Not Enough Bricks


2020 election forecasters would do well to look to California as an early indicator of how the Democratic Party might position itself to compete with President Trump’s popular style. As the saying goes, “As California goes, so goes the nation.”

In areas from the environment to immigration, California has tried its unique left-coast spin on Federalism — bucking national standards in favor of its own progressive exemptions. Our vehicle emission standards have shaped the national debate, and the ambitious high speed rail bill is emblematic of California’s can-do spirit when it comes to tackling greenhouse gas emissions.

Governor Gavin Newsom says there’s “no way” he’s running for President in 2020—he has a job to do for at least 4 years—but the agenda he laid out in his recent State of the State address reflects the likely priorities of the pool of Democratic contenders. It was boldly progressive, pitting “California Values” against the President’s vision of America. Yet compared to the extremism of Alexandra Ocasio-Cortez’s “Green New Deal,” Newsom’s environmental agenda looks conservative.

Marc Joffe, a senior policy analyst for the Reason Foundation, did the rest of us a favor by tuning in to the Governor’s address last week, and recently wrote a piece dealing with a surprisingly pragmatic plank of Newsom’s agenda. Whereas former Governor Brown hoped the bullet train from LA to SF would be his legacy and didn’t budge in the face of harsh economic realities, Newsom is confronting the possibility of a lack of funds to complete the project. He used his speech to signal his plans to limit costs by truncating the proposed line south of Bakersfield and west of Merced:

“Let’s level about high-speed rail. The current project, as planned, would cost too much and, respectfully, take too long.” — Gavin Newsom in his first State of the State address

It looks like the classic parable* of the builder who failed to take stock of his inventory before beginning a project, and finds himself short before it’s finished. In this case, California may still be able to cut its losses before incurring the most expensive sections of the rail, although the sunk costs include the construction of the now-overkill “Transbay Terminal” that was supposed to serve as the terminus in San Francisco. Joffe notes that the $2.2 billion station will now amount to little more than an enormous bus stop.

This cautionary tale can come in handy whenever progressives begin lecturing on sustainability. It is even more relevant to the conversation around the Green New Deal, which promises nation-wide high speed rail as a substitute for vehicles and airplanes. Marc will join the show’s producer Charlie Deist this Sunday to debunk “AOC’s” daringly bad legislative proposal before it picks up steam in the popular imagination.

Moderates in the Democratic Party would be wise to read up on the cold, hard experience of HSR in California, which demonstrates why centrally-planned mega-projects are a bad way to combat greenhouse gas emissions. Marc summarized the main reasons in a recent article:

In a 2010 UC Berkeley study, Professors Mikhail Chester and Arpad Horvath estimated that the entire California high-speed rail project would generate 9.7 million metric tons of carbon dioxide during construction.
Chester and Horvath estimated that it would take high-speed rail 71 years of operation at medium occupancy to offset its own construction-related greenhouse-gas emissions. Given the project’s delays and carbon reductions being achieved by new technology, like electric vehicles, it is possible that, if built, the rail system will never pay back the carbon investment required to build it.

Such figures raise the specter that a Green New Deal, which invests massively in the present to offset future carbon emissions, will merely accelerate the warming effects of industrial capitalism (if you buy into that premise).

Marc and Charlie explore the “Net Present Value” calculations necessary for a full accounting of costs and benefits of various green technologies.

*The whole entrepreneurial class is, as it were, in the position of a master builder whose task is to construct a building out of a limited supply of building materials. If this man overestimates the quantity of the available supply, he drafts a plan for the execution of which the means at his disposal are not sufficient. He overbuilds the groundwork and the foundations and discovers only later, in the progress of the construction, that he lacks the material needed for the completion of the structure.
— Ludwig von Mises, Human Action