Monday, 28 March 2016

Yes, I know, the Torygraph again, but it's such fertile ground

Exhibit A

DT Letters

SIR – Sir Tim Lankester misconceives the case for infrastructure developments: some may bring a commercial return, but many are justified by the wider benefits that they bring.
Many early railways did not bring a commercial return but brought huge public benefit. Perhaps the best example of this was the Union Pacific, which went bankrupt but was crucial in opening up middle America in the 19th century. It continued to serve the country under new financial arrangements.
HS2 may seem marginal, but it will greatly strengthen a key transport corridor, allowing the West Coast Main Line to concentrate on the needs of middle-distance and freight traffic.
Mike Keatinge
Sherborne, Dorset
Exhibit B
A quote from the article at the link:-
"... In the end, the railroads constituted a huge transfer of wealth from taxpayers, Indians, Mexicans, and more efficient enterprises who found themselves competing with these subsidized behemoths.
The UP went bust.

Same old, same old.


Mark Wadsworth said...

There's a bit more to it than that.

Taking 'society' as a whole, Union Pacific paid for itself several times over. It's just that it was the taxpayer paying and landowners receiving the 'several times over' because their now accessible land was worth much, much more.

Mark Wadsworth said...

So in that sense Mises is probably wrong as well.

If the Faux Libertarians had their way, there would be no railways or motorways at all. Even if finance were not an issue and planning permission were not an issue, nobody would be able to buy up all the little bits of land to join together.

DBC Reed said...

The big transcontintental railroad companies were given vast tracts of land either side of their railroads as a bribe to build.They advertised cheap farms in the East Coast papers and people went out in special trains hoping to live like the gentlemen farmers depicted in the blats.As soon as they produced anything after a period of hardship they had to transport it by the railroad and store it beforehand in company grain elevators that stood by the tracks: they were, of course, in the grip of a private sector monopoly and complained from the outset vociferously, forming "the Grange" which campaigned for cheaper freight rates and the Populist Party which was infiltrated by Henry Georgites and monetary reformers who objected to the gold standard.(Hence the mainstream Cross of Gold speech by Bryan).
This period still sends out mixed messages.

Lola said...

MW. The comparison is not about land ownership/purchase per se. It's about the boondoggle nature of the state sponsored nature of both enterprises - the Union Pacific and HS2. There was no economic rationale to build the UP at the time. And the promoters spent more time on government lobbying for grants than they did actually making sure the UP (and similar railways) were well built. Various individual cronyists made fortunes out of the U, at the expense of taxpayers and private investors.

And I agree that without the power of state coercion to compel land sales it would be a very difficult thing to get a railway (or a road or a canal) built. You'd be forever negotiating ransom strips. But the finance for most UK railways was raised on the capital markets by bond issues, from banks and from individuals.

DBCR. Indeed. This was also government sponsored - most of the US railways were boondoggles.

DBC Reed said...

The mixed messages of this American era are such that I would point to Henry George's support for publicly owned mass transportation systems as of present relevance ( American rail nationalisation/ municipalisation!!)
It is also interesting that the railways in opening up the American high plains led to the reckless ploughing of land that had never been turned over before in areas of insufficient rainfall .I believe that agriculture in the region is now dependent on pumping the Ogallala aquifer which is a finite resource.

Lola said...

DBCR In other words the initial flawed intervention by the government - wild subsidy and crony corporatism with various 'sponsors' - leads to other ills, e.g. the over-ploughing in the 'dust bowl'.

Bayard said...

The writer has obviously missed the point that the whole purpose of HS2 is to raise land values in Birmingham by bringing it within commuting distance of London. Since this can be done without actually building anything, I'd be very surprised if it was ever built.

Lola said...

B. Quite. Speculation. And not in a good way.