France’s SNCF had been consulting on the project. It left in 2011 when a powerful LA County board member insisted the route be changed (so as to bring construction jobs to his district).

    When California voters approved funding for the project in 2008, the budget was a hair under $10 billion. While Gary notes the current price tag is $100 billion, estimates of the final price are closer to $120 billion. The legislature has quietly started to divert funds to local transit projects.

    The first segment of the project will likely become operational in 2032 (24 years after approval). But, the project as originally conceived will likely never be completed.

  5. Gee, they reference projects in California and NYC, two jurisdictions controlled by a super-majority of Democrats blatantly corrupt with political infighting.

    Who would have thought?

    The mid-terms can’t come soon enough.

  6. Gavin Newsom’s Presidential aspirations will be seriously damaged in future for not even making the effort to truly kill high speed rail. Of course, he still has time to pivot.

  7. Mike, when the Northridge earthquake hit, LA’s freeways were devastated. Given the political will, all freeways were back up within 60 days. When the 1989 San Francisco earthquake hit, its freeways were devastated. But, politics entered the fray and two key freeways took 15 years to reopen (diversions were employed). As Mak states: it’s not about the ability or the technology, it’s about the money and the politics. And, both political parties engage in it.

  8. In Florida, Brightline will connect Miami, Ft. Lauderdale, West Palm Beach and Orlando with 120 mph rail by 2024. It runs now between the first three cities. Private enterprise with vision can get it done.

  9. Ahem Brightline Florida…..It can be done. The difference being that we don’t have woke dipshits running things down here in the Florida Freedom Zone.

  10. These large scale projects in the U.S. are extremely difficult because a combination of forces: unions, bureaucracy, pseudo environmentalists, obstructionist judges, corrupt politicians, and diversity.

    Europe has unions, regulations, and bureaucracy but workers take pride in building infrastructure and doing engineering and construction because they benefit their ethnic people. A German railway helps Germans. An Irish ferry helps the Irish. A Spanish commuter tube helps the Spanish. Just talking about workers alone, there is no pride in building the high speed railway or other projects because they are not serving their own people. That’s what diversity does. We see this with flight attendants at the big 3 who take pride in providing poor customer service. In Europe most of the under 30 flight attendants would be embarrassed if they performed poorly in front of their friends and colleagues. Here the union workers do whatever it takes to be laziest, worst quality, and slowest possible. These projects go from 10 years to 20 years and quadruple in cost because of this. No one really cares because it’s just a paycheck and not about national pride. There is no real nation in America. There are 20 nations in one landmass. It’s a lot easier when a country has one people and is the size of Texas

    Europe doesn’t have the same degree of lawsuit problems when it comes to constructing things. Local and State issues become federal issues with the court system because of environmental nonsense.

    Germany has fared poorly in the last 15 years because the kafkaesque bureaucracy is becoming a hinderance like we saw with the Berlin airport and Tesla factory.

  11. @CHRIS: that said you hillbillies are now on all fours begging to cover your loses for another hurricane loss. How many times you idiots going to rebuild and pray next year you won’t be hit? True genius.

  12. Literal everyone saw the debacle coming in California. Yet Californians vote for the same people over and over again. They got exactly what they voted for.

  13. What makes sense for California is to start with a high speed connection between LA and Las Vegas.

  14. Hilarious that ‘everyone’ knows this California high-speed train is a joke … but it continues sucking up money. Why is that? Can nothing stop the morally-bankrupt politicians in this country?

  15. feel free to let us know what part of the US, let alone the world, is free from natural disasters. You can’t because it is part of life.
    In fact, many – not all – losses in Florida are insured – and people paid for that insurance no different than has been the case in states and cities around the US.

    The real issue is that you want to change the topic from the HUMAN failures and mismanagement that are costing real lives and hard-earned dollars and that is what you definitely don’t want to address.

    California is losing its luster more and more – I need only look at the number of CA, NY, IL and other license plates in my state and all across “hillbilly country” to know that people are rejecting the economically debilitating and lifestyle crippling choices of a number of the largest and most democratically run states.

    People aren’t stupid. Don’t trash them when they reject the ideas that you hold.

    Florida will rebuild at far less expense than CA will have for a train that will never deliver what was promised at costs that are far higher than projected.

