Trains in Vain

Speaker 2

and I'm Phil Bagnus, The Economist.

Speaker 1

Couple of things come to mind. One, when I lived in Los Angeles for a little while, I went from LA to Santa Barbara. It was a nice train ride. I think it was like four hours or something like that. And then I was in Prague one summer and I went from Prague, Praha, for those of you who know, to Berlin. No idea how long that is. I had way too much cerveza, which is not what they call it in Prague, to remember that trip all that well. But that was another long trip. Phil, what's your relationship like with trains? What's the longest you've been on a train?

Speaker 2

Yeah, it's pretty similar. So I've done ⁓ several cities in Europe where they have kind of, I guess they call it a higher speed rail network, ⁓ everything from the UK to Italy. I've also been a fairly regular user of the EMTRAC system, but on the Northeast corridor of the United States that stretched between Washington, DC and Boston.

Speaker 1

You know, with all the train travel, I have to say I have never been impressed in any degree. mean, the one thing I've been impressed by is that I didn't have to wear a seatbelt, which was like, ⁓ this is different, I guess. But other than that, ⁓ doesn't really do it for me.

Speaker 2

It's not great. mean, the one exception I've had was in Europe, where they have high-speed city-to-city rail. And I'd say the main benefit there is, you know, it was easier to do that than to go through airport security for like a 45-minute flight from Rome to Milan.

Speaker 1

So I do wonder, you it's obviously a very European thing with the, with the trains, all, all these people calling for more trains in the United States. always wonder like, where's that kind of coming from? Because, you know, like you said, when you're in Europe, it's easier to do the train than to go through, you know, all the annoyances of going through an airport. get that in the United States it's yes, the airports are annoying, but sometimes the difference between like an, ⁓ two hour flight. and a 17 hour train. ⁓ You know, it's like, okay, I guess I'll deal with a little unwelcome touching from TSA.

Speaker 2

Right, right. Well yeah, I think there's a lot of romanticized conceptualizations of how trains work by people who go abroad and they use them to get from city to city. They come back from Europe or they come back from Japan and they're like, ⁓ these trains are so wonderful and so convenient. Why don't we have those here in the United States?

Speaker 1

Well, yeah, think that's a question, Phil. Tell me, why don't we have them here in the United States? What's up?

Speaker 2

So I say the biggest issue there is population density. Europe is actually a relatively dense continent. The cities were made in medieval times where, ⁓ you know, in 1300, a day's travel could have been going like 10 or 15 miles up the road to the next village. So the continent is very much settled in that pattern. You come to the United States and like the entire state of Wyoming is mostly open land. and cattle ranches and farms and stuff like that, ⁓ how do you traverse the state of Wyoming getting point to point on a train system which is very fixed? It can only go between two cities. And if you are veering anywhere off of that route, you need to go anywhere off of that route, I mean it's kind of like you're out of luck. It's a technology that emerged in the 19th century around very fixed transit points between old style cities. I guess another analogy here, this is why trains in the United States, the one area where they're at least semi-functional, I'm not going to say they're great, but the M-TRAC system is semi-functional and it's that northeast corridor between Washington and Boston. And if you think of that, it's one of the densest regions of the United States. It's city after city. You go Washington, to Baltimore, to Philadelphia, to several stops in the middle of New Jersey, New York City, then you have all of the central Connecticut, Providence, Rhode Island, Boston. ⁓ In a way, it's almost like a continuum of urban areas and suburbs that just blend into each other ⁓ from Massachusetts all the way down to Virginia. And if you have that and you have commuters on that corridor, it actually kind of works because there's enough traffic moving up and down the corridor to make use of regular trains. Where it doesn't work, is if you're trying to get from New York City to the middle of rural Alabama. There's just not enough passengers that would justify this massive infrastructure ⁓ investment to build the line from Washington to Birmingham or something like that. how many people would be moving down that line? And because it's fixed, there's no real way. You actually have to make choices of which cities it stops at. There's no real way to accommodate someone who's only going half of the way down and then veering off in another direction because they need to go to Nashville. Again, it's a density thing in an infrastructure and we happen to be on a very large and not very densely populated continent in the grander scheme of things.

Speaker 1

Now there's definitely been attempts to be like other nations and to build up rail. You why have attempts in the US failed? Like what's wrong with us Americans? Why are we so backwards that we're not using backward technology?

