Jobs or Job-Years: Who Cares?
The San Jose Mercury News editorial board is sure they’ve found a scandal:
So here’s a heads-up for staff and public officials at cities, counties and any other government agencies involved in construction projects: If you’re measuring job-years, say job-years. If you want to talk about jobs, then translate your job-year statistics before making public pronouncements. High-speed rail’s 1 million job estimate shrank under Mercury News reporter Mike Rosenberg’s scrutiny to about 60,000, once he’d parsed the methods, and the authority’s credibility, already shaky, took another plunge.
Watchdogs need to be on the alert, particularly when the public or legislators are going to vote on projects based in part on creating jobs.
Here’s my response: who cares?
Seriously. Why is this even an issue? 1 million job-years, 60,000 jobs, it’s a non-issue that obscures the fact that HSR will provide a badly-needed economic stimulus to the state. Maybe if California were functioning at full employment this might be a useful exercise. But with unemployment still above 11%, it’s absurd. The Authority was clear that it was speaking in “job-years” and while that term doesn’t really make sense to anyone but bureaucrats, it is a legitimate concept, as the Mercury News editorial notes:
Job-years is an excellent tool to calculate the amount of work needed to complete a project. A job-year is one year of work for one person; a new construction job that lasts five years is five job-years. It is a more precise measure because an individual job may last for six months or a year or forever.
So the Authority was using a more precise measurement, but because that number was far larger than another measurement, the anti-HSR Bay Area News Group paper had to attack it in order to make the Authority look bad:
In a weak economy like today’s, construction jobs are a factor to consider for projects like stadiums and transit systems. But the main consideration has to be the long-term value to the community, once construction is finished. What’s especially unfortunate about high-speed rail is that the real number of likely jobs, some 60,000, is substantial. Only because 1 million were touted is the rail authority’s credibility further damaged.
The only people who believe the Authority’s credibility is “damaged” by using what the Mercury News termed a “more precise measure” is the Mercury News. Most normal people don’t care. They understand that the jobs are “substantial.” More importantly, they understand that HSR provides clear long-term value to the community in the form of the ability to affordably and quickly travel from Santa Clara County to the other major metropolises of the state without having to depend on volatile oil prices.
Still, it’s worth continuing to push back against the Mercury News’ silly arguments. Writing at Fox and Hounds Daily, Michael Bernick, a former director of the California Employment Development Department defends the Authority’s approach to measuring jobs:
Recently, I reviewed ten projections associated with a range of infrastructure investments in California and the United States. The projections varied widely in the number and types of job years estimated for each $1 billion spent in investment. Some of this variance was due to the different types of infrastructure (water, transit, highway), and some was due to whether the jobs were in the region, state or nation. Yet even controlling for these factors, the estimates for direct construction jobs, indirect jobs (i.e. suppliers) and induced jobs (jobs created as project expenditures spread throughout the economy) yielded varied estimates for job years per dollar spent.
The California High Speed Rail Authority (CHSRA) estimates that the high speed rail construction will generate 6600 construction job years for each $1 billion spent. This falls roughly in the middle of the projections. Similarly, the CHSRA estimates that the project will create around 13,400 indirect and induced job years per $1 billion—which falls also around the middle of projections.
Bernick points out that the 2012 Business Plan was not always consistent, sometimes referring to “jobs” instead of “job-years” but that this small error can be corrected in the next revision. He also provides some good analysis of the impact of the jobs that the Central Valley project will create:
Using the estimate of 6600 construction job years per billion, the Central Valley Initial Operating Section (IOS) priced at $5.8 billion will create roughly 38,280 job years for construction-related direct employment. As the IOS will be built over a 5 year period, the number of workers employed at any time will fluctuate as the works ramps up and down. On average, using the Authority estimates, the IOS will be employing roughly 7000 workers at any time.
This employment will by no means “solve” California’s 11.3% current unemployment rate. However, two observations might be put forward on IOS employment impacts.
First, the number of these construction jobs dwarfs the construction jobs on all other highway and transit projects in California. Most of our highway and transit projects, even the larger ones, generate less than a hundred workers at any time; only a few projects even reach over a hundred workers at any time. High speed rail will generate more construction jobs than the current highway and transit projects in the Central Valley and nearby areas combined. The impacts will be greatest as the jobs can be targeted at construction workers in the Central Valley—where building trades unemployment has been over 25%-30% for the past few years.
This is particularly important given that Central Valley Republicans like Jeff Denham, Devin Nunes and Kevin McCarthy have been trying to argue that the HSR money should go to freeway projects in the Valley instead. What Bernick points out is that HSR will create more jobs for the money than a freeway project would. And of course, HSR would cover its own operating costs, unlike a freeway, as well as not contribute to pollution, traffic, sprawl, and fossil fuel dependence.
Second, even more than the direct employment, if the Authority’s Small Business Plan currently under consideration is properly structured, the Central Valley economy will benefit from developing an expertise in high speed rail construction. The Central Valley segment is the first segment to be built in the United States. Businesses, including environmental, design, and construction management—that work on this first segment will be positioned for work on other segments in California and throughout the country, possibly the world.
In other words, the Central Valley would get to develop a high speed rail industry, helping to diversify the region’s economy. That’s a significant boost too, especially given the region’s ongoing and severe economic woes.
The Mercury News doesn’t seem to care much about this, focusing instead on a distinction its own editorial seems to acknowledge is small, to attack the high speed rail project for using a metric the Mercury News admitted was actually more precise.
I’m not sure what their approach adds to the discussion in California over high speed rail, jobs, and stimulus. But it does reveal a disturbing belief among the Mercury News editorial writers that playing “gotcha!” is somehow more important than helping the state to economic recovery.
Either you don’t understand at all how a globalized economy functions — or you are proposing to lavish Solyndra-style subsidies on politically connected benefactors. At best, this wastes money that would be better spent extending the rail network. At worst, this is the worst kind of corruption.
Tom McNamara Reply:
January 9th, 2012 at 8:56 am
As a general rule, manufacturers and their subsidiaries tend to locate their operations near the predominate buyer of their goods.
Talgo North America is in Seattle, Kawasaki in Yonkers. And now all the major defense contractors are based inside the Beltway (Boeing is the exception, technically). It’s very true that embracing domestic HSR production would be a huge boost to diversifying the Central Valley economy.
