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Chinese Bullet Trains

Today, Liu Zhijun is ruined, and his high-speed rail project is in trouble

Apr 25, 2011


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APRIL 25 2011

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Chinese Bullet Trains

As California legislators prepare this week to discuss several bills affecting the California High Sped Rail Authority (CHSRA), we suggest consideration of the Washington Post article below about the High Speed Rail (HSR) project in Red China.  The Communist Chinese project has been trumpeted by the CHSRA as THE model to copy.  A second article from the New York Times exposes the folly of the current rail project in California. 

Many citizens, public agencies, and private organizations both in the San Joaquin Valley and the Bay Area have brought forth legitimate concerns about the effects of the HSR on their respective communities, economic infrastructure, and private lives.  Often times, these concerns have to do with the CHSRA Board, staff, and consultants ignoring the intent of the HSR bond and law, and proceeding with an approach that HSR needs supersede those of anyone else in society. 
In this time of economic challenge, we can ill afford an over budget and poor planned public project.  If CHSRA planners continue to refuse to work cooperatively with the citizens of California and their legitimate concerns, then California legislators and federal representatives need to enact laws drastically revising CHRSA's power, or shut it down altogether .

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The Chinese Role Model Collapses on the Progressives

Ed Lasky

For years, China's high-speed rail and green energy programs have been portrayed as miracles that America must follow to remain "in the game."  During the last two years and counting, American taxpayers have been put on the hook for tens of billions of dollars as Barack Obama and Democrats in Congress promote agendas that would supposedly emulate China and lead us to Nirvana.  What is the trouble with this picture?  It has been one giant mirage.

The Washington Post runs a column by one of their finest journalists, Charles Lane, that honestly portrays the Chinese high-speed train project as being a high-speed boondoggle mired in financial and other problems:

For the past eight years, Liu Zhijun was one of the most influential people in China. As minister of railways, Liu ran China's $300billion high-speed rail project. U.S., European and Japanese contractors jostled for a piece of the business while foreign journalists gushed over China's latest high-tech marvel.


Today, Liu Zhijun is ruined, and his high-speed rail project is in trouble. On Feb. 25, he was fired for "severe violations of discipline" - code for embezzling tens of millions of dollars. Seems his ministry has run up $271billion in debt - roughly five times the level that bankrupted General Motors. But ticket sales can't cover debt service that will total $27.7billion in 2011 alone. Safety concerns also are cropping up.


Faced with a financial and public relations disaster, China put the brakes on Liu's program. On April 13, the government cut bullet-train speeds 30 mph to improve safety, energy efficiency and affordability. The Railway Ministry's tangled finances are being audited. Construction plans, too, are being reviewed.


Liu's legacy, in short, is a system that could drain China's economic resources for years. So much for the grand project that Thomas Friedman of the New York Times likened to a "moon shot" and that President Obama held up as a model for the United States.


In China, as in the US, high speed rail is expensive.  Huge amounts of money have to be laid out for construction, tracts, and equipment, and getting ticket revenue sufficient to cover costs is problematic.  Bullet train lines in Japan, China, and Taiwan all needed bailouts.  All but one of France's bullet train lines loses money.


While Barack Obama has been promoting high-speed rail projects for years (perhaps to give Vice-President Joe Biden something to do with his time, since he was scheduled to be put in charge of this effort), the rise of the Republicans and the resultant budget deal with Barack Obama derailed his dream project.  Governors (among them was newly elected Rick Scott of Florida) opposed the projects because, while federal seed money would start the projects, state taxpayers would be saddled with all the resultant problems from operating the money drains.  The administration, acting in typical fashion, then threatened transportation funding for obstreperous Governors and indicated it would send the federal money to other states more willing to fall in line with the Obama agenda.


China has also been hailed as a role model of green energy development.  Again, Americans were told by Barack Obama and his acolytes that we would fall behind the curve of history if we did not plunge rapidly into the green energy movement-the technology for the next century.  To further these efforts billions were spent as part of the stimulus program, and billions of additional taxpayer money (via grants, loans, loan guarantees, mandated purchase requirements, etc) flowed to promoters of renewable energy projects.


In reality, many of these "projects" were wasteful green schemes that all too often enriched "friends and family" (and donors) of Democratic powers-that-be (including Barack Obama).  At the same time, to further these efforts, the Obama team has been busy trying to choke off the exploration and development of our vast resources of oil, coal, and gas.  They have used suspect means to cut Gulf of Mexico oil and gas production, imposed a de facto drilling permit slowdown that has been so Machiavellian that a federal judge was compelled to hold the Obama administration in contempt, slashed the leasing of federal lands for energy exploration, proposed the slashing of subsidies that have promoted the production of energy at relatively little costs, proposed a vast array of regulations (such as the EPA's assault on American business and energy consumers) that would crimp development of our own domestic and to a great extent land based carbon wealth.


