Tags: gil | Shidlo | Japan | south korea | Seoul | fund | US

Shidlo: Japan, Seoul Could Fund US High-Speed Train

Monday, 20 Dec 2010 09:08 AM

By Gil Shidlo

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Spain has inaugurated the latest route of its high-speed train, the AVE, to Valencia from Madrid.

This new track will reduce the time from about four hours to only 90 minutes and reach speeds of 300 kilometers an hour (190 mph).

Valencia, Spain’s third biggest city, is in the Mediterranean whereas Madrid the capital is in the middle of the country. The cost of this 272-mile line is a mind-boggling $8.8 billion, which is nearly the same amount which President Barack Obama offered to allocate to the entire U.S. high-speed train program. The new line will create 136,000 direct and indirect jobs, according to Accenture. This is an impressive jobs number in a country with very high unemployment.

Portugal is also planning a high-speed train that will link Madrid to Lisbon by 2015.

How can these high-debt countries that are part of the so-called PIIGS (Portugal, Italy, Ireland, Greece and Spain) euro crisis afford such expensive high-speed trains whereas the United States cannot?

The Obama government offered various states a high subsidy for such trains and in most cases the state governors rejected this, saying they cannot afford the relatively low local financial participation.

The only high-speed train in the United States is the Acela Express, which travels up to 150 mph between New York City and Boston (3 hours and 15 minutes) and New York City and Washington, D.C. (2 hours and 28 minutes).

Spain now has the second-largest track system of high-speed trains after China and just behind France (2,056 km or 1,275 miles in Spain; 1,896 km or 1,176 miles in France and 1,285 km or 797 miles in Germany).

One reason why countries such as Spain can afford this is due to their low expenditure on defense.

Whereas France spends only 2.3 percent of GDP on defense, Spain only 1.2 percent and Portugal 2 percent, the U.S. defense budget at $663 billion (over 4 percent of GDP, according to Stockholm International Peace Research Institute, or SIPRI, 2009 data) is more than all Western nations together.

It's no wonder the United States cannot afford to modernize its transport system. Airports need to be modernized as well as the highways that were built ages ago.

One way to reduce the heavy use on highways and the crowded airports is for government to invest in a high-speed train system. This would also reduce pollution as well connect smaller towns to larger urban centers.

Many neglected small towns in Spain or France have become new industrial centers or alternatives to expensive urban housing.

For example, San Francisco, whose real estate is beyond the reach of most people, would benefit from a high-speed train, which would enable smaller nearby towns to become commuter towns.

Indeed, the U.S. Department of Transport has estimated that several interstate highways linking major urban centers will experience severe congestion by 2035.

Air traffic will be constrained by 2025 even with improvements in the major 14 airports. There are also significant environment concerns with highway and air travel depending on fossil fuels.

But how can the United States afford it? There are different partnerships that can finance the new high-speed trains but it seems at this point there are difficulties for states to accept these.

While California is considering building a high-speed train system, Florida, Wisconsin and Ohio — who have been awarded hundreds of millions of dollars of federal funds — have governors who are threatening to reject these projects if it becomes a burden on the local tax payer.

Florida was awarded $1.2 billion to link Tampa to Orlando. Some high-speed train manufacturers – European and Chinese – have offered to finance or pay the relatively small portion of the total cost allocated to the states. One assumes they will plan either to go over budget later on or make profits on maintenance.

But one simpler model would be for the United States to start charging such countries as South Korea and Japan for defense. South Korea spends only $27 billion on defense which is 2.8 percent of its GDP (according to 2008 data) and Japan $47 billion, which is only 0.9 percent of its GDP (2008) whereas the United States spends $663 billion, which is a whopping 4.3 percent of its GDP (2008).

Part of the defense budget goes towards the maintenance of overseas military bases in Asia. As of May 2010, it is reported that there are about 28,000 U.S. Armed Forces personnel in South Korea and 50,000 personnel in Japan.

Maybe they could trade defense for high-speed train technology.
Japan built the first high-speed trains — the so-called Bullet Trains in the 1960s.

In return for benefiting from the U.S. military, Japan and South Korea could partly finance the building of a high-speed train system in the U.S. that wouldn’t only benefit the U.S. but also provide employment to its aging population.

Although the main contenders for the high-speed train bids are French, German and Chinese companies, the United States should look at South Korea and Japan companies as well. It is obvious that whoever wins should create as many jobs as possible in the United States rather than mostly in their own countries.

© 2014 Moneynews. All rights reserved.

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