Drunk Engineer Reply:
January 9th, 2012 at 9:23 pm
For UIC high-speed rail, that would be….Europe.
Even if multiple lines were to built in the USA, still a very, very tiny market. The only reason for a Talgo or Siemens to maintain an office in the US is because of the uneconomic regulatory requirements.
Nathanael Reply:
January 10th, 2012 at 6:41 pm
That would be satisfied by the “Buy America” requirements, which make manufacturers open up final assembly plants in the US.
The FRA “rolling tank” requirements, on the other hand, effectively prevent the existence of a passenger train market in the US.
Richard Mlynarik Reply:
January 9th, 2012 at 10:21 pm
A couple months ago Patentes Talgo won a contract to supply 35 320lmh high speed trains to Saudi Arabia, with an option for an additional 23 trains.
Talgo has sold more than 46 350kmh and 45 250kmh comtemporary design trains for service in Spain.
Meanwhile, Talgo North America has sold a grand total of 7 low-speed 130kmh, unpowered, superseded trains to the US “market” over a couple decades of beating its head against a brick wall.
And we’re to believe that Talgo has erected Potemkin assembly plants in the USA-USA-USA because of their proximity to “predominate buyers of their goods”?
Robert Cruickshank Reply:
January 9th, 2012 at 8:17 pm
Solyndra-style subsidies are a good idea. It won’t always work but the concept is sound. And it’s certainly not corruption.
Look at the airline industry. Without federal air mail contracts both the carriers and the builders would never have survived. And even then companies have often relied on military contracts to support their passenger aircraft construction operations.
joe Reply:
January 9th, 2012 at 8:49 pm
We did more than that. We gave them billions in 2001.
The CV has a proximity to markets, capital, knowledge based industries. Also solar. It’s in vogue to slam the technology but we’re going to see costs below fossil fuel alternatives in the 2020s.
Jerry Reply:
January 9th, 2012 at 10:43 pm
Thank you Joe. I forgot about that multi billion dollar subsidy.
Sobering Reality Reply:
January 10th, 2012 at 7:54 am
A $5 billion bailout to help airlines recover $10 billion that was lost becasue the Federal Government failed to do it’s job sounds like a bargain to me.
D. P. Lubic Reply:
January 10th, 2012 at 7:59 am
Weren’t the airlines in financial trouble before the attacks? Wasn’t something like this in the works already, but it got a sense of urgency–and greater necessity–following the attacks?
Sobering Reality Reply:
January 10th, 2012 at 9:14 am
Only United. Everyone else was making money. The airlines lost over $1 billion alone on the 4-day FAA shutdown and its took over a year to recover from a financial standpoint. Ironically, United was denied a loan from the ATSB because it was determined that their request was not based on 9/11 loses but on their status before 9/11, hence they received no loans.
Nathanael Reply:
January 10th, 2012 at 6:39 pm
I have to say I take Warren Buffett’s analysis of airline profitablility more seriously than yours.
What he said was, if the Wright Brothers had been shot down at Kitty Hawk, investors would have done better.
What he meant was, as he explained later, that the total net profit of the entire commercial airline industry, added up over its entire history, is *negative*.
Sobering Reality Reply:
January 10th, 2012 at 6:50 pm
What he meant was, as he explained later, that the total net profit of the entire commercial airline industry, added up over its entire history, is *negative*.
*********
Which by the way is a false statement.
Sobering Reality Reply:
January 10th, 2012 at 9:20 am
More to your question, no there was no “bailout in the works” for the airlines before 9/11.
thatbruce Reply:
January 10th, 2012 at 9:56 am
@Sobering Reality:
A $5 billion bailout to help airlines recover $10 billion that was lost becasue the Federal Government failed to do it’s job sounds like a bargain to me.
Which job did the Federal Government fail to do, and how did that cost the (US) airline industry ten billion?
Sobering Reality Reply:
January 10th, 2012 at 10:58 am
1. The Federal Government established airport security screening standards which allowed 9/11 to occur.
2. The Federal Government let people into this country who should not have been here which allowed 9/11 to occur.
3. As a reult of the failure of item 1 & 2 people stopped flying.
Oh let me guess, you’re one of those that blames the airlines for 9/11.
thatbruce Reply:
January 10th, 2012 at 5:17 pm
Up until the last line, you were doing great in avoiding the regular ad hominem attack.
I don’t understand why people would attempt to blame the airlines for 9/11, beyond what was pointed out in the 9/11 Commission Report regarding the delay by everyone involved, not just the airlines, in escalating multiple hostage/non-responsive plane situations.
We haven’t really changed the airport security screening standards since 9/11, beyond adding more security theater. The significant changes in this space has been the acceleration of the previous NTSB recommendation for reinforced cockpit doors, restricting the secured area of the airport to boarding-pass-carrying passengers, and ensuring that baggage travels on the same plane as the traveler and is removed when the passenger fails to show. All these have been done, like the establishment of the previous screening standards, in consultation with the airline industry. The other things, like no liquids, partial disrobing at the security check, and removal of shoes, don’t increase ‘security’ beyond making people uncomfortable with the whole process.
Onto the issue of Immigration. You’re trying to imply that the 9/11 attackers would have been deterred by not being able to live in the country prior to launching the attacks. With a previous version of what turned into the 9/11 attacks having been ‘hijack planes flying to America. fly them into CIA headquarters once you enter US airspace’, the issue of the Federal Government having let undesirables into the country is rather moot, as the aforementioned version would have had the hijackers board the planes outside US Control.
Point 3 is poorly phrased due to the previous points conflating two issues. It reads better as two points:
1. The Federal Government established certain airport security screening standards.
2. The Federal Government let people into this country who should have not been here.
3. As a result of the failure of items 1 & 2, the September 11 attacks happened.
4. As a result of the September 11 attacks, people stopped flying.
Even revised, there’s still an issue of timing. For sure, the airlines lost revenue as a result of the FAA-mandated 4 day shutdown of US airspace and the subsequent scramble to reposition planes and get delayed people to their destinations. We’ll take your figure of a billion here. In the 11 days between the September 11 attacks and the establishment of the ATSB on the 22nd of September, the airline’s losses had been extrapolated out to ten billion, based on I’m guessing predicted losses over the next year. This is also possible, given that the airlines have a lot of historic data on how people react to negative news about the airline industry.
