Passengers exit an Amtrak Acela train from New York Penn Station as it arrives on a platform at South Station train and bus station in Boston, Mass., Aug. 7, 2012.
Yaro says a similar impact from high-speed service could be seen in the Northeast. If the line was ever fully developed, such second-tier cities as Baltimore and Trenton could also realize massive benefits, as companies located there could more easily attract labor from New York or Washington, while their citizens could pursue professional opportunities in cities that currently are out of reach. Such a system would shrink the Northeast Corridor, making it into a single labor market, rather than several disparate ones. And in the short term, the massive construction project would help create jobs all up and down the Corridor, as well as widespread spinoff economic benefits for suppliers, construction firms and other players.
The Numbers Game
According to Morris Cohen, a professor of operations and information management at Wharton, “The impact of construction is direct, immediate and observable,” whereas any indirect benefits “could take a long time to be realized.” Furthermore, “it is difficult to attribute benefits such as increased economic activity to infrastructure. There are many factors that go into decisions to invest or to grow businesses, which would be a source of benefit. Infrastructure is only one of them.”
Trying to put a specific number on the impact of a high-speed rail would be a nearly impossible task, Cohen notes. Still, he adds, “I am sure this project will create long-term economic benefits. The question, of course, is, ‘Do these benefits justify the cost?’”
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That long-term unpredictability is certainly problematic, especially as Amtrak tries to lobby lawmakers to cough up $151 billion during a time of persistent recession. Both Yaro and Taylor say the Northeast Corridor project would not only benefit from, but very likely will need, some kind of contribution from the private sector. Moving forward, for instance, they can foresee a time when private carriers in the mold of Virgin Airlines might share rail space with Amtrak, thereby increasing the frequency of service and creating new competitive dynamics that could bring fares down.
But Yaro says he is convinced that the project is both worthwhile and reasonable. “It’s a lot of money, yes, but the Northeast has a $2.6 trillion economy. It would be the fifth or sixth largest economy in the world if it were its own country. And we have this problem right now, which is that the corridor is basically full. So this is really about capacity.” He notes that the existing Amtrak lines, which share space with regional rail systems such as Philadelphia’s SEPTA and New Jersey Transit, are running near full capacity. Airports in Boston, New York and Philadelphia are regularly backed up, and Interstate 95 is gridlocked in most major cities during working hours.
Given the available options, then, building a new rail network, even at a cost of $151 billion, could rightly be called the most practical solution of them all. Yaro points out that it was this kind of dynamic that gave the California project proposal its winning edge. “One of the strong arguments that both [former California governor Arnold Schwarzenegger and current governor Brown] have made effectively is that although [a high-speed rail project] is expensive, the roadway and airport expansion alternatives would cost even more,” he says.
Still, Allen has his doubts that the Amtrak proposal will gain needed traction among citizens who will likely be blinded by the price tag. ”Look, I would use it,” he says. “When I go to Washington, I don’t fly — I always take the train. I don’t drive in the Corridor unless I’m on a leisure trip, and I’m a big advocate for high-speed rail. But I just don’t think the guy on the street is going to buy into this. If we could wave a magic wand and a new system would instantly appear, people would flock to it. But getting there is going to be a huge battle. You have to convince people it’s worthwhile to spend all this money, and that won’t be easy.”
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Republished with permission from Knowledge@Wharton, the online research and business analysis journal of the Wharton School of the University of Pennsylvania.
