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What did F.A.Hayek think of high speed rail?
Let's take it, as a given, that high-speed rail is a good investment (not a malinvestment) for the
nation, as it produces total economic benefits well in excess of its cost.
Private money is not interested in the investment, the massive capital costs make payback too slow. Only the hand of government can build them. However, government can recoup its actual costs by way of higher taxes from the benefits of the system - increased commerce and higher property taxes when a town gets a station and real estate prices go up.
Would Hayek have a problem with the fact that government has to be involved?
Hayek certainly knew of high speed rail and probably rode it. The debate started in the 60s, and the French line opened in 1981. The Japanese before that.
For the scope of this question, it is a given that it's a good investment. In real application, it probably varies case by case, but here we are presuming a case where it IS a good investment overall. If that doesn't jibe with your worldview, this question is not for you.
Externalities are the issue with both answers so far. It assumes perfect cost recovery and that does not happen, especially not in Europe. EU directive 91/440 says train operators are not allowed to own the track they run on, to allow "open access" to all interested operators. It is a socialist nightmare full of broken business models, massive subsidy and perverse incentives but I won't get into that. Bottom line is, profitable or not, the Euro/Japan high speed lines were built by government. The question stands: what would Hayek say?
2 Answers
- Anonymous1 decade agoFavorite Answer
Friedrich Hayek (1899-1992) is best known forhis defense of classical liberalism and free-market capitalism against socialist and collectivist thought. I'm so sure that he would have arguments against the government involvement in the bullet train business. In Britain and Japan, they are privateized and can work very well.
- SDDLv 71 decade ago
1. Hayek died in 1992, so I don't think he thought anything about it.
2. Your premise is incorrect. It is NOT a good investment. A good investment is one where you realize more money in return than you invest.
3. The reason "only the hand of government can build them" is that a rational person would not set out to lose money.
4. Name a single rail system where the government has actually recouped its investment in taxes.