Speaker 2

That's so wild because again you get this romanticized decision and the one that everyone always points to is this California high-speed rail system and they've been trying to get this thing built in various iterations for multiple decades and then really in earnest for about the last decade and if you look at all the numbers on this it's just a gigantic boondoggle. They are in the I think the latest estimates it's about 15 to 16 billion dollars have been spent on this thing that was originally projected to be a tiny fraction of that cost. The idea was, you you have two major urban corridors, Los Angeles to San Francisco. There's obviously a lot of traffic between them. Fair enough. You think, ⁓ well, this will this make sense. But these are built up urban areas and to build a high-speed rail system that goes into those urban areas, you're crossing a lot of very valuable real estate. To get through the suburbs of San Francisco, that's some of the most expensive real estate in the country. Same with Los Angeles. So what they've really done is they've focused on building the links in between where it's less settled, less dense, and rather than having a true high-speed rail from Los Angeles to San Francisco, it's now kind of like a medium-speed rail. that is still many years away from completion between Bakersfield and Fresno or something like that. There's just not the traffic to justify it, especially when I can go to LAX and hop on a flight and be in San Francisco 45 minutes to an hour later. So we have a very functional plane infrastructure, airport infrastructure, and a lot of flights between these two major cities. Not as much in between a... very heavy resource-intensive, infrastructure-intensive construction process to link those two cities that would have to go through the suburbs of some of the most expensive real estate in America to ⁓ actually connect the cities downtown urban areas. And whenever you're running a ⁓ rail system through like Beverly Hills or something, you're going to run into the NIMBY problem. Nobody wants a giant railroad track as they're ⁓ filling in the easement or the right-of-way behind their house. and flying by at two in the morning with horns blaring at 100 miles an hour.

Speaker 1

Historically speaking, when the United States was laying down a lot of rail, ⁓ what went into that process? Because what you talk about now is if one were to start building more rail, if you're not doing it on federally owned or state owned land, then you're gonna have to be moving a lot of people off that land. I nobody, myself included, wants a train going through our living room.

Speaker 2

the eminent domain and all these other considerations. So it's very expensive to build anywhere near a dense area. Now if you go back historically in the 19th century, so railroads did connect the continent. Remember the famous scene from everyone's history book had like a painting of them driving the spike in promontory Utah where the the East and West Coast transcontinental railroads connected and this is in the late 1860s and it's the first link across the country. Well, some interesting things are happening behind the politics of that because a lot of the railroad construction is dependent on privileged and favorable land subsidies that were given through the federal government. And there was an old joke that actually kind of came into fruition when the federal government said, okay, we want to incentivize them to build this transcontinental railroad. And in exchange for this, we're going to give the railroad company land ⁓ adjoining and adjacent to where they choose to build the tracks. Now if you're an investor at a railroad company and you see, the government's handing out free land to build my tracks and the land is determined by where the route goes for my railroad, are you going to pick the quickest route between two points or is it going to zigzag every which way and try to pick up as much land as possible and hit every small town, every junction that you seem to... ⁓ They can even lobby to get the railroad to come there as determined by politicians and you throw them into the mix. And it very quickly becomes a perverse incentive situation where politicians and businessmen are now wetted at the hip to determine politically the routes that these railroads take all for the dispersal of government land, which is like a privilege and a payoff. And then they take that land and they throw it into investment schemes. So railroads in the mid-19th century are like the peak of this gilded age corruption, the twirly mustache guy in a top hat. ⁓ All of those stereotypes kind of come from this whole railroad industry funded by the government. And there are multiple recorded instances that they all end up going belly up because they're not responsive to market incentives to build them. It's all political determination. ⁓ we don't go too much into 19th century scandals anymore. But the really famous one, this was in the Ulysses S. Grant administration, was the Credit Mobilier Association. And it's this giant financial scheme premised on bad stocks that are issued from a finance company of the old former Pennsylvania Railroad Corporation that had been seized during the Civil War and reallocated to the Union Pacific. it basically entwines everyone up to the vice president of the United States and several Cabinet officers are implicated on insider trading and privilege deals all around railroad stock and land. And the relics that we see of this today is, you know, when the Central Pacific and the Union Pacific, the two main lines, when they reach each other in Utah, you can actually look on the map of some of these Western states like Nevada, Utah, California, and pull up land plots of what is federally owned land today and what is privately owned. And all these states have this little line that zigzags in all sorts of different ways across the middle of what is a big block of federally owned land. And then you have like a couple mile area around where the original railroad track is. It's now still visible on the landscape today because that was the reward given over to the railroad companies in exchange for building.