But attempting to draw a correlation between the even now easily-defeated and not notably changed screening methods, US Immigration practices when the hijacking was originally planned to occur outside US Control, and the public’s loss of confidence in the airline industry as a result of the September 11 attacks is not supportable.
Sobering Reality Reply:
January 10th, 2012 at 6:54 pm
We haven’t really changed the airport security screening standards since 9/11, beyond adding more security theater. The significant changes in this space has been the acceleration of the previous NTSB recommendation for reinforced cockpit doors, restricting the secured area of the airport to boarding-pass-carrying passengers, and ensuring that baggage travels on the same plane as the traveler and is removed when the passenger fails to show. All these have been done, like the establishment of the previous screening standards, in consultation with the airline industry. The other things, like no liquids, partial disrobing at the security check, and removal of shoes, don’t increase ‘security’ beyond making people uncomfortable with the whole process.
*********
Whats missing is the airlines wanted these changes in 1996. The only change that actually occured was positive verification of passengers ID.
Sobering Reality Reply:
January 10th, 2012 at 7:36 pm
The claim thats it’s “mostly theater” is also a completely innacurate statement. What was “mostly theater” was the passenger and baggage screening process before 9/11. If you think today it’s theater then you have no idea how things were before 9/11 and you know nothing about how things are today.
thatbruce Reply:
January 11th, 2012 at 12:33 pm
Whats missing is the airlines wanted these changes in 1996.
Then why did the airlines wait until 9/11 to implement these requested changes? I’m not referring to the elements under the government’s control, but the elements that are under the airline’s control, such as installation of reinforced cockpit doors on airline-owned planes, airline employees matching names on the boarding pass against the government-issued ID at the boarding gate, and airline employees keeping the baggage on the same plane as the traveler.
My experience, as a frequent air traveler within the US and overseas through the 90s and 00s, has been that the airlines did not make changes to their procedures until after 9/11, when the previous recommendations became mandates.
Richard Mlynarik Reply:
January 11th, 2012 at 12:51 pm
Soviet-style internal passports required for travel were instigated by the airlines — not the national security apparatus — as a way of eliminating the resale market for tickets. Nothing to do with “security”, everything to do with profits. Nothing to do with “9/11″ (the ID nonsense preceded this triumph of US foreign policy by years), everything to do with squeezing late purchase bucket allocations.
“No fly lists” and the other unaccountable, unconstitutional, totalitarian general population controls built on what the airlines sought and obtained for purely business reasons.
Sobering Reality Reply:
January 10th, 2012 at 11:00 am
Before you start blaming the airlines, consider what entity has the right to determine what is or is not search and seisure. It’s not a private company.
thatbruce Reply:
January 10th, 2012 at 5:18 pm
Consider the entities that provided significant input into the pre and post 9/11 airport security screening standards. It’s not just the Federal Government.
Sobering Reality Reply:
January 10th, 2012 at 6:41 pm
Try again.
Emma Reply:
January 9th, 2012 at 11:03 pm
I have been saying this for such a long time. If we want more federal funding we need to lie about our intentions. Tell Congress that we will use the trains to mount intercontinental rockets on them just in case something comes flying at us from the Asia-Pacific region. Now that Obama is shifting the military focus to that area, it would be the perfect timing. On top of that we could tell them that the cars can be used to transport troops from San Francisco to San Diego and back in less than 3 hours.
Or we could tell that that we need more funding to fund train marshalls and introduce measures to prevent suicide bombers from blowing up trains.
And so on and so forth. They did it for the Highway system, they did it for the airlines, why shouldn’t they fall of the same trick with HSR? You can always controll Congress with fear.
Nathanael Reply:
January 10th, 2012 at 6:24 pm
Heh. I like the idea.
Don’t worry — I expect the federal government to collapse completely. Hopefully California will have started its own bank by then.
Nathanael Reply:
January 10th, 2012 at 6:42 pm
(I mean, because we seem incapable of getting a Congress which is less than monumentally stupid. Even when the House is OK, the Senate is extra-triple-dumb, and the country can’t survive that much longer.)
Sobering Reality Reply:
January 10th, 2012 at 7:50 am
Sigh…
The ATSB (Air Transportation Stabilization Board) was designed to provide “up to” $10 billion in “loans” to stabilize the aviaiton industry post 9/11. They ultimately issued loans to the airlines of $1.179 billion – loans people. Not payouts, but loans. All of the loans were repaid and the US government made a profit on the loans of $300 million in 3 years time (yes, that’s 25%):
http://www.usatoday.com/travel/news/2006-01-30-loan-profits_x.htm
Don’t let the facts destroy you or anything.
Tom McNamara Reply:
January 10th, 2012 at 12:33 pm
You are describing exactly the mechanism used for the Troubled Asset Relief Program and the GM receivership.
Neither of these might be true “bailouts” but the mechanism was indeed the same.
Sobering Reality Reply:
January 10th, 2012 at 3:45 pm
I was refuting the bogus claim of $15 billion in “handouts”.
Drunk Engineer Reply:
January 9th, 2012 at 9:26 pm
Well there you have it. Nothing but a lemon socialist.
Tom McNamara Reply:
January 10th, 2012 at 7:18 am
Van Jones has said that the program that enabled Solyndra was actually a hold over from the Bush Administration. It’s important to separate the concept of subsidy with the concept of cronyism. If you think they are one and the same, then the US stands absolute no chance against the rest of the world, because they do.
Paulus Magnus Reply:
January 10th, 2012 at 9:28 am
Why are you surprised Drunk? Robert’s openly admitted that he doesn’t care if CAHSR makes back its operational costs and wants to subsidize the fares.
Funny, when I saw the word ‘scandal’ in your latest headline, I thought you were going to discuss (and undoubtedly defend) the latest bombshell – this article all about the CHSRA board member who owns property all over downtown Fresno….
http://californiawatch.org/dailyreport/downtown-fresno-high-speed-rail-plans-cause-little-stir-14360
StevieB Reply:
January 9th, 2012 at 1:41 am
None of Richards’ properties is within 500 feet of the station site.
