People take HSR sometimes because it's heavily subsidized, especially in China. Without government intervention rail can't compete against airports and roads. China's railway is in a staggering amount of debt due to mass overbuilding of the sort that would have bankrupted any normal company in a market economy long ago:
https://www.reddit.com/r/China/comments/vt7jrz/a_whopping_90...
> China is not at all like the USSR ... China has an absolutely crazy abundance of consumer products
Products for export, yes. It doesn't have a particularly strong consumer economy because its model is to keep Chinese labour poor whilst building up huge foreign reserves and gutting foreign competitors. That's why Chinese consumption is still far below the US:
https://capx.co/xi-jinpings-coercion-is-destroying-his-own-e...
"private consumption accounts for just 39% of the economy – extremely low by world standards (the figure in the US is 68%). But there is no consumer confidence, with 80% of family wealth tied up in property and no meaningful social safety net."
The TGV in France makes a profit. As does the Shinkansen in Japan. Intercity routes in the UK aren't high speed but are all profitable. Rural rail lines are not profitable and commuter lines are about break-even, depending on the fares charged. E.g. the tube in London is break even as it receives no operating subsidy, but it's quite expensive compared to e.g. the Paris / Madrid / Berlin metros. If you want to lubricate congestion in your city an easy way to do it is to encourage people to take a more space efficient form of transport by subsidising this. As a business proposition it probably makes sense for the overall region in the same way that it makes sense for a factory to move stuff around on conveyer belts rather than having everyone carry stuff from one station to the next. Britain has low productivity compared to the western EU average. It is posited that one of the big reasons for this is that our infrastructure is a bit shit.
TGV doesn't make a profit by any normal accounting standards. As far as I know every line except Paris-Lyon has received large subsidies. The Bordeaux-Toulouse line requires a subsidy of 35 EUR per year per passenger for the next 50 years. Nor are tickets even cheap as a consequence. Supposedly it's cheaper to drive the moment you have at least two people in the car (I haven't checked that claim, probably there are routes where it's not true).
Rail in the UK requires subsidies. Once again you can play games with non-standard accounting, like by excluding the cost of track and stations, but those are the bulk of the costs. If rail subsidies were zeroed tomorrow every single railway in the UK would go bankrupt the day after. This is also true for the Tube which certainly isn't break even - where on earth did you read that? They were once able to cover daily operating costs from ticket fares, but Sadiq Khan put an end to that and now they can't even cover operational expenditure without subsidies from central government. Even back when they were able to balance the daily books they only achieved that by starving capital expenditure and not building up any kind of profit margin, meaning that any kind of upgrades or repairs have to come out of additional subsidies.
https://tfl.gov.uk/corporate/about-tfl/how-we-work/how-we-ar...
The Shinkansen has a long history of building unprofitable lines which led to JR's eventual "bankruptcy" in 1987, ending up 28 trillion yen in debt. After being semi-privatized they were given a lot more leeway to shut down their unprofitable lines, but even so, it's viable mostly due to the government ensuring they have access to nearly unlimited risk free and repayment-schedule free money (ZIRP).
Passenger railways are fundamentally not possible to run as ordinary free market companies. They were run that way once, but the railways were built out on the back of huge private sector investments in infrastructure. Governments the world over then nationalized them and redirected funds towards staff/union pay settlements or reducing ticket fares, cutting infrastructure spending to compensate. The result is a massive overhang of tech debt that now can't be paid off without unrealistically high ticket price rises.
British productivity is low because it has cheap labour due to effectively unlimited immigration. Companies invest in productivity improvements when labour becomes expensive, otherwise they don't bother, it's easier to just throw more people at a problem. None of that is really a secret, it just doesn't get talked about much because the British ruling classes don't like to criticize immigration lest they be called racist - however, this is a purely economic issue. Railways hardly matter for productivity and commuting may even harm it for many people, as evidenced by the popularity of working from home.
Citations please. I believe the opposite of much of what you said is true. Here are my references.
SNCF is profitable: https://www.lemonde.fr/en/economy/article/2023/02/24/sncf-re...
Pre-pandemic the main intercity routes were all private operated. The operators had to pay track access charges to cover maintenance costs but they also had to bid to the government to buy the rights to operate the franchise. I.e they had to say how much profit per train service they were willing to pay to the government for the right to operate. The privatised rail sector collapsed because these companies overbid for these rights not because the routes themselves were fundamentally unprofitable.
TFL operating surplus: https://tfl.gov.uk/info-for/media/press-releases/2023/march/...
Japan has never closed a shinkansen route. They have closed many rural branch lines though.