Speaker 1

Correct me if I'm wrong, but I think I remember reading it. I don't know if it was in the myth of the robber barons about how there was a difference between basically the private train industry and the government run industry and how ultimately the private train industry won out because you were talking about, these incentives and when the government is paying per mile of track laid down. you're going, you're gonna find a way. I'm surprised that we don't have like roller coasters, because it seemed like that was such such a moneymaker. Something that happened recently that is not not exactly train related or not train related at all. In New York, they're, they're trying to pass or maybe they have passed legislation when it comes to like, Uber Eats, ebike delivery people, where they want them to be getting paid by the hour. So If they have a delivery and it's, you know, a 15 minute ride, they are now incentivized to take longer than 15 minutes because they're getting paid for the time. Yeah. And it's incentives are a real, are a real thing. Even with, even with choo choo trains. ⁓

Speaker 2

the full loop around. Especially so, and that's the famous incident you refer to, the private railroad, the first private transcontinental, and this is built, I think in 1893 is when they linked it, it's the Great Northern Railroad, and it took a route that did not depend on all these government subsidies and promises of land and ⁓ politics and financial schemes behind it, and it turns out to be among the most solvent of the major railroad companies that was ever completed. all with private money and they kind of prided it on themselves on that. ⁓ Whereas you have these government funded railroads in the Union Pacific and Central Pacific are, you know, they're certainly completing the task. They make the transcontinental link, but constantly mired in the bad incentives of being paid by mile, being paid by ⁓ where the prime land was. It's like, well, let's divert this route 20 miles to the north because I want that land. It's not, let's find the quickest and safest route between A and B. So you get this infrastructure that's just basically inorganic and zigzags and it's politically determined.

Speaker 1

One thing that I often hear because I live so much of my life online is people will point to, they will point to countries like Japan, they will point to Europe. Then they'll also point to China and talk about China's high speed rail and how quickly they built that. And there'll be some copy that goes along with it. You'll have like this footage of like almost futuristic looking city and the train just flying by like a bullet. and they'll say, look at what China can do with its trains. Why can't we? And it made me start to think like, wow, can you imagine what we, the United States could accomplish if we were a one party authoritarian state? Can you imagine what we could do?

Speaker 2

⁓ I know those exact videos. like ⁓ people see Logan's Run or one of these old sci-fi movies from the 70s and it's always the high-speed train moving between these futuristic buildings. ⁓ Again, it's back to this like ⁓ imagined fantasy of an ideal of what trains could be versus the reality. Well, you know, one of the other things that we have in the United States, and this is hanging up the California system, is we have these things called environmentalists. and environmental regulations. ⁓ You know, China doesn't seem to care too much about that. In California, if you're building the overpass, even if it's in the middle of nowhere, the ⁓ endangered desert toad might be in a habitat nearby, so you have to do an environmental impact study. And then suddenly the $10 million overpass is $50 million. And then someone else comes in and sues on another thing, because they don't want the train going through their backyard. and now it's drawn out in an eminent domain dispute. And then the local community may decide that ⁓ they want the train to bring passengers to them, but they don't want it to actually bring passengers into the territory or the part of the city that would be useful. So you get another lawsuit. It's all this political determination, and every time that happens, that's why these things are boondoggles and cost overruns. And what initially started more than a decade ago, at least the current phase of the California rail system, They have all these referendums to fund it. It starts out like a tiny fraction of the cost that they've actually spent so far and the thing's still not complete.

Speaker 1

I'm starting to wonder if the train industry is such an industry where you can keep getting paid without actually accomplishing anything, without laying down any rail, without having any functioning train, and yet you're still able to kind of suckle on the teat of the government and be able to get that money.

Speaker 2

Absolutely, it's a giant rent extraction industry. It draws resources from the public sector because it is an infrastructure project, it's heavily funded, it's a niche industry that has a lot of safety and regulatory standards that are very particular to it. Like to build the train car, you have to meet all sorts of federal regulatory standards. There's only a couple of companies that are able to do that on a successful economical basis, and it's almost entirely dependent on government contracts. Although it flies under the radar. I mean, we think of well-connected industries are usually in the defense sector. It's like Boeing and Raytheon and all these airplane manufacturers, Lockheed, which, yeah, they know how to play the federal game. Now imagine that, but instead of jets flying everywhere, it's train car manufacturing. So something much more boring, much more likely to fly under the radar, and your only relationship is between servicing government contracts. It's ripe. for all sorts of cost overruns and very little market oversight of what's actually being produced.