Does that mean you believe that California High Speed Rail will revitalize downtown Fresno and create a business mecca attracting development and jobs?
Robert Cruickshank Reply:
January 9th, 2012 at 8:18 pm
Of course, the station site has been known for years before Richards was even on the board…
OT – this week’s most important development will be the verdict on the Grapevine / Tejon tunnels. I’m very curious to see what comes out of that.
synonymouse Reply:
January 8th, 2012 at 10:37 pm
Clem, do tell more.
Clem Reply:
January 8th, 2012 at 10:43 pm
We’ll have to wait until the materials for this week’s board meeting are posted.
Peter Reply:
January 9th, 2012 at 9:27 am
Clem, the Executive Summary is posted.
Tejon/Grapevine is dead.
Paulus Magnus Reply:
January 9th, 2012 at 10:16 am
Here is the link. Looks like the 1-4 billion in savings didn’t materialize and it would have been sufficiently steeper to reduce time savings to just 3-4 minutes.
Elizabeth Reply:
January 9th, 2012 at 11:14 am
It looks like they didn’t materialize because they added a “risk adjustment ” cost to the Grapevine.
Elizabeth Reply:
January 9th, 2012 at 11:14 am
but not Palmdale.
Nathanael Reply:
January 10th, 2012 at 6:25 pm
This is because prices *always* go up as you do more engineering.
(They occasionally start to go down when you start construction.)
Clem Reply:
January 9th, 2012 at 1:00 pm
What a dud.
VBobier Reply:
January 9th, 2012 at 2:38 pm
Well the Grapevine route from Bakersfield to Los Angeles is dead, So It’s now Palmdale & the Tehachapi & no other route.
thatbruce Reply:
January 9th, 2012 at 11:36 am
The Study has confirmed that the seismic risk for the I-5 alignment is still greater than for the Antelope Valley alignments.
Richard Mlynarik Reply:
January 9th, 2012 at 12:20 pm
The Study has also re-re-re-re-reconfirmed that Stakeholders can cause Parameters to be Adjusted until Acceptable Conclusions are reached.
(Note I don’t have a horse in this race, but I did offer to lay money on this particular outcome. Past performance is a guarantee of future results, for fixed matches.)
VBobier Reply:
January 9th, 2012 at 2:40 pm
As I already said, the Grapevine route is dead & unacceptable, don’t like It? Talk to the San Andreas fault…
Richard Mlynarik Reply:
January 9th, 2012 at 3:27 pm
Your geotechnical expertise matches your demonstrated skill in other fields. A well-rounded individual indeed.
VBobier Reply:
January 9th, 2012 at 5:38 pm
As does Yer square peg in a round hole.
Tom McNamara Reply:
January 9th, 2012 at 10:17 am
The one thing this does cause me to ask is if a station in Sylmar really makes sense. Maybe even using Palmdale they should move the station to SC. There’s a rail line that could be rehabbed from there to Ventura County that might make sense as opposed to pouring more cash into extending the Red Line to Sylmar….
Jon Reply:
January 9th, 2012 at 3:37 pm
Having skimmed through the study, a few points come to mind:
1) The length of the I-5 route has increased largely due to the requirement to diverge from the current route east of Bakersfield rather than bypass Bakersfield to the west. I’m sure this requirement is driven by a desire to get the Frseno – Bakersfield EIR/EIS certified in time to start construction on the ICS. What would the effect of a west Bakersfield bypass be on the cost and travel time of an I-5 route?
2) The cheapest and fastest I-5 route bisected the proposed Tejon Ranch, but the study didn’t take this route forward to detailed analysis. Instead they analyzed a ‘considerably more expensive and slower’ route which cuts right through Lebec, in order to avoid the ‘significant cost and schedule risk’ involved in bisecting the Tejon Ranch. How fast and expensive would the I-5 route through the Tejon Ranch have been? How difficult would it be to permit this route?
3) Also the risk adjustment to account for the 5% design- this seems to be an obvious fudge. You can see everything they changed in Appendix B. What is the justification for increasing the risk allocation for real estate from 20% to 40%, for example?
VBobier Reply:
January 9th, 2012 at 5:44 pm
Tejon isn’t going to happen & no amount of griping or wishing or pleading will ever make It so, It’s now Palmdale or bust & bust isn’t going happen.
Richard Mlynarik Reply:
January 9th, 2012 at 6:26 pm
Hey, if we turn this knob, does the answer come out right? Oh-kay … How about if we crank this one up to 11 as well? And if we do that and polish this big knob?
Twiddling knobs is fun.
Clem Reply:
January 9th, 2012 at 6:52 pm
After reading it, I provide you an updated executive summary of the Grapevine study:
“All the topographically good alignments (straighter, shorter, faster, cheaper) cut through the proposed Tejon Village resort. We don’t want to piss them off. Therefore we analyze a contorted alignment that is not feasible.”
If there ever was a reason for eminent domain laws, this is it. The alignment they came up with is a joke, and I’m sure the Tejon Ranch owners / developers would shut up if you gave them a small sliver of the rounding error in the cost estimates (say, 0.1 billion… chump change to the CHSRA, a freaking bonanza for these jokers)
Drunk Engineer Reply:
January 9th, 2012 at 8:08 pm
And the thing is, even after gerrymandering the I5 alignment, with the “risk-adjustment” (cough-cough), their estimate for I5 is still a good $400 million cheaper. Granted, $400 million is a tiny fraction of an overall $15 billion price tag, but $400 million is…you know…$400 million. There are a lot of things that could be done with $400 million.
Elizabeth Reply:
January 9th, 2012 at 8:48 pm
The entire market cap of Tejon Ranch is $500 million. They have $100 million in cash and some other assets. Let’s make a deal.
Tom McNamara Reply:
January 10th, 2012 at 7:16 am
Before continuing this discussion, please Google the term “Kern Valley Water Bank”.
Donk Reply:
January 9th, 2012 at 9:28 pm
This sounds a lot like CHSRA’s solution to build a tunnel under the Millbrae station for $XB instead of rebuilding the station for $100M. Do these guys have blinders on?
Nathanael Reply:
January 10th, 2012 at 6:26 pm
Wrong, Clem. Look at the list of local governments which opposed the I-5 route:
Kern County
Los Angeles County
Los Angeles City
etc. etc. etc.
