Monday , November 19 2018
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No more public mass transit infrastructure

Summary:
This past April, I spend 25 days in Japan, where I took dozens of trips on railroads and subways. In each case, the train left exactly on time and arrived on time. This past weekend, my wife and I decided to take a ride on the “Gold Line” from Union Station in downtown LA to Arcadia, a trip scheduled to last 35 minutes.  It was a disaster. Los Angeles is unique in terms of its lack of rail service for a developed metro area with more than 10 million people (indeed nearly 20 million if you include suburban areas in neighboring counties.)  They have tried to remedy the situation with some newly built rail lines, with more under construction.  But it just doesn’t seem to be working. Our trip took an hour and 20 minutes, more than twice the scheduled 35 minutes.  Even

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This past April, I spend 25 days in Japan, where I took dozens of trips on railroads and subways. In each case, the train left exactly on time and arrived on time. This past weekend, my wife and I decided to take a ride on the “Gold Line” from Union Station in downtown LA to Arcadia, a trip scheduled to last 35 minutes.  It was a disaster.

No more public mass transit infrastructure

Los Angeles is unique in terms of its lack of rail service for a developed metro area with more than 10 million people (indeed nearly 20 million if you include suburban areas in neighboring counties.)  They have tried to remedy the situation with some newly built rail lines, with more under construction.  But it just doesn’t seem to be working.

Our trip took an hour and 20 minutes, more than twice the scheduled 35 minutes.  Even though (we later found out) the delays were due to maintenance, and not unexpected, this information was not given to passengers who boarded the train.  The ride itself was also unpleasant, with loud music being played by passengers.  My wife vowed never again to take mass transit in LA, and I can’t blame her.  I’ve had similar bad experiences in New York and Boston.  Washington DC’s subway is better, but also has frequent delays.

Elsewhere in LA the situation is even worse.  The even newer “Expo Line” is a surface line that must frequently stop at red lights, as cars are given preference over trains.  Thus this hugely expensive new rail line (costing $2.5 billion) is little better than a bus route:

The Expo Line is infamous for being slow because in certain sections it stops at red lights. The poster nailed it with this: “If it is at-grade and doesn’t have signal priority you might as well write the word ‘train’ on the side of a bus and you’d save money ….”

More such lines are currently under construction in LA, funded by a recent tax increase. The planned high speed rail between LA and the Bay Area is an especially costly fiasco.  It would make more sense to stop building new public mass transit infrastructure, and instead work on improving the existing lines.  For reasons that are difficult to discern, LA’s mass transit has extremely high maintenance costs, despite being a relatively new system that is not heavily used (and not having to face ice storms, as in Boston.)

How should the current mass transit lines be improved?  I see little evidence that spending more money would help—-the US already spends far more (per mile) on transit lines than other countries, with much worse service to show for it.  Instead, we should look for alternative models of management.  Here’s how it’s done in Japan:

In Japan, being in the railway business means being in the real estate business, explained Egon Terplan, SPUR’s regional planning director, at Thursday afternoon’s panel discussion about what the Bay Area can learn from Japanese transit station area development. “They are able to capture the value of the train stations they are building and beyond. One third of the revenue is from retail, services, hotels.”

That’s because rather than contracting out the business opportunities on the real estate around their stations, they own it all–everything from department stores to vending machines on the platforms. That has turned Japan’s six passenger railway companies–Hokkaido Railway Company, East Japan Railway Company, Central Japan Railway Company, West Japan Railway Company, Shikoku Railway Company, and Kyushu Railway Company–into hugely profitable corporations.

“These are companies listed on the stock exchange; they make money,” said Terplan. They also, together, carry nearly a third of the world’s railway passengers.

In Japan, the profit motive of real estate, retail, and office space–in addition to the trains–becomes a bit of a feedback loop. The Japanese railway companies want to maximize the value they derive from space around the stations. So transit oriented development isn’t just about housing. In Japan, it includes department stores, office buildings, shops, and hotels, and housing on different levels directly above and below the stations.

Obviously there are many geographical, cultural and political differences between the US and Japan, and I’m under no illusion that it would be easy to implement the Japanese system over here.  But this is the sort of reform that policymakers need to start thinking about if they wish to improve rail service in the US.  Get the right incentives in place.  Simply throwing more of the public’s money at the problem won’t work.

Scott Sumner
Scott B. Sumner is Research Fellow at the Independent Institute, the Director of the Program on Monetary Policy at the Mercatus Center at George Mason University and an economist who teaches at Bentley University in Waltham, Massachusetts. His economics blog, The Money Illusion, popularized the idea of nominal GDP targeting, which says that the Fed should target nominal GDP—i.e., real GDP growth plus the rate of inflation—to better "induce the correct level of business investment". In May 2012, Chicago Fed President Charles L. Evans became the first sitting member of the Federal Open Market Committee (FOMC) to endorse the idea.

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