Speaker 1

I'm actually surprised there hasn't been a defense contractor who's like look every country we're at war with let's start building rail

Speaker 2

World War I, Germany built this giant like battleship-sized cannon that they fit on the back of a train and the idea is that we're gonna drive the train over to the coast and like fire it at England or something. Even that kind of stuff has been tried in the past. Turns out it doesn't work.

Speaker 1

Okay, good. glad you said it didn't work because the audience that we've built up, I think there might be a few of them out there who are like, ⁓ I just got an idea. Every time I start listening to like the discourse when it comes to trains, I've been to Europe. I've really enjoyed the places that I've gone in Europe. The United States isn't Europe. And I would argue that a big reason why the United States isn't Europe has to do with cars, has to do with the American lifestyle has been very much built kind of around cars and we are where we are in large part because of cars.

Speaker 2

certainly a big part of it. It's a path trajectory. mean, again, Europe, these cities developed in the Middle Ages and the typical street is like this tiny, windy, rickety road that goes around thousand-year-old buildings. Most United States cities, I mean, the very earliest cities we have on the continent are in the 1600s on the East Coast. And the further you go inland, like you get to somewhere like California, something that was built in 1850, that's considered old. In Europe, that's brand new. So the infrastructure that we have in our country, at best, it developed around the early days of the railroad. And really most of it came into space after 1900, which is the age of the automobile. interesting if you think about it as kind of an organic growth because you know even though government did subsidize highways and roads and all that sort of thing it's the great question who will build the roads well this is always seen as a public sector thing so even though there is government subsidy of interstate highways and things like that they also are much more suited to the geography than a railroad system especially in that era and I think that's continued to the way the country is going to grown up today Because, you know, the beauty of the railroad is that it's a fixed point A to B. And as long as you are running along that corridor, it's great. If you have to move even, even if you're like a couple miles off that corridor, you're out of luck. It's not like you can stop in Philadelphia and decide, well, I'm actually going to West Virginia from here, but there's no train corridor from there. There is a road.

Speaker 1

Right. And also on that train, you have to stop every 25 miles.

Speaker 2

Yes, yes. At every little town in the middle of nowhere, whether there are passengers getting on or off, anyway, because somewhere in a law from 100 years ago, said that they had to do that. So there's all sorts of weird considerations like that, but you know, like a highway system. The function here is you can use the main arteries, the interstate 10 across east and west connects like Los Angeles to Jacksonville, Florida. Interstate 95, it's the southern tip of Florida all the way up to Maine. These are major arteries, but there are roads that veer off there that are not dependent on a fixed route. So you may be driving on Interstate 95 for part of your trip, but at some point you turn off to head to Ohio. And in a car, you can do that on the spur of the moment at the point that you get there. You don't have to sit there and wait for a train to connect on the next route. and then catch another train to connect on the next route. ⁓ So trains would make a very complicated journey for a multi-stop trip that goes anywhere off of the main corridor, whereas cars, it's almost seamless. You just transition to a different type of a road and pick a different route.

Speaker 1

Yeah, I've been ⁓ opening for ⁓ Rob Schneider on the road and ⁓ the past few shows I was in Hanover, Pennsylvania and then I was outside of. Baltimore and Timonium and for you know, both of those shows I took my car and I used to be someone who didn't enjoy driving my car. I didn't enjoy three plus hours behind the wheel. But I've noticed that as I've gotten a little older and I have kids, young kids, some alone time with just my thoughts and maybe a podcast like Happy Hour Econ is just what I need. But there is something too about, you know, sort of this word keeps popping up for me and you've brought it up quite a bit. It's fixed. You have all these fixed points and the car kind of as a symbol of, you know, America is I'm independent individual that can move when I want to move as I want to move.

Speaker 2

And there are other advantages. I mean you have the maneuverability, the flexibility that comes with a car. You know, I'm driving into work in the morning and I decide, you know, maybe I need to stop by the grocery store at lunch. I can throw my groceries in the trunk, go back to work, go home in the evening, multi-stop trip. Now if I were doing that same thing on a train, where would I stick my groceries in the middle of the day? I'd also have to go find the train station to take it to the grocery store on my lunch break. So, yeah, if I'm down to a train or a transit system, a subway, what could be a very simple set of tasks throughout the day of me going to the grocery store, getting gas, ⁓ pick up a kid, pick up someone at work, and also do the tasks that I need associated with my job during the day, that becomes a lot more complicated if you're bound to going between train stops. You can't carry groceries with you except what you can fit in your backpack or carry around or lug around in your suitcase or something. There's no place to store that on the train. mean, imagine putting your groceries on a random seat on the subway in New York City and thinking, hey, what's going to, where are they going to look like if I come back an hour from now?

