California’s High-Speed Train Has Done a Lot More Good for Big Consultants than for Taxpayers or Riders

The ongoing saga of California’s high-speed bullet train may end up being as classic a story of Democratic politicians’ hubris as the Solyndra debacle. The difference is that the bullet train is still going – well, not the train itself, but the taxpayer spending on the planning – despite some optimism earlier this year that Gov. Gavin Newsom was going to put the project out of its misery. A Los Angeles Times story last week by Ralph Vartabedian is a deep dive on the consulting companies that have been intimately involved in the whole process. Here’s the most revealing nugget:

The rail authority’s consultants are hardly household names, but they are politically powerful and made major contributions to support the 2008 political campaign for the bullet train bond. They have staffed their ranks with former high-level bureaucrats, and their former executives have occupied key government posts….

The consultants, however, have played a key role in the political success of the project. Along with labor unions, consultants helped fund the campaign for the $9-billion bond that is paying everybody’s salaries, including their own.

Engineering and construction firms contributed $837,000 to the bond campaign, second only to the $1.6 million spent by various unions, according to a Times review of campaign filings. WSP put $107,000 into the campaign. There was no organized opposition to the bond measure. It passed with 52.7% support, but its popularity has dropped in public opinion polls ever since.

The consultants continue to provide political muscle for the project. A revolving door provides lucrative job opportunities for state and federal officials to enter higher-paying private jobs.

The firms and the unions that expected to profit from building the rail line paid for the campaign to persuade voters to approve the bond issue that would commit taxpayers to the project. And the consultants move in and out of government to make sure the project – if not any actual train – stays on track. Political scientists write about an “iron triangle” of government agencies that handle a particular issue or project, special interests that benefit from it, and legislative committees that oversee it. The flow of personnel – the “revolving door” – is part of that cozy process.

So how’s all that coziness working out for California taxpayers? Here’s the basic story:

When California shifted its bullet train plan into high gear in 2008, it had just 10 employees to manage and oversee design of the largest public construction project in state history.

Consultants assured the state there was little reason to hire hundreds or thousands of in-house engineers and rail experts, because the consultants could handle the heavy work themselves and save California money. It would take them only 12 years to bore under mountains, bridge rivers and build 520 miles of rail bed — all at a cost of just $33 billion….

But significant portions of this work have been flawed or mismanaged, according to records reviewed by The Times and interviews with dozens of people involved in the project. Despite repeated warnings since 2010 about weaknesses in its staffing, the rail authority believed it could reduce overall costs by relying on consultants and avoiding a large permanent workforce. But that strategy has failed to keep project costs from soaring. Ten years after voters approved it, the project is $44 billion over budget and 13 years behind schedule.

And here’s a typical example of economic analyses of stadiums, convention centers, mass transit, and other megaprojects:

At one time, Cambridge Systematics, the consultant that developed ridership models, estimated that more than 90 million people would ride the trains every year, based on an overly optimistic assumption that 90% of motorists along the route would switch to trains, said David Brownstone, a UC Irvine economics professor who reviewed the work of consultants that provided ridership estimates.

“Once we pointed out all the problems, they lowered it to 25 million and characterized it as a minor change,” he said. “Calling that a minor adjustment was a flat-out lie. The mistakes were obvious and crude.”

In Brownstone’s opinion, the rail authority didn’t question the calculations because high ridership estimates supported its revenue projections.

“Some of these consultants will tell you whatever you want to hear for a fee,” Brownstone said.

This Wednesday the rail authority plans to send the legislature “a detailed plan on building a partial operating system from Bakersfield to Merced for $16 billion to $18 billion.” You can drive from Bakersfield to Merced in 2.5 hours according to Google Maps. You can already take a train for $27 that covers the distance in two hours and 45 minutes, and the consultants promise that the high-speed train would cut that by 45 minutes. And all for only God-knows-how-many billions of dollars.

At only $535 million in unpaid taxpayer loans, Solyndra looks like a bargain.

Posted on April 29, 2019  Posted to Cato@Liberty

David Boaz discusses libertarianism on the Seen and the Unseen podcast

Posted on April 22, 2019  Posted to Cato@Liberty

Key Concepts of Libertarianism

The key concepts of libertarianism have developed over many centuries. The first inklings of them can be found in ancient China, Greece, and Israel; they began to be developed into something resembling modern libertarian philosophy in the work of such seventeenth- and eighteenth-century thinkers as John Locke, David Hume, Adam Smith, Thomas Jefferson, and Thomas Paine.

Individualism. Libertarians see the individual as the basic unit of social analysis. Only individuals make choices and are responsible for their actions. Libertarian thought emphasizes the dignity of each individual, which entails both rights and responsibility. The progressive extension of dignity to more people — to women, to people of different religions and different races — is one of the great libertarian triumphs of the Western world.

Individual Rights. Because individuals are moral agents, they have a right to be secure in their life, liberty, and property. These rights are not granted by government or by society; they are inherent in the nature of human beings. It is intuitively right that individuals enjoy the security of such rights; the burden of explanation should lie with those who would take rights away.

Spontaneous Order. A great degree of order in society is necessary for individuals to survive and flourish. It’s easy to assume that order must be imposed by a central authority, the way we impose order on a stamp collection or a football team. The great insight of libertarian social analysis is that order in society arises spontaneously, out of the actions of thousands or millions of individuals who coordinate their actions with those of others in order to achieve their purposes. Over human history, we have gradually opted for more freedom and yet managed to develop a complex society with intricate organization. The most important institutions in human society — language, law, money, and markets — all developed spontaneously, without central direction. Civil society — the complex network of associations and connections among people — is another example of spontaneous order; the associations within civil society are formed for a purpose, but civil society itself is not an organization and does not have a purpose of its own.

The Rule of Law. Libertarianism is not libertinism or hedonism. It is not a claim that “people can do anything they want to, and nobody else can say anything.” Rather, libertarianism proposes a society of liberty under law, in which individuals are free to pursue their own lives so long as they respect the equal rights of others. The rule of law means that individuals are governed by generally applicable and spontaneously developed legal rules, not by arbitrary commands; and that those rules should protect the freedom of individuals to pursue happiness in their own ways, not aim at any particular result or outcome.

Limited Government. To protect rights, individuals form governments. But government is a dangerous institution. Libertarians have a great antipathy to concentrated power, for as Lord Acton said, “Power tends to corrupt and absolute power corrupts absolutely.” Thus they want to divide and limit power, and that means especially to limit government, generally through a written constitution enumerating and limiting the powers that the people delegate to government. Limited government is the basic political implication of libertarianism, and libertarians point to the historical fact that it was the dispersion of power in Europe — more than other parts of the world — that led to individual liberty and sustained economic growth.

Free Markets. To survive and to flourish, individuals need to engage in economic activity. The right to property entails the right to exchange property by mutual agreement. Free markets are the economic system of free individuals, and they are necessary to create wealth. Libertarians believe that people will be both freer and more prosperous if government intervention in people’s economic choices is minimized.

The Virtue of Production. Much of the impetus for libertarianism in the seventeenth century was a reaction against monarchs and aristocrats who lived off the productive labor of other people. Libertarians defended the right of people to keep the fruits of their labor. This effort developed into a respect for the dignity of work and production and especially for the growing middle class, who were looked down upon by aristocrats. Libertarians developed a pre-Marxist class analysis that divided society into two basic classes: those who produced wealth and those who took it by