Yes, there’s politics involved, but that’s a LOT of big players, not just one.
Donk Reply:
January 9th, 2012 at 9:37 pm
So they are trying to tell us that:
a) Tunneling on Antelope went from 13 to 33 miles while Tejon went from 29 to 31 miles and
b) Tejon is ~24 miles shorter but
c) They cost the same
Bullshit. The whole point was really that Tejon was supposed to be way more expensive due to all of the additional tunneling.
This thing will never get built if it costs $15B to get from Bako-Sylmar.
People who give a damn about facts? People who have even the tiniest modicum of political sense? People who realize that a project should (and increasingly in the digital age, can) only be sold on its real and actual benefits?
Well, for starters, people didn’t vote for it on the grounds of creating jobs (try and float a ten billion dollar bond for digging holes and filling them back up). Furthermore, the numbers quoted are fanciful, absurd, and utterly divorced from the reality of every other high speed rail project in the world. The actual number of created jobs is minimal and will not have an appreciable effect upon California’s unemployment rate.
Regarding 6600 job years per billion dollars: The only way this is a feasible number is if it is referring to all jobs, everywhere in the world, created. It is not a number that refers to the number of jobs created in California (to wit, it posits a mere $150,000 per job year).
As for the CV developing a high speed rail industry, get real. All they are doing is building bridges and laying track. None of it requires locating any industry in the area. Train set manufacturing would be more than a decade later and probably take place in the Bay Area or LA Basin.
synonymouse Reply:
January 8th, 2012 at 10:34 pm
Of course, we care, otherwise we would not be jawing on this site.
Perhaps in some ways the debate over the direction hsr should take in California hinges on how we see money. High-profile doctrinaire politically correct “liberals” have a very flexible notion of how much money there is and where it comes from, maybe even what it is. Rich people have lots of it; they can afford to give up some of it, and if that doesn’t pan out we’ll just print some more. The economy will expand; wealth and value will be created and everybody will be happy. One factor, highly camouflaged, is that these same “liberals” are also rich and their money, being “rich” money, will be protected by the others, more unenlightenedly rapacious, of the same affluent class from being seized. Therefore it is possible to buy your way to heaven into the press and still maintain all your loot.
Others who have to work at low level and low pay jobs see money as very finite. That means what you spend on one thing you do not have left to spend on another. In this antique, stix worldview blowing mucho bux on Stilt-A-Rail means there is less money for education and other social spending.
Tom McNamara Reply:
January 9th, 2012 at 8:00 am
paul dyson Reply:
January 9th, 2012 at 6:07 pm
Really Tom? Invest $6 billion in a higher speed route to save $25 million a year in operating subsidy? That helps pay for education? We see a lot of this intelligent investment. Build a $1 million solar facility to save $20,000 a year on your electric bill, and so on. You guys talk as if capital is free and bonds don’t have to be repaid, that they disappear off the balance sheet. It’s OK guys, we’ll get a federal grant, free money. You also talk as if HSR will throw off a lot of free cash once it starts running, as if it’s the eleventh commandment. Do you think SWA is going to roll over?
Today I heard on CNBC that the national debt is equal to our annual GDP. I think we’ll find that the appetite for issuing bonds will diminish sharply in coming months and years regardless of the merits of the project.
Brsk Reply:
January 9th, 2012 at 7:07 pm
Oh, you’ve decide to risk your life savings on shorting US. Federal bonds? Go for it!
Remember these three things: US is wwwaaayyy over its head in debt; it will blow ANY second; and don’t ever, ever, never look at the Japanese debt to GDP ratio before gambling your live savings on US bonds collapsing next year! Profit!!! (for someone)
As for “HSR will throw off a lot of free cash once it starts running, as if it’s the eleventh commandment.” Actually it is! “Thou shall look at over a dozen previous examples (and that shit-can called Acela) look at your far bigger population, and then assume the obvious.” You didn’t here about that commandment? Jeez’ bible school these days!
joe Reply:
January 9th, 2012 at 7:08 pm
10 year treasury bonds are 1.98%. Given inflation, investors are paying the US Government to hold their money.
So money is better than free – borrowing money is currently profitable. Our government pays less back than what your borrow. Also, having an awesome infrastructure generates economic activity.
Nathanael Reply:
January 10th, 2012 at 6:29 pm
Yep. Inflation is still over 2%. (Though it may drop.)
Pecos Reply:
January 9th, 2012 at 9:27 am
Basic fact #1: we have a rail infrastructure in this country that’s not going away. Fact #2: it needs to be upgraded. Fact #3: it will create jobs, whether 600,000 or 1,000; either way it creates jobs and tax revenue from the jobs it creates. I don’t understand why the Authority needs to make things convoluted by stating facts in jobs vs job years but I’m sure there’s a good reason. It also seems like this would create job opportunities outside of the rail system by allowing people to commute to farther locations faster than they would care to drive. Hypothetical example: I live in SF, I see a job opening I like in Gilroy. Gilroy is way too far to drive but would take < an hour to get to by train. I'll allow anyone to retort here…
Oh yeah, I snowboard, say I live in Bakersfield and could take a HS train to Tahoe via Sacramento, that's a very reasonable trip to make which could help create jobs in Tahoe since it would be a lot more accessible to more people than driving 7+ hours to get there. Just thinking outside the box here.
Nathanael Reply:
January 10th, 2012 at 6:29 pm
Syn, you don’t understand money. Don’t feel bad; this is common.
Here’s a place to start: money is PRINTED. By the Bureau of Engraving and Printing. It really does come out of nowhere!
It’s actually more complicated than that — money is based on some subtle psychological things like trust — but the key point is that *the money supply is not constant*. The federal government can just print the stuff, and people will keep accepting it.
California can, if it wishes to, print money too. Because it is California, people will accept that, too. We’ve seen this on a limited scale with all of the goofy “vouchers” and stuff, but frankly the state could just print money.