Speaker 1

in New York, the idea is that you just, you just stay there. You sleep there now on the subway. That's, that's your, that's your home right now. Yeah. I often find a lot of the people who make these really, you know, passionate arguments for trains happen to be like kind of single people. And when I was, when I was single or unmarried and my wife and I were, you know, traveling so easy, so easy, but all you have to do is you add say like one kid and that that just makes things so much more impractical, so much more difficult. Or even when you're traveling, add an extra bag and suddenly it's like, man, I'm schlepping this bag along with me and now travel becomes so much more ⁓ torturous and arduous than it would be if you just throw it in your car.

Speaker 2

Absolutely. ⁓ Strollers are not fun on airplanes. They're not fun on trains. But they're relatively easy to do if you stick the kid in a car seat in the back of the car. Another aspect of it is the timing. If you're on a train, it looks great when the ⁓ stops align with your schedule. But what if you need to get somewhere at 3 in the morning and the train, instead of running every five minutes, is running once an hour? Well, suddenly the car has a very clear advantage over that. What if you are trying to get to the middle of a rural area of a state that only has one scheduled train per day and you miss it by five minutes? Well, you're stuck there till the next day. Otherwise, if you're in a car, you just go whenever it's convenient to you. So it's actually a much more flexible. mode of transportation is also a better way to more efficiently use your own personal time and suit it to your needs as opposed to scheduling your day around train schedules of when they're going to go from city to city and town to town. It's a little bit easier in Europe again because it's a population density question. When you have trains going through all day you can reliably depend on one being there every 30 minutes or whatever the schedule happens to be and you can build your day around that. But they can do that because the population density exists to support it.

Speaker 1

I think a lot of people, a lot of pro train people, and I know I'm beating up on you guys, I know. You probably don't listen to this show because you're so much into trains that you're not listening to Happy Hour Econ. But if you are and you check in right now, I think one of the issues that you guys have is kind of this amnesia. Historical amnesia I can understand because we weren't around in the 1800s, early 1900s, but historically there was such excitement for the automobile. There was such excitement over this new technology that was going to be better than horses that just like everything that Phil's been laying out, you can move about as you as you want. And then the other amnesia is it's not that far away. It's back in 2020. It was a little thing called a pandemic and there were lockdowns. And let me tell you, as someone who was in Brooklyn Heights in the year 2020, when my wife was pregnant with our first son, and things were locked down, there were a lot of shut a lot of things were shut down. Thank goodness, we had our car, because we were we were not dependent upon if buses were going to ride if the train was going to be on time. Also, at the time, we didn't know much about what was going on with you know, COVID the idea of like wanting to be locked in a metal box with a bunch of strangers when we didn't know what you know what was happening, especially with it with a new a newborn was insanity. And something that I think a lot of people need to contend with is something like that is bound to happen again. And if that is to happen again, you got to be honest with yourself. Do you want the means to be able to get out of to get out of there? Or do you want to be stuck and dependent upon the kindness of your neighbors and kindness of your government, which there was not a lot of kindness going around, at least in my experience during that really tumultuous time.

Speaker 2

exactly. Trains have limitations. They're great to romanticize and in some parts of the world they're very convenient. But again, you what are you forgoing when you're stuck on a fixed route? You don't have the flexibility to move anywhere outside of the schedule of the train and it only goes to certain cities and they aren't always the cities you want to be in.

Speaker 1

And I'm wondering too, what does the future hold for trains? Because, you know, speaking of the, you know, the, the automobile, we have self-driving cars now that seem to be becoming more and more prevalent. So rather than, you know, trying to lay down, you know, the equivalent of like billions of dollars in track, if you have half a billion put into self-driving cars, it seems like that could be a way of getting around. That's a lot easier and cheaper.

Speaker 2

Right, and the market seems to be there for the self-driving cars. mean, decade or so ago, we barely even had something like Uber. Now it's the standard mechanism for ⁓ point-to-point travel in most cities, and it's by clicking a button on your cell phone app. You can't push a button and say, train arrive and take me to here. You can with an Uber, and maybe a self-driving like a Waymo car. Some of the larger cities are now starting to invest in those. ⁓ Again, much more convenient path. There's a nostalgia for the old way of doing things, but the old way is very expensive, has its limitations, has very fixed routes.

Speaker 1

Well, I want to thank all of you for joining us in the new way of doing things. Whether you're in a car, in a train, in an automobile, in a zeppelin. Well, I want to know where you got that zeppelin. Please tune in next week for an all new episode of Happy Hour, Econ.