Britain has a low immigration rate compared to Europe. E.g net gain ~750k compared to 1.9m to Germany last year. Germany also has high rates of unemployment for unskilled labour yet they have a sophisticated and highly automated high tech manufacturing economy.
https://en.m.wikipedia.org/wiki/Immigration#/media/File%3ANe...
Air travel is also heavily subsidized, and road travel even more so. One of the real reasons for the interstate highway system (not the purported reason -- defense -- that got the bill through Congress) was to break the back of the rail monopolists (and, importantly, the rail unions). The American state chose to literally invent a whole new kind of socialized transport (marketed as a form of consumer individualism) than just nationalize and upgrade the railroads like every other civilized country.
Air travel is taxed not subsidized. As far as I know there are no subsidies to the airline industry, unless you get into very ideological arguments by claiming the US military is a form of subsidy to anything that depends on fossil fuels. Double checking Wikipedia confirms this. After a huge page listing all the taxes, there's one unsourced paragraph claiming that "some" governments subsidise air travel with a "who?" dispute filed against the claim:
https://en.wikipedia.org/wiki/Aviation_taxation_and_subsidie...
Road travel is usually profitable for the government as fuel taxes cover more than the costs of building and maintaining the roads. Drivers end up subsidizing rail in every country that I know of. It's possible EV cars will start to change this.
US passenger rail is nationalized. Amtrak is majority owned by the federal government, for example.
There's not really a way to have this discussion without being ideological but military contracts, fossil fuel production subsidies (yes there is a tax on the fuel, but also a subsidy to the people pumping and refining it), and municipally-financed airports (including the tax subsidy on muni bonds) all seem to be pretty direct subsidies that the air travel industry would not exist without. Air traffic control is also a 100% governmental function that is necessary for the industry to exist.
On what you would probably term the more ideological side, there is noise pollution, environmental costs (this one is admittedly likely a wash -- it's not as if our airports would be nature reserves if they weren't used for aviation), and presumably a major hit to revenue and quality in major metro areas -- is O'Hare really the best possible use of that extremely extremely valuable piece of Chicago real estate, or could it generate more revenue for the city and happiness for citizens as housing, shops, commercial and industrial space, and parks?
Anyway have a good day. I'm glad you're a fan of motoring and aviation and hope it brings you great joy.
I don't get much joy from long distance travel in any form tbh ;) I keep posting in this thread because people keep making untrue claims about transport economics, and it's important to be realistic here.
So we go unto the breach once more: in the USA the government run parts of the air system are funded by taxes on fliers, not direct subsidies. ATS is a part of the FAA which is funded by such taxes:
https://usafacts.org/articles/who-funds-the-faa-you-whenever...
Airports usually fund themselves via fees charged to airlines, which are then ultimately charged to the flier. You can see them in the fare breakdowns sometimes. I'm sure there are tiny airports in the US that are subsidized because governments love subsidizing uneconomic things for prestige reasons, but it isn't structurally needed.
In the US, fuel taxes and tolls combined only cover about 35% of the cost of building and maintaining roads. The rest of the cost is covered by the federal, state and local governments.
That's because gas taxes are an unusually live wire in US politics, not because roads are fundamentally uneconomic. Until 2008 gas taxes did cover highway spending, and they now require general transfers because gas taxes weren't indexed to inflation. According to this website the taxes weren't increased since 1993, so in practice the US system has been deliberately starved of sustainable revenue.
https://taxpolicycenter.org/briefing-book/what-highway-trust...
"Congress could pay for projected highway and mass transit spending by simply raising the federal tax rate on gasoline and diesel fuel. Increasing those rates by 15 cents per gallon along with indexing the rates for inflation would increase federal revenues by $240 billion over ten years (CBO 2022)."
Balancing the highway books in the USA would be easy, and it's done already in most other parts of the world.
You've now admitted that most of the cost of maintaining and building roads in the US is borne by government subsidies.
I just looked up how Germany funds its road network. It turns out that 2/3rds of the funding comes from taxes (subsidies, in other words).[0]
0. https://bmdv.bund.de/DE/Themen/Mobilitaet/Infrastrukturplanu...
Funding is a subsidy only if it comes from tax/borrowing sources that aren't related to the thing being subsidized. If taxes levied on driving fund driving, that's not a subsidy. Also that page seems to be talking about all transport including railways, but we're only interested in roads here.
Germany spends ~16B EUR per year on roads at the federal level:
https://www.statista.com/statistics/1293915/federal-expendit...
The amount it gets from motor taxes is vastly in excess of that:
https://www.destatis.de/EN/Themes/Society-Environment/Enviro...