There are good reasons George Soros sugar daddy of the Democratic Party has been investing in green schemes.  He has tilted the playing field in his direction via his leverage over the Democratic Party.


Our own fact-based energy revolution is endangered by Obama and Democrat policies.  Vast new fields of readily tapped shale gas have already dramatically brought down the price of natural gas, saving consumers billions of dollars, revitalizing communities that lie above these reserves, creating jobs and revenue for city and state governments across America.  These shale gas pockets are massive pockets indeed and are ideally, if not providentially, located near where most Americans live.  Additionally, the land footprints of these operations are tiny.


This proximity to end consumers would make transport quite cheap and easy compared to the need to use in-the-middle of nowhere locations of solar and wind farms (that occupy vast swaths of land) to provide negligible amounts of very expensive and unreliable power.  The goal, evidently, it to push us into "the green future" (and into the hands of green energy "profiteers") and trump China's green energy industry.


But the China model is cracking at the seams, as it is in Spain and other nations that have rushed to embrace green energy.  The problem is that it is a dream and not based on facts, as Bjorn Lomborg reminds us in a Washington Post column.  He notes that China has been held up by Western elites  as the model "green energy"giant:

New York Times columnist Thomas Friedman described China's "green leap forward" as "the most important thing to happen" at the end of the first decade of the 21st century.

But the facts do not support this "green" success story.


China indeed invests more than any other nation in environmentally friendly energy production: $34billion in 2009, or twice as much as the United States. Almost all of its investment, however, is spent producing green energy for Western nations that pay heavy subsidies for consumers to use solar panels and wind turbines.


China was responsible for half of the world's production of solar panels in 2010, but only 1 percent was installed there. Just as China produces everything from trinkets to supertankers, it is exporting green technology which makes it a giant of manufacturing, not of environmental friendliness. (snip)


A 2008 Citigroup analysis found that about one-third of China's wind power assets were not in use. Many turbines are not connected to the transmission grid. Chinese power companies built wind turbines that they didn't use as the cheapest way of satisfying on paper government requirements to boost renewable energy capacity....

The vast bulk of Chinese energy (87%) is provided by burning coal.  Much of the rest comes from biomass and water power.  The widely heralded green program of China is a Big Lie reminiscent of the 5 Year Plans, Great Leaps Forward, and other communist slogans that broadcast the agitprop that communist regimes will leave us in the dust.  The only green thing about the Chinese Green Miracle is the number of American dollars enriching that nation at our expense.


Meanwhile, China is embarking on an ambitious program of the one type of green energy that makes sense (despite the Japanese disaster): nuclear power.  Once these nuclear power plants are running, China will be blessed with clean and cheap energy.  Meanwhile, President Obama may talk about nuclear power but has effectively shut it down by closing down Yucca as our depository for nuclear waste-after billions of dollars have been spent to prepare this isolated location in Nevada to accept and store spent fuel.  Senator Harry Reid may be pleased that he was blessed with this "favor"; the rest of America should not be.


There are certainly reasons people like Barack Obama favor big dreamy projects such as high-speed rail and renewable energy programs.  Perhaps it is the narcissism that drives so much of the Obama agenda his desire to "fundamentally transform" America and leave permanent landmarks to his own presidency.  There is no space left on Mount Rushmore but plenty of space for rail tracks and solar and wind farms.


Some people throughout the twentieth century been gullible gulpers of the propaganda that communist dictatorships are utopian role models worthy of being emulated (Paul Kengor's superb book, Dupes: How America's Adversaries Have Manipulated Progressives for a Century, charts this sorry history).  Lincoln Steffens was one of the leading journalists of the first quarter of the twentieth-century and what he said of Soviet Communism after a Potemkin-like tour there has echoes that have persisted into the twenty-first century: "I have been over into the future, and it works."  Well, given the benefit of hindsight, we have seen how well that view reflected reality.


Perhaps, Barack Obama truly believes his mission is a God-like one: to stop the rise of the oceans and heal the planets.  He and other cosseted academics with little real-world experience are inclined to adopt the view that elites should be social engineers and be given vast powers to impose their will on the American people.


