Explaining the slow progress of US high-speed rail
Also: A big win in California for housing reform and economic opportunity
“The greatness of America depends not on its force of arms, or even on the opulence of its economy, but upon the power of its message to the world.” - Joel Kotkin and Yoriko Kishimoto, The Third Century: America’s Resurgence in the Asian Era
In This Issue
The Micro Reads: GDP and democracy, the Billionaire Longevity Race, red blood on the Red Planet, and more . . .
The Short Read: A big win in California for housing reform and economic opportunity
The Long Read: Moving high-speed rail from fantasy to fact is probably harder than you think
The Micro Reads
🗽“(Successful) democracies breed their own support” - Daron Acemoğlu, Nicolas Ajzenman, Cevat Giray Aksoy, Martin Fiszbein, Carlos Molina, VoxEU | Popular support for democracy isn’t simply philosophical. It’s also based on its perceived ability to deliver a better life. So yet another reason why we shouldn’t dismiss the importance of economic growth to a healthy society. From the analysis: “In a recent study, we show that people who live in democracies tend to support democracy and oppose authoritarian and army rule. Importantly, these effects are driven by those who have experienced successful democratic periods in terms of GDP growth, relatively high public expenditure, peace and political stability.”
🧪 “Peter Thiel, Jeff Bezos and the quest for immortality” - Fani Papageorgiou, Financial Times | We should hope the Billionaire Space Race turns into a Longevity Race, if only to increase our healthspans.
⚛ “Illinois approves $700 million in subsidies to Exelon, prevents nuclear plant closures” - Reuters | It’s great to talk about the importance of nuclear power as a reliable sources of clean energy, but proponents also need to mention the high-wage jobs created by the industry. That played a big role in keeping the Illinois plant open.
📉 “We have reduced our forecast for real GDP growth” - Mark Zandi, Moody’s Analytics | This newsletter is about the policies and technologies needed to boost long-term technological progress and economic growth. But I also like to check in, from time to time, on how the post-pandemic recovery is going. From Zandi:
Given the economic fallout from Delta, we have reduced our forecast for real GDP growth this year by about a percentage point to near 6%. Most of this is due to much weaker growth in the third quarter, which according to our current-quarter tracking model that translates the monthly economic statistics into an estimate of GDP has slumped to below 4% annualized. Just a few weeks ago, growth was tracking almost double this. And given what likely will be a raft of weak August data that will be released in the next couple of weeks, it is likely that growth for the quarter will be marked down further. Hurricane Ida has also dinged growth.
🌌“Martian Colonists Could Use Their Own Blood to Produce Concrete, New Research Suggests” - Gizmodo| Yes, this sounds like the basis for a spec script about Martian vampires. But it’s also a good news for the prospects of building a Mars colony. The less stuff you have to ship to the Red Planet the better. Indeed, according to the Gizmodo piece, the ancient Romans apparently used animal blood when making concrete. Here’s a bit from the study itself:
The high cost and significant time delay associated with delivering payloads to the Martian surface means that exploitation of resources in situ — including inorganic rock and dust (regolith), water deposits and atmospheric gases — will be an important part of any crewed mission to the Red Planet. Yet there is one significant, but chronically overlooked, source of natural resources that will — by definition — also be available on any crewed mission to Mars: the crew themselves. . . . In essence, [human serum albumin — a common protein obtained from blood plasma] produced by astronauts in vivo could be extracted on a semi-continuous basis and combined with Lunar or Martian regolith to “get stone from blood”, to rephrase the proverb.
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The Short Read
🏘 A big win in California for housing reform and economic opportunity
Fresh off his recall election win, California Gov. Gavin Newsom has signed three bills that will make it much easier to build multi-family housing in the housing-starved Golden State. One bill allows property owners to build duplexes and fourplexes on residential lots previously zoned for single-family homes. Another makes it easier to build smaller apartment buildings near public transit and jobs. The third one maintains restrictions on local governments’ ability to downzone and accelerates the approval process for housing projects. Taken together, Newsom’s actions “functionally eliminate single-family zoning across the state,” according to Bloomberg City Lab reporter Sarah Holder.
This is all far bigger news than the recall win itself, although without that victory, obviously, the legislation might have continued to languish. Given California’s size and influence, Newson’s actions are an important step in creating nationwide momentum to solve America’s housing problem. They show it’s possible to defeat entrenched NIMBY sentiment.
And it’s about time. For decades, local regulations have made it hard to build new housing, especially in some of the nation's most productive and high-wage job markets. These artificial supply constraints have, consequently, made too many of these cities unaffordable to working-class Americans. And those who do move to these cities find that high housing costs significantly eat into their wage gains. "The data show that many people, even those in the middle of the income distribution, have been excluded from these high-wage places because of rising housing prices," writes economist Daniel Shoag. What’s more, a recent NBER working paper by economists Joseph Gyourko and Jacob Krimmel estimates that these “zoning taxes” — the amount by which land prices are bid up due to supply-side regulations — works out to hundreds of thousands of dollars in places such as New York, San Francisco, Seattle, and Los Angeles.
