I was saying to someone the other day that I think we underestimate the long-term price the country pays for its drive for global domination by thinking too much about the flow of spending and not enough about the stock of missing goods. Consider, for example, trains.
Randal O’Toole from the Reason Foundation has dedicated his life to the principle that investing in rail is a costly boondoggle. He says:
Even though moderate-speed passenger trains are less expensive than true high-speed trains, they are still very expensive. Upgrading the 12,800 miles of track in the administration’s plan to moderate-speed rail standards would cost far more than the $14.5 billion the president has proposed to spend so far. The entire 12,800-mile Obama-FRA system would cost at least $50 billion. Rather than build the entire system, Obama’s plan really just invited states to apply for funds to pay for small portions of the system. […] One cautionary note on high-speed rail costs comes from California. In November 2008, California voters agreed that the state should sell nearly $10 billion worth of bonds to start constructing a 220-mile-per-hour high-speed rail line from San Francisco to Los Angeles. The state’s estimated cost for the entire system jumped from $25 billion in 2000 to $45 billion by 2008. However, one independent analysis concluded that the rail line would cost up to $81 billion.
Thus, the costs of a true high-speed rail system would be far higher than the costs of a medium-speed system on existing tracks, as envisioned by the Obama administration. To build a 12,800-mile system of high-speed trains would cost close to $1 trillion, based on the costs estimates of the California system. It is unlikely that the nation could afford such a vast expense, particularly since our state and federal governments are already in huge fiscal trouble.
The cumulative spending on the wars in Iraq and Afghanistan has, thus far, been $1.4 trillion, and we haven’t stopped spending money on either of those things. Keep in mind that this O’Toole estimate isn’t the cost estimate of a rail booster. O’Toole’s point is that rail proponents underestimate the cost of building these things and that $1 trillion is the real cost of doing it. Also keep in mind that nobody is proposing a system this expansive. O’Toole’s point is that this is a reductio ad absurdum of rail proponents’ idea. People think a high-speed rail initiative sounds like a good idea, but to really build a nationwide HSR network would cost (cue Dr Evil voice) ONE TRILLION DOLLARS.
And yet whether or not you think building a trillion dollar nationwide true HSR network would be a good idea, I think there’s no question that if it existed, some people would get some use out of it. The money would be spent, and then we’d have the train. Operating costs would exist, of course, but they’d be trivial compared to construction costs. Which is to say that when you spend on rail infrastructure, you spend money but you accumulate a stock of trains and train tracks, etc. that can be used in the future. When you spend on the military, you don’t much in the way of useful stock. You build a bomb, then the bomb blows up. Or else the fact that you have the military equipment becomes (as in Libya) the reason you need to spend more money on losing it. Or else good money gets thrown after bad, as in the situation where a president who thinks we never should have invaded Iraq now thinks we need to keep spending money on sustaining a presence there. The overall result is to slowly but surely impoverish the country. Meanwhile, if you look at how American became a major power in the first place, it had nothing to do with defense spending and everything to do with economic growth. If you have growth, then you can build a military. If you squander your resources, then you’ll be overtaken.