  16. Political parties don’t matter here, it’s all about the Benjamins and putting on a show. And in the end those who think they are profiting are gone and the public is left with the mess and the bill; I hope Mr. Epstein likes counting his money in the grave. He could have helped build a monument to efficiency and service that the country would have been proud of for generations, but then so could a lot of other people who were just looking out for their own petty interests.

    None of this is new–the first Transcontinental Railroad had all sorts of corruption attached to it, and the way Los Angeles stole norther California’s water a century ago is an incredibly dirty deal. More recently, Cheney’s Haliburton company, among other contractors, made vast profits off the military-industrial-security complex and its many worthless programs (body scanners, for one). But given that the U.S. is also the nation that built the Panama Canal, the DC-3, and the Interstate Highway System among other big projects, it’s pathetic what we’ve come to.

  17. Of course something like Brightline can work, Florida is flat. California has hostile geography for a project like this plus a whole lot of cities in the middle that want positives out of being on the route as well, which will slow it down.

    For the record, LA has the busiest light rail system in the US and one of the busiest bus systems.

  18. @bhcompy
    If you deduct the number of homeless people who “live” on public transportation the number drops dramatically. There are currently 6,100 people and guess what? They don’t pay and they make public transit much less safe.

  19. @Ray and @HueyJudy- right on. I lived for 60 years in the Bay Area and now in the SMF area. There is NO way that a high speed line- to compete with airlines and cars- can run from San Francisco or San Jose (high density, high travel points) via the middle of the state (where there is minimal traffic to LA). Unless this line went directly down as close to the coast as possible (such as via Salinas, San Luis Obispo) without 5-8 stops in between, this is truly a boondoggle. It needs to be stopped dead in its tracks NOW before billions of more dollars are thrown at it. The whole point of this line was to reduce car and air traffic between two major hubs- the San Francisco Bay area and LA, not between places like Merced, Fresno and Bakersfield and LA. I’m a Democrat- I certainly didn’t vote years ago for something like this.

  20. No aircraft will ever reach the comfort and reduced footprint of a high-speed train.

    The solution is self-evident: outlaw lobbying, including the you’ve-got-to-be-kidding fiction that corporations are “people” who can make political donations and “think-tanks” that do the bidding for special interests.

    If SNCF could build a line in 7 years in Morocco, without lobbyist’s power they could have done it in 5 in California. Epstein should have gone to jail for lobbying.

  21. You’re all being silly. The purpose of the train is to collect taxes, issue bonds, get kickbacks, hand out favors to donors and relatives, and for developers, unions, politicians and environmental lawyers to make off like thieves. And it’s working perfectly to plan.

  22. @ Tim Dunn. Agree. Here in Austin, actually a little west of Austin, I’ve never heard ANYONE say “when I retire I’m moving to New York” . . . or California for that matter.
    However, on the post topic, I do think high speed rail would work in the Dallas-College Station-Houston-San Antonio-Waco-Austin market.

  23. Brightline is a high-speed rail project which is viable (and already operational). Of course, Florida is flat, but California had the advantage of building the train in the middle of nowhere. Florida overcame plenty of engineering challenges with soft foundations, urban sprawl, flooding, and annual hurricane impacts. Up to a third of Brightline’s route had to be built through urban areas. The reason why Florida excelled where others failed is common sense. Privately-funded and managed project which has to become profitable soon (git’ er done mentality), with successive Republican state governments who were pro-business team players, and consistently saw the bigger picture. Taxpayers weren’t completely on the hook for the project, and we don’t pay much taxes anyway, there’s far less political incentive or opportunity to milk the cow. No milk-run diversions to nowhere because there’s 10x more people living along the coast (Brightline built their tracks adjacent to East Florida Railway’s tracks here in Brevard County, and acquired easements alongside the 528 Beeline toll expressway to Orlando International Airport – smart planning and engineering). Mostly cows between most of Osceola and Miami-Dade counties, and we got the train finished by not playing pointless political games.

    I am eagerly anticipating the day where I can just hop on our sunny little train to get to MIA/FLL. Ya’ll are welcome to come on down here and see Disney and South Beach in a single day with only ONE trip through TSA, and no tolls.

    Don’t California my Florida. LOL.

  24. A couple things I have learned about California, being from and growing up there, is that 1) Sacramento is a black hole where federal funds go to and disappear. 2) Its always a money grab & kickbacks/coersion (we’ll agree in return of xyz)

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