Alon Levy Reply:
January 8th, 2012 at 11:33 pm
Why is $150,000 per job-year so outlandish? Do you have comparable rest-of-world numbers?
joe Reply:
January 9th, 2012 at 9:39 am
There’s a multiplier effect.
http://krugman.blogs.nytimes.com/2009/01/13/bang-for-the-buck-wonkish/
Consider an increase in government spending; assume that the interest rate is fixed (a good assumption right now, because interest rates are up against the zero lower bound). Then textbook analysis says that if the stimulus is dG, the increase in GDP is 1/(1 – c(1-t)) where c is the marginal propensity to consume out of income and t is the marginal tax rate. Suppose c is 0.5 and t is 1/3; then the multiplier is 1.5, which is more or less the conventional wisdom right now.
But if $100 billion in spending raises GDP by $150 billion, and the marginal tax rate is 1/3, $50 billion of the spending comes back in additional revenue. So bang for the buck — increase in GDP per dollar of added debt — is 3, not 1.5. Since the main concern about stimulus is that it will add to government debt, it’s this bang for the buck measure, rather than the multiplier, that’s relevant. And 3 sounds a lot better than 1.5.
Take this a bit further: $150 billion is about 1 percent of GDP, which Romer and Bernstein say means a million jobs; so this says $50,000 per job, which is a much better number than the critics have been throwing around (plus many more workers with full-time rather than part-time jobs).
In terms of seriousness, the suggestion, “Jobs or Job-Years: Who Cares?,” ranks with the heading of an earlier topic, “High Speed Rail Authority Demolishes Peer Review Report.”
Richard Mlynarik Reply:
January 9th, 2012 at 12:05 am
In Soviet Russia, jobs last years. In PB America, years are jobs!
joe Reply:
January 9th, 2012 at 9:31 am
Soviet Russian uses Metric system. That inflates distances. 1 mile is 1.6 KM. I bet PB uses KM, not miles. Follow the concrete.
Tom McNamara Reply:
January 9th, 2012 at 8:03 am
I feel for Robert. He’s a fighter from Old Regime of Bloggistan: I think there are some meaningful things he could do to improve the currency of this website. But he feels like he’s constantly on the defensive now because last decade liberal bloggers were the vanguard and didn’t get taken seriously. Now that Obama is going to have to fight a defensive re-election campaign, guerilla tactics don’t work as well.
joe Reply:
January 9th, 2012 at 9:45 am
Huh?
The way jobs were reported is openly stated. Those who want to press this as a scandal are intentionally conflating over how economic data are measured.
HSR track is reported in KM does that mean the CAHSR is inflating distances? No.
Who cares about units?
Tom McNamara Reply:
January 9th, 2012 at 10:07 am
I’ve been reading liberal blogs since…well…one of my roommates in college started checking out Instapundit to humor his conservative sensibilities.
In the early days, a member of the “netroots” was almost muckracking: you dug out salient information left out by the mainstream media or you did niche reporting that they didn’t have the agility to collect.
And oh yeah, 99% of bloggers had no new content to add, but they arranged and packaged information in a very effective and partisan way.
But after the election of Obama, and the blogosphere coming of age, there’s still the desire to wait for the New York Times or Washington Post put up a story at midnight on their website and then comment on it, ad nauseam. Pretty soon, cable news caught on, and we had the codification of a 24-hour news cycle.
While that’s great n’ all for Twitter and TMZ, what’s going to be more effective in the long run is not trying to game the 24 news cycle but to connect it. Robert and other bloggers can be their own worst enemy by elevating developments that nobody pays attention to and not digging further on stuff that really matters.
But I don’t blame him. It’s not like we pay $5 a month to read this thing. He’s trying to have a debate, biased though he may be. Moreover, the liberal blogosphere didn’t exist the last time Democrats were playing defense. (In fact, it arose because they lost.) None of them want to cost someone an election, and while that’s understandable, it’s hollowing things out a bit.
joe Reply:
January 9th, 2012 at 7:18 pm
MediaWhores was an early liberal site. It called out the bias in the national media. Dr. Duncan Black was a anonymous contributor and he’s quite good at making counter points to the media’s slant. Krugman even cites him.
Other blogs Like Josh Marshall’s grew and now has a NYC news service that broke the DA firings for political purposes. FireDogLake covered Libby’s trail and were well recognized experts. They cover events and produce news. DailyKos produces news, articles and poll data.
I see less effort in the Mercurynews than This blog. Mercury talks to people for quotes, cuts and pastes the reports and produces a summary post of their discussions. The “news” is their posts are distributed in a apper and popular website. Their news is not the value added.
As for bias, I think you misuse the term. BIAS is like a thermometer that always over estimates a temperature regardless of the precision. Bias for HSR based on challenge-able factual arguments is no more bias than a thermometer that accurately reads temperature in a warming room. The thermometer may be less precise than a expensive instrument but that’s not bia to report a rising temperature.
Robert Cruickshank Reply:
January 9th, 2012 at 8:20 pm
Interesting points. I don’t necessarily disagree.
Nathanael Reply:
January 10th, 2012 at 6:32 pm
Huh? Obama has to fight a defensive re-election campaign because he’s *not a liberal*. What does that have to do with liberal bloggers, who still have to be guerillas?
Your second comment regarding the evolution of news makes much more sense.
Assembly Diane Harkey has introduced AB-1455 which would halt Prop 1A funding of the High Speed Rail project if passed by the Legislature.
See:
http://www.centralvalleybusinesstimes.com/stories/001/?ID=20144
VBobier Reply:
January 9th, 2012 at 2:34 pm
Big whoop Morris, Gov. Brown would Veto that bill & the chance of an override is between zero & nil, so that bill is DOA.
morris brown Reply:
January 9th, 2012 at 3:42 pm
VBobier:
If the legislature were to pass, you may well be right Brown most likely veto. There hasn’t apparently been a Governor’s veto in our legislature in over 40 years.
However, the the other side of this is, if the legislature was willing to pass this bill, they might just as willing to not approve funding for the project and omit such funding from the next budget bill. That would effectively accomplish the same goal.
jim Reply:
January 9th, 2012 at 4:04 pm
If the legislature were willing to reject appropriations for the project, there would be no need for this bill. They’d be much more likely to do that than to pass this bill. The bill is a publicity stunt. Harkey is presumably introducing it so when the project goes forward she can tell her constituents she did everything she could to stop it, but the fix was in.