We have certainly seen this movie before: our health care, the auto industry, the world of finance, the environment, the octopus that his Consumer Protection Agency will likely become.  Americans should not be trusted bitter clingers or not.  But elites stride above the common folk and should be endowed with massive powers to control society and determine our future.  This seems to be the mindset of Tom Friedman and Barack Obama: one regularly holds up China as a role model and the other wishes he were the leader of China.  Many of us may agree with the latter idea.


But their dreams are just that fantasies concocted by them that bear little relation to reality.  If they are successful in promoting their grand ambitions, their dreams will become our nightmares.

Ed Lasky is news editor ofThinker American

Fast Train to Nowhere


Stanford, Calif.

It is hard for liberals like me to find good news in the latest agreement to cut the federal budget, but there is at least one silver lining: subsidies for high-speed rail have been sharply reduced. Why is this good news?

In his State of the address, President Obama compared high-speed rail to the 19th-century transcontinental railroads as parallel examples of American innovation. I fear he may be right.

For the country as a whole, the Pacific Railway Act of 1864 and subsequent legislation subsidizing the transcontinental railroads — the lines that crossed the continent from the 98th meridian to the Pacific Coast — were the worst laws money could buy. By encouraging dumb growth, those laws sacrificed public good for private gain, and Americans came to regret it.

It is not that either transcontinental railroads or high-speed railroads are always bad ideas. A compelling case can be made for high-speed rail between Boston and Washington, for example, but the administration proposes building high-speed lines in places where there is no demonstrated demand. In California, construction of the new high-speed rail line from San Francisco to San Diego will begin with a line from Borden to Corcoran in California’s Central Valley. It is already being derided as the train to nowhere. The reduction of federal subsidies has not stopped the project, which now threatens to become a forlorn monument to hubris.

Proponents of the transcontinental railroads promised all kinds of benefits they did not deliver. They claimed that the railroads were needed to save the , but the was already saved before the first line was completed. The best Western farmlands would have been settled without the railroads; their impact on other lands was often environmentally disastrous. For three decades California commodities could move more cheaply, and virtually as quickly, by sea. The subsidies the railroads received enriched contractors and financiers, but nearly all the railroads went into receivership, some multiple times; the government rescued others.

As more astute members of Congress came to recognize, the subsidies were a mistake. One described the major drawback of a proposal for the government to guarantee bonds: “If there be profit, the corporations may take it; if there be loss, the government must bear it.”

After 1872, the country turned against the subsidizing of large corporations. It was a little late. Fraud and failure left a legacy that would lead to four decades of government attempts to get back what had so carelessly been given away. In the 1890s, Congress was still trying to recover money from the Pacific Railway.

Yet here we are again. The Obama administration proposed a substantial subsidy, $53 billion over six years, to induce investors to take on risk that they are otherwise unwilling to assume. Such subsidies create what the economist Robert Fogel has called “hothouse capitalism”: government assumes much of the risk, while private contractors and financiers take the profit.

As before, California has become the heartland for railroad dreams. California in the 1860s and 1870s needed a regional railway feeding the ports on San Francisco Bay, and today it needs better urban rail and improved freight systems. Instead, in the 1860s it got the Pacific Railway, and today it gets high-speed rail. And, as it did in the 1860s, California has sweetened the pot with subsidies of its own: a $9 billion bond issue. State law stipulates that the California High-Speed Rail Authority, which is planning, contracting for, and, eventually operating the system, will not get operational subsidies. It, not taxpayers, will pay its operating costs and its debts.

Those assurances are based on rosy and widely ridiculed ridership projections. Critics, the most trenchant of whom are part of the Community Coalition on High-Speed Rail, say that only two high-speed rail routes run without operating subsidies: Paris to Lyon and Osaka to Tokyo.

Without bond guarantees, private investors, which so far seem more prone to due diligence than the California High-Speed Rail Authority, have yet to put up money. The most astonishing thing is that even as financial problems force California to dismantle its social safety net, eviscerate its educational system, and watch its roads crumble, it has agreed on a plan for high-speed rail that demands substantial local subsidies and certainly will involve further concessions by the state to attract private investment.

It is as if a family, with one spouse out of work, unable to meet mortgage payments or school tuition, eagerly takes out a loan to buy an electric car after an uncle offers to share the cost. The catch is that there is no upper limit on the price, and the neighbors have to chip in. Nineteenth-century Americans would have grasped the analogy.

Richard White, a professor of history at Stanford, is the author of the forthcoming “Railroaded: The Transcontinentals and the Making of Modern America.” 


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