Perspective Online: High speed rail essential to winning America's future

SANTA CLARA -- Would high-speed rail spending add jobs in theUnited States? Of course.

Even if some of the rolling stock for the trains were imported,structures and other permanent way would still have to be built inthe United States. Under current conditions, any government spending-- for rails, for bridges, for highways, for the military -- wouldcontribute to job creation.

Fears that government spending might displace or crowd outprivate-sector capital formation would be justified were we at orclose to capacity. But we are not.

The unemployment rate remains almost 10 percent, and this doesn'taccount for those who, discouraged, have simply left the workforce.

Even more telling is the ratio of employment to population, whichhas fallen from its all-time high of over 64 percent in 1999 to 58percent today. Despite large "supply side" tax cuts tilted towardthe wealthy, the record of the George W. Bush presidency on jobcreation was in fact quite poor.

For a variety of reasons, including the recent financial crisis,the U.S. economy remains in a serious slump. High-speed railspending could stimulate job growth and help jump start the economy.

These projects would, of course, add to the deficit and concernsabout its long term growth, particularly that attributable to healthcare, are merited.

Looking back over the last three decades, however, Republicans'interests in deficit reduction seems to have waxed and waneddepending upon who occupied the White House.

The deficit ballooned under Bush, due largely to tax cuts butalso to increases in military spending and a new unfundedprescription drug benefit. The resulting run-up in the debt wasregrettable, but the time to cut government spending is when theeconomy is strong, not when it is weak.

If the country is going to incur new debt, it is better to do soto acquire well-chosen infrastructure and equipment than to fundconsumption.

Would high-speed rail represent well-chosen infrastructure? Inother words, would it help the U.S. "win the future"? This is a morecomplex question. It requires us to consider not simply whether suchprojects would help close the output gap, but whether and howeffectively they would expand the potential output of the economy.

Here there are legitimate concerns about whether the U.S. hasenough high density corridors -- such as that between Boston andWashington -- to yield large benefits.

And building in dense areas can be costly. For example, theproposed Los Angeles to San Francisco route would go right throughmy backyard in Palo Alto, and the extent to which that part of theroute will or will not be put underground has become a contentiouspolitical issue.

That said, state and federal governments have a long and largelysuccessful record of supporting infrastructure development, from theErie Canal to regional and transcontinental railroads to theInterstate Highway System and, more recently, to the Internet.

The build-out of the surface road network during the GreatDepression generated large private-sector benefits, contributing tovery fast productivity growth in transportation --railroads andtrucking -- as well as in wholesale and retail distribution.

High-speed rail projects could certainly create jobs andstimulate the economy in the short run. Whether they would generatebenefits similar to those of other government funded infrastructureprojects is uncertain. History suggests, however, that there's agood chance they would.

Alexander J. Field is a professor of economics at Santa ClaraUniversity. Readers may write him at Santa Clara University, 500 ElCamino Real, Santa Clara, CA 95053.