That's not surprising because Germany has the highest motor taxes in Europe:
https://www.acea.auto/press-release/motor-vehicle-taxation-b...
The US does subsidize roads but it doesn't have to, hasn't done so in the recent past and arguably shouldn't be doing so.
Germany is highly federal. The federal government only covers a portion of the cost of road construction and maintenance, with state and local governments carrying much (a majority, I think) of costs.
From what I see in your 2nd link, motor taxes do not even cover the federal government's contribution to road construction and maintenance, not to even mention what state and local governments pay.
You're saying the US doesn't have to subsidize roads, but removing that subsidy would require the US to raise fuel taxes and tolls by 200%. Rail can also break even if prices are increased. The reason governments subsidize HSR is because it has positive externalities.
> People take HSR sometimes because it's heavily subsidized, especially in China.
Most forms of transportation are subsidized. Good transportation infrastructure benefits the entire economy, so governments subsidize it. The fact that people can travel between cities easily and quickly facilitates business.
> China's railway is in a staggering amount of debt due to mass overbuilding
HSR is heavily utilized in China. A lot of the continued rail construction is because existing lines are butting up against capacity constraints.
> Products for export, yes.
I'm talking about products in their own shops. Chinese consumers have access to a much wider array of consumer products than Americans have.
> private consumption accounts for just 39% of the economy
Now, you're mixing completely different topics. Lower spending on consumption isn't because there aren't products on the shelves. It has to do with things like Chinese people's propensity to save, China directing more of its GDP into investment, and on the flipside, the United States' trade deficit.
Most forms of transport aren't subsidized. Air travel and road travel isn't. Cargo shipping isn't.
> The fact that people can travel between cities easily and quickly facilitates business.
Governments like claiming this but dig in and you'll find they have no robust evidence for it. It also just fails a quick reality check: if it were true then passenger railways would be profitable in their own right, as businesses would be happy to buy tickets for employees at their true costs. Yet passenger rail is never profitable and what we see in reality is lots of workers preferring to work from home than take even the subsidized railways into the cities.
You can argue for trains as a lifestyle thing, maybe even an environmental thing although EV are changing that. But you can't argue for them economically.
> HSR is heavily utilized in China.
HSR is famously mostly empty in China. Go read accounts of anyone who has travelled on the newer lines.
> Lower spending on consumption isn't because there aren't products on the shelves
Nobody stacks shelves with products that will never be sold. Lower spending on consumption means the goods are being exported, and Chinese people aren't buying what they make because they don't have enough trust in the system to do so. Hence so much money being ploughed into real estate bubbles (an attempt to save money in something that's hard to confiscate).
> Air travel and road travel isn't. Cargo shipping isn't.
I don't know about cargo shipping, but both air and road travel are subsidized (and I strongly suspect the same is the case for cargo shipping).
> It also just fails a quick reality check: if it were true then passenger railways would be profitable in their own right, as businesses would be happy to buy tickets for employees at their true costs.
What you're effectively arguing is that the only way to measure whether basic infrastructure has positive externalities is to ask whether it turns a profit. By that argument, all government spending on infrastructure is wasteful - a position that I think is obviously wrong.
> HSR is famously mostly empty in China. Go read accounts of anyone who has travelled on the newer lines.
I've traveled on Chinese HSR many times. It is extremely heavily used. Trains are usually packed. I've had to buy first-class tickets before, simply because the regular carriages were completely sold out (luckily, first class is not too expensive on Chinese HSR, and the upgrade is definitely worth it).
What are you basing your impression of HSR being empty on? Are you basing that on newspaper articles in Western press, on first-hand experience, on data, or on something else?
> Nobody stacks shelves with products that will never be sold.
You began by comparing China to the USSR, and talking about Yeltsin was shaken by the abundance of consumer products in the US. This comparison just completely fails when it comes to China. The China of today has a crazy abundance of consumer goods for sale. The malls are full of every type of shop with full shelves. There are packed markets with stalls selling everything. You can buy pretty much any consumer product you can imagine on your smartphone. There are endless numbers of couriers driving on electric scooters throughout every Chinese city, delivering people's online orders. Your image of what China is like is just completely out of date.
the low consumption as part of GDP also has to do with different ways of reporting GDP. they dont include some government funded services in the consumption share of GDP, when similar services are included in other countries consumption shares.
china consumes 30% of cars, 20% of mobile phones, 40% of televisions, 25% of furniture, etc. in basically every consumer category they exceed 20%. how can that be true and at the same time they have an abnormally low "true" consumption rate?
https://www.project-syndicate.org/commentary/china-household...
https://asiatimes.com/2023/11/consumption-in-china-is-it-rea...
