The California Labor Federation has a membership of more than 1,200 unions, representing over two million workers. And the first of seven key issues they list on their legislative agenda for 2012 is supporting high speed rail. As they put it, “Building high speed rail will grow our economy and create long-term jobs. An estimated 450,000 jobs in operations, maintenance, ticketing, and services will be needed to keep HSR up and running.”
It is difficult to imagine economic thinking more well intentioned yet fundamentally flawed. What private sector unions want, ideally, is to work cooperatively with government and industry to help create well paying jobs. But high speed rail will incur far more economic costs than economic benefits. Massive construction projects, using public/private financing mechanisms, have to benefit the economy. Otherwise they are examples of private gain – high paying jobs for workers who happen to belong to unions involved in the construction and maintenance of the project – in exchange for socialized loss – higher taxes that lower the disposable income of everyone else.
Policy activists who are critical of unions must understand that there are two crucial debates they are engaged in with unions. The first one is an economic argument – convincing union leadership that encouraging free market competition will lower the cost of living for everyone, and that when this happens all workers benefit. This is a tough sell, despite being entirely accurate. But the second debate, which regards what projects unions should be putting at the top of their legislative agenda, is much easier, because all projects create jobs.
During the great depression, massive infrastructure projects were completed that delivered millions of jobs, but they also delivered amenities to society at large that yielded long-term economic dividends. Hydroelectric dams increased the availability of water for irrigation and the supply of electricity. Rural electrification delivered cheap and clean power to homes and businesses across the country. New roads and bridges resulted in cheaper and faster movement of people and goods. From new school buildings to new civic stadiums, the public/private projects of the 1930’s helped make affordable education and entertainment more accessible to millions. These infrastructure investments put millions of people to work, but they also fundamentally transformed America’s economy, enabling everyone less expensive access to water, power, transportation, education and entertainment.
There is no possibility whatsoever that high-speed rail can compete in California with existing air travel services. It will lose money forever.
The legislative agenda of unions in California should indeed prioritize public/private partnerships to create high-paying jobs, but they should promote projects that will lower the cost of living in California. This is the win-win formula that results in accelerated economic growth and a higher standard of living for all workers, in addition to delivering construction jobs today. Here are examples of such projects – and none of these would cost anywhere near the $100 billion that is the new minimum estimate for high-speed rail:
(1) Build desalination plants off the Southern California coast:
Desalination technology has advanced to the point where it is now possible to desalinate a cubic meter of seawater using less than 2.0 kilowatt-hours of electricity. Put another way, the energy necessary to desalinate seawater is now less than the energy currently required to pump an equivalent unit of seawater over the mountains from the California aqueduct into the Los Angeles basin. Because the California current is one of the biggest ocean currents in the world, the brine that would be discharged as several gigatons of fresh water were recovered each year from seawater would have an insignificant environmental impact. The brine could be discharged through pipes that would run atop the seabed with the outfall 10+ miles offshore where the California current would disperse it immediately. Desalination is a key element towards delivering cheap water again in California, and like nuclear power, claims that desalination is prohibitively expensive are based more on the cost to overcome regulatory hurdles and lawsuits, not the actual construction costs, and certainly not the operating costs.
(2) Develop new surface storage and aquifer storage for storm runoff:
California’s system of reservoirs provide ample fresh water to agriculture, industry and residential/commercial users in years with normal rainfall, but inevitably there are cycles of drought when the existing water storage infrastructure is inadequate. It is probably possible to add another 5 million acre feet of storage without resorting to high dams by identifying areas within the Central Valley where runoff can be collected in great bulk and kept there until spring irrigation draw-downs begin, or systematically transferred to underground aquifers. The capacity of underground aquifers to store water in California is still poorly understood, but California’s water commission estimates there could be 10 million acre feet or more of underground water storage capacity in California. There is plenty of runoff, even in drought years, that isn’t being harvested. To allow California’s agricultural industry access to cheap, abundant water (agriculture consumes well over 80% of the fresh water diverted in California), better storage of storm runoff is essential.