Harkey introducing this bill shows that she thinks the legislature will approve the bond appropriation. If she’s actually capable of counting votes, this is good news for HSR proponents and bad news for opponents.
joe Reply:
January 9th, 2012 at 7:24 pm
Assembly member Diane Harkey … she did the same thing in 2008 and it went nowhere. Also, she’s nuts.
joe Reply:
January 9th, 2012 at 7:25 pm
Correction,, 2010
http://blogs.ocweekly.com/navelgazing/2010/03/diane_harkey_tries_to_kill_hig.php
StevieB Reply:
January 9th, 2012 at 3:02 pm
Ron Paul has introduced bills to repeal the Sixteenth Amendment, income tax, estate tax, and gift tax several times. He has introduced over 600 bills and one has been signed by the president into law (to authorize the Administrator of General Services to convey a parcel of real property in Galveston, Texas, to the Galveston Historical Foundation). Hundreds of bills are introduced at all levels of government every year and very few make it into law. This bill of Diane Harkey halting funding has as much chance as a Ron Paul bill.
thatbruce Reply:
January 9th, 2012 at 3:16 pm
@morris brown:
any link to the text of the bill? leginfo hasn’t been updated with it yet.
morris brown Reply:
January 9th, 2012 at 3:44 pm
@thatbruce
I have been looking for the text, but haven’t found it as yet.
morris brown Reply:
January 9th, 2012 at 5:06 pm
@thatbruce:
Here is an OCRd text of the bill AB1455 just introduced by Harkey.
morris
———
An act to add Section 2704.30 to the Streets and Highways Code, relating to high-speed rail.
U1/U5112 12:04 PM 47792 RN 1200164 PAGE 2
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 2704.30 is added to the Streets and Highways Code, to read:
2704.30. Pursuant to Section 1 ofArticle XVI of the California Constitution, the amount ofindebtedness authorized by Chapter 20 (commencing with Section 2704) is hereby reduced to the amount contracted as of January 1, 2013, notwithstanding anything in that chapter to the contrary.
01 /05112 12 :04 PM 47792 RN 1200164 PAGE 1
LEGISLATIVE COUNSEL’S DIGEST
Bill No. AB-1455 as introduced, Harkey. General Subject: High-speed rail.
Existing law, the California High-Speed Rail Act, creates the High-Speed Rail Authority to develop and implement a high-speed rail system in the state, with specified powers and duties. Existing law, pursuant to the Safe, Reliable High-Speed Passenger Train Bond Act for the 21 st Century, approved by the voters as Proposition 1 A at the November 4, 2008, general election, provides for the issuance of$9.95 billion in general obligation bonds for high-speed rail and related purposes. Article XVI ofthe California Constitution authorizes the Legislature, at any time after the approval of a general obligation bond act by the people, to reduce the amount ofthe indebtedness authorized by the act to an amount not less than the amount contracted at the time ofthe reduction or to repeal the act if no debt has been contracted.
01 /05112 12:04 PM 47792 RN 1200164 PAGE 2
This bill would reduce the amount ofgeneral obligation debt authorized pursuant to the Safe, Reliable High-Speed Passenger Train Bond Act for the 21 st Century to the amount contracted as of January 1, 2013.
Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.
thatbruce Reply:
January 10th, 2012 at 10:21 am
Leginfo has updated their site this morning as well. Thanks for the text.
It appears to be mostly the same as her 2010 ab2121 and 2011 ab76. (those links will expire at the end of this legislative year)
Robert Cruickshank Reply:
January 9th, 2012 at 8:20 pm
She’ll get maybe a few more votes for this than her last try, but that’s about it.
California’s High-Speed Rail Fibs
An article just out in the Wall Stree Journal:
http://online.wsj.com/article/SB10001424052970203513604577144351390445434.html?mod=googlenews_wsj
The author’s are Joe Vranich and Wendell Cox, authors of the 2008 Reason report
Here they effectively using quantitative numbers destroy the arguments that Robert, in particular, and others have been using with the logic that
it is much cheaper to build the HSR project than what will bee need new highway orad and airport or airport gates
The $171 Billions promoted as being needed if HSR is not built have no credibility and this article just piles onto other articles that have concluded likewise.
The tag line for the article:
Florida and Ohio have walked away from dubious train projects. Are Golden Staters more gullible?
is so accurate. To date for sure, Governor Brown is the prime victim of this gullibility.
VBobier Reply:
January 9th, 2012 at 5:46 pm
Anything from Reason/Koch Industries is GARBAGE…
joe Reply:
January 9th, 2012 at 7:26 pm
David H. Koch now sponsors PBS’s NOVA.
D. P. Lubic Reply:
January 9th, 2012 at 7:33 pm
Morris, I normally don’t speak so poorly of people, but I’ve followed for a while, and he is either an idiot or a liar, perhaps both. He’s certainly arrogant as hell, and I can tell you personally he doesn’t properly account for the cost of roads.
Of Joe Vranich, he suffered great disappointment, and can best be described as a Richard who managed to make the disappointment pay. Good for him, I suppose he can use the money (and I could use more myself), but we have to work with what is available, and if it were up to those two, we’d have no passenger rail service at all–maybe the New York subway system, but that would be it.
D. P. Lubic Reply:
January 9th, 2012 at 7:39 pm
More about Cox–so much of what he says is so wrong, and with him getting paid for it, I consider him a con artist. If he or you want to call the people of California more gullible than those of Florida or Ohio, well, there are those who are more gullible still, and they are the ones who pay attention to Cox. They in turn are surpassed by the people who pay Cox.
That’s that.
Documentation available on request.
morris brown Reply:
January 9th, 2012 at 8:16 pm
@VBobier
Apparently the WSJ doesn’t think their article is garbage — they printed it.
@ D. P. Lubic.
You are entitled to your opinions, but the facts obviously prove otherwise. Re-read the Reason report and see just how many of their predictions have now come to be reality.
Hanging around this blog so much seems to have led you to Robert’s favorite message when he doesn’t like what he reads — that message is “assassinate the messenger”
joe Reply:
January 9th, 2012 at 8:55 pm
Like you just did?
DHow many phones have to be tapped to get you to admit the activist-conservative, Murdock owned WJS and Reason Foundation have a political agenda?
