Morton J. Marcus, an economist formerly with the Kelley School of Business, Indiana University. His column appears in numerous Indiana newspapers.
Too little, too late,” is the standard objection to the economic stimulus program now in effect. That criticism is based on opinion, not fact. It will take several years to know whether the stimulus (or stimuli, because there was more than a single stimulus) worked. We do know that funds from the federal government were used by state and local governments everywhere to supplement or replace their own depleted revenues.
This meant people held jobs that would otherwise have been cut. It meant that contracts were let to private firms that would have had thinner order books. Was it enough? What’s enough? We could not expect that a federal stimulus program from a constipated congress could be enough. We could not expect that the entire economic slide of the past two years would be offset by federal spending when nearly half the congress believes (incorrectly) that government spending is inherently sterile.
Yet it is appropriate to ask “What kind of economic program should we be following now?” Health care is popular, but no one is suggesting giving the health care industry a spending boost. Most people not in the insurance or health care industries want to see lower expenditures for health care. We want our neighbors to take better care of themselves, act on problems before they reach a crisis stage, and accept less than cutting edge treatment.
What then could be the right kind of economic stimulus? One answer is High Speed Rail (HSR), not the puny program put forward recently by the federal government. A few disjointed lines operating at speeds that fail to match those of other advanced nations will not do. If we are going to increase productivity (which should always be a priority of government spending), then we need a decade-long, integrated national program to design, build and operate an HSR system competitive with any in the world tomorrow.
This would be the national interstate highway program on steroids. It would generate millions of new jobs and benefit every corner of the country. (I admit I don’t have an idea of how HSR would work for Hawaii.) The upheaval in our cities would be marvelous. It would allow us to tear down decrepit structures along existing rail lines. All grade crossings on the HSR lines would be removed and not a single HSR train would ever be constrained by local speed regulations.
HSR would encourage the improvement of intra-city transportation. When visitors get to Fort Wayne, Indianapolis, South Bend they will need a means to reach their local destinations. More visitors without cars mean more local options for transportation.
HSR would help re-establish regional centers. If the new service skips Sullivan, Vincennes, and Princeton on its way from Terre Haute to Evansville, then efficient carriers connecting smaller places to larger places will be encouraged. Today a traveler from Sullivan to Chicago drives through Terre Haute and dreams of a by-pass. With HSR, the Sullivan traveler has reason to be in Terre Haute.
Advances in transportation are central to gains in productivity. Web-conferences are poor substitutes for face-to-face interaction. Yet, at today’s prices and speeds, the movement of people has been sacrificed and only messages are given premium service.
The HSR network is ideally suited to financing through bonds paid from future revenues. Future citizens benefit from the system and pay for it as they use it. In the present, however, we can create the jobs we desperately desire.