So, yeah, supply and demand still work. In a 2017 New York Times op-ed, economists Chang-Tai Hsieh and Enrico Moretti clearly show the damage these housing regulations are doing to the US economy:
The creeping web of these regulations has smothered wage and gross domestic product growth in American cities by a stunning 50 percent over the past 50 years. Without these regulations, our research shows, the United States economy today would be 9 percent bigger — which would mean, for the average American worker, an additional $6,775 in annual income. . . . The cost for the country of too-stringent housing regulations in high-wage, high-productivity cities in forgone gross domestic product is $1.4 trillion. That is the equivalent of losing New York State’s gross domestic product.
Of course, expect a backlash from the usual populist suspects, who see zoning reform as a diabolical plan to ruin the suburbs and turn them into dense hotbeds of critical race theory. But fixing restrictive housing rules is a major move toward a more opportunity-rich society.
The Long Read
🚅 Moving high-speed rail from fantasy to fact is probably harder than you think
Every now and then, this wishcasting graphic goes viral:
Created by graphic designer Alfred Twu in 2013, the image shows a North American transcontinental (you’ll note that it dips into Canada and Mexico) high-speed rail system. Now I’m not sure the size of the market for taking a train from Boston to LA, but it would be possible. Well, it would be possible if such a system were possible.
And it is possible technologically. But building big things in America is about a lot more than technology. You’ve to get the politics and policymaking right, too. Unfortunately, the difficulty of getting that part right often seems to border on the utterly impossible.
Case in point: The Los Angeles Times reports of a fight between conservationists and advocates of carbon-free transportation over a proposed $8 billion, high-speed electric rail line connecting Southern California and Las Vegas.
The proposed rail project, which would occupy the center divider of Interstate 15, calls for the construction of a 6-foot-high concrete barrier to keep vehicles from careening into trains as they hurtle through the desert at speeds close to 200 mph. The barrier, however, would also prevent animals from making an already perilous crossing of the freeway. . . . Once completed, it would take 3 million vehicles off a 170-mile stretch of congested highway and whisk 11 million passengers annually between Victorville and Vegas. . . . A coalition of conservation groups is demanding that the rail developer, Brightline West of Miami, include a wildlife overcrossing in its project plans because of its potential effects on bighorn sheep, a fully protected mammal under state law, and mountain lions, a candidate for listing as a state threatened species.
So for now, the project, first announced in 2015, is stalled. And not just because of the dispute between the naturalists and train proponents. As the piece points out, there are lots of players involved with developer Brightline West, including, the Federal Railroad Administration, the Federal Highway Administration, the Nevada Department of Transportation, local cities, and Caltrans. About the only positive is that the “Federal Railroad Administration has exclusive jurisdiction over the project. . . . California and Nevada laws, such as the California Environmental Quality Act (CEQA), do not apply to construction approval or operation of the interstate passenger rail line.”
Think of the above-mentioned CEQA as a state-level version of the National Environmental Policy Act, signed into law in 1970 to make federal agencies consider the environmental impact of their proposed actions prior to making decisions. NEPA has been blamed for making all manner of infrastructure projects costlier to build, take longer to build, or maybe not built at all.
Indeed, this fight over the electric train line reminds me of one of the earliest NEPA controversies, the 1973 discovery of the snail darter, an endangered species, during construction of the Tellico Dam on the Little Tennessee River. Construction had begun in 1967, before NEPA became law. But due to NEPA delays, the dam was not completed until 1979. The absurdist nature of the dispute — a big dam being held up by this little creature — made it big news at the time. Even as a kid, I was aware of it.
Now maybe several wildlife crossings will get added to the Southern California-to-Las Vegas plan, and the train line eventually gets built. But this example should be a neon red flag for high-speed rail enthusiasts — and those of big infrastructure projects generally, including clean energy. One would think LA-to-Vegas would be one of the easier train lines to build, given the economic case. Here’s another map of a proposed high-speed rail system:
Note that it also includes an LA-to-Vegas connection. And one reason why is that the plan’s author, Alon Levy, has taken into account potential customer demand. That’s also why you don’t see all those regional systems connected. Most people who want to get from Chicago to LA are going to want to fly, not hop on a train, even a really fast one. Indeed, you’ll find a disregard for demand and density issues — lots of big US cities are really far apart and better served by air travel than train — at the heart of the more fantastical HSR plans. Not to mention that for most people, their big transportation problem is a grueling commute — arguing for better commuter rail — than a lack of options getting from the East Coast to the West Coast.
We need big reform of environmental regulation at the state and federal level, but we also a need a broader societal agreement that we have overcorrected in favor of narrow environmental interests at the expense of being able to solve major challenges. If not, we’ll find ourselves engaging in more wishcasting than problem solving.