Robert Cruickshank Reply:
January 9th, 2012 at 9:12 pm
Actually, the message itself is pretty easy to assassinate. I’m not into shooting the messenger. No fun in it.
Alon Levy Reply:
January 9th, 2012 at 11:30 pm
The WSJ should stick to claiming that the US is about to have hyperinflation and/or go bankrupt.
Nathanael Reply:
January 10th, 2012 at 6:33 pm
Or to claiming that cutting taxes for rich people gives money to poor people.
Or to claiming that cutting environmental regulations makes the air cleaner.
Or to claiming that global warming isn’t happening.
Or….
D. P. Lubic Reply:
January 10th, 2012 at 3:52 am
Morris, I’d been watching and reading Cox for years before this blog even existed, and the blog was around long before I found it. I have good reason to have the opinions I do.
Maybe I’m not quite as old as you, but I’m not a teenager, either, and I’ve done some original research myself. I’ve also worked pretty hard, at least in the past, to avoid my own biases–and was pleasantly surprised, a bit shocked–to find I was more right than I thought I was. This was in a cost study on a light rail line here.
As to the Wall Street Journal, I will not make any comments as I don’t read it with any regularity, but I understand it is owned by Rupert Murdoch’s News Corporation, and other comments about it by other observers, my own observations of his Fox News service recently, and the blow-up of a News Corporation paper in London that had systemic problems, including illegal practices, does not speak well for anything Murdoch has. If anything, they suggest that Murdoch is poisonous to business, except for making money.
If you think money is the only measure that counts, I suggest you go into the sex business. A strip club near my house, in a neighboring town, is easily the most profitable business I’ve ever seen as an auditor for its owners. The sex movie industry in Burbank is supposedly worth $13 billion per year, considerably larger than Hollywood’s $9 billion per year (and at that, look at how much of the Hollywood business is a lighter version of the Burbank business).
I’ve kicked around the idea of doing this myself; I can use the money, and it seems to be one business for which the demand is bottomless. For some reason, though, my wife doesn’t like the idea. . .and I have to admit to not being totally comfortable with it.
Are you married, and if so, what would your wife say if you said you would think of something like this? What would you think of it yourself?
Nathanael Reply:
January 10th, 2012 at 6:34 pm
Can’t answer for Morris, but for my Significant Other, I think she wouldn’t want me to act, but I think she’d be OK with me directing.
peninsula Reply:
January 9th, 2012 at 9:39 pm
VICTIM?
Just my opinion, but this conversation has veered way off course, and that goes for both pro and anti-HSR folk. Yes, jobs are important, and yes, $10 billion should still eventually be appropriated for HSR (sort of). The problem as I now see it is that we are attempting to start construction in the wrong damn place: the Central Valley. As stated before, we should be doing a “bookend” approach to building our system: NorCal and SoCal regional rail. Or as I like to call it now, HSR-light. With this approach, you relieve serious traffic now (relatively speaking) vs in 2030 and you create perhaps the same amount of construction jobs as the proposed ICS. Connect the two regions via the Central Valley when the regional “HSR-light” becomes profitable (upgraded Caltrain, ACE and Metrolink).
Robert Cruickshank Reply:
January 9th, 2012 at 9:12 pm
We’ve basically been trying this approach for the last 30+ years and it hasn’t succeeded.
when the regional “HSR-light” becomes profitable (upgraded Caltrain, ACE and Metrolink).
Yeah, that’s the way we should fund improving the NEC, use all the profits generated by the commuter lines that use it……
Tony d. Reply:
January 9th, 2012 at 7:48 pm
Just my opinion again, but I think appropriating bonds for regional rail enhancements would create jobs, be a wiser investment and be more profitable than the proposed ICS.
A thought came to me–although it has been expressed here before, and by others as well as myself–but if highways are so great, if they are so efficient, why don’t we privatize them, let their owners charge tolls to cover the road and its maintenance and emergency service and police protection, and have them pay real estate taxes on their property, like the railroads do?
I think we would see some very interesting results, and mighty quickly, too.
morris brown Reply:
January 9th, 2012 at 8:10 pm
@ D. P. Lubic
If you would do a bit of research you would find that Indiana a few years ago, privatized a toll road in the Northern part of the State.
Depending on who you believe, the Governor thinks it was a deal made in heaven. Users now face much higher tolls. The private operation is apparently very happy.
Nathanael Reply:
January 10th, 2012 at 6:37 pm
It’s not as bad as the Chicago parking meter deal, but I wouldn’t call it a good deal.
The problem with privatization of public infrastructure is that the private monopolist will charge monopoly rents (high tolls). The problem with public provision of limited-capacity infrastructure is that the government will charge below-cost rents (low tolls).
Nobody has quite figured out how to get the “right price”. It’s one of the more difficult political problems.
Andre Peretti Reply:
January 10th, 2012 at 4:36 am
“why don’t we privatize them…?”
Most French freeways are built and operated by private companies. These companies are among the few unaffected by the crisis and pay “scandalously high” (say left-wing politicians) dividends to their shareholders. To which they answer that the high taxes they pay contribute to the maintenance of the free public highways that parallel them.
It’s interesting to note that Vinci, who operates the Tours-Bordeaux freeway, has also won the bid to build and operate HSR on the same corridor.
Such a competitive market is unthinkable in socialist America…
Now that we are talking about job years, I wish they were fewer. 2033? Is this a one-man project? And no, this is not the date of the whole system. It’s the date when the SF-LA section will be finished if at all. Add LA-SD and 2040 sounds more like what the CHSRA has in mind. Ridiculous.
I don’t really consider the Mercury News a legitimate paper anyways. All they concern themselves with is trying to stir up sensationalist headlines to catch people’s interest who otherwise wouldn’t pay attention. As someone living in the south bay and within their “region” I just see the Mercury’s “journalistic approach” as a tacit acknowledgement that living in this valley is so boring you just got to make crap up to call it “news”. It’s either that or acting as the perpetual brown-noser to the tech industry. The Mercury News was more than happy to propagate that “train to nowhere” mantra and never challenge it in their supposedly unbiased reporting. They are not much better than those fake “local community papers” like the Palo Alto Daily News and their identical clones in each community up and down the peninsula. They all got a bit of that “Fox News aspect” about them. It’s hard to believe so many people take them seriously.