(3) Widen and upgrade interstate freeways:
Along with interstate freeway upgrades, widen and upgrade all major freeways, highways and boulevards in California. Widen and retrofit bridges and tunnels. California needs smart lanes on upgraded roads, not the “bullet train.” As energy becomes abundant and cheap – and technology guarantees this will occur – the most convenient personal transportation appliance ever conceived, the automobile, will become even more indispensable. Cars of the future will be not only clean operating and fuel efficient, but will go faster than ever and be capable of operating on autopilot. To participate in this revolution in transportation, Californians need to upgrade their roads, not attempt to discourage people from using them by neglecting their maintenance, upgrades, and expansion.
(4) Upgrade existing rail corridors:
It is not necessary to develop bullet trains for passenger transportation in a state that will never have more than 50 million people living along an 800 mile corridor. But fast intercity rail, using existing track that is upgraded to tolerate speeds of 120 MPH is a viable proposition, particularly if these upgraded rail lines are also still utilized for faster freight transportation, which will always be more efficient via rail. Diverting public funds into bullet trains is folly, when immediate returns would accrue to investments in better roads and better existing rail.
(5) Streamline permitting process to allow more oil and gas drilling, and more mines and quarries:
California has abundant energy and mineral resources, but nothing can be developed without years of permit applications and legal battles. As a result, basic raw materials have to be imported at far greater cost than necessary. Making development of mineral resources in California more expensive than virtually anywhere else on earth robs Californians of jobs, and constitutes a drain on every facet of California’s economy that relies on these resources.
(6) Build nuclear power plants:
The latest generation of nuclear power technologies are safer than ever, and there is an abundant supply of nuclear fuel within North America. Adding a few nuclear power stations in California would have a dramatic impact on the price of electricity. Claims that nuclear power is more expensive than alternative energy are based more on the cost to overcome regulatory hurdles and lawsuits, not the actual construction costs, and certainly not the fuel costs. Nuclear power development is a key element towards delivering cheap energy again in California.
(7) Build an LNG terminal off the California coast:
Along with new North American sources of natural gas from shale, there is abundant natural gas around the world, and a global market exists for liquified natural gas that is transported by tanker. A few years ago an LNG terminal was proposed to be built fourteen miles off the coast in Ventura County, but was nixed by California’s legislature. By receiving LNG tankers several miles offshore, and piping in the less hazardous gaseous fuel, this terminal would not pose any threat, however remote, to onshore communities, and would allow California to further diversify their sources of this abundant and clean fossil fuel.
By pushing for high-speed rail which will never come close to ever operating at a profit, the current agenda of California’s union leadership is to create more jobs that are essentially parasitic. They will impose new costs to society to benefit a relatively small number of workers, but make everyone else poorer. It doesn’t have to be this way.
California’s union leadership should recognize that by successfully pushing for infrastructure projects that pay for themselves, they can not only create new jobs, but foster long-term economic growth. This, in turn, will enable perpetual job creation. But if they do this, they would have to take on the powerful environmentalist lobby, for whom high-speed rail is virtually the only project they seem to favor.
Union leadership should also recognize that as long as they are unwilling to take on the environmentalists, and push for projects that lower the costs for water, power, transportation – the basic necessities for all consumers – they are doing the bidding of the corporate special interests. These quasi-monopolies benefit from environmentalism run amok, because it means they avoid competition as long as new projects remain on the drawing board. It means they can charge exorbitant prices for commodities that ought to get cheaper every year.
For private sector unions – who value jobs in construction – to remain relevant and forge new partnerships, they will have to divorce themselves from the environmentalist lobby, which has become extreme, and from the public sector union agenda, which prefers to allocate resources to inflated pay and pensions for government workers over investing taxpayer’s money in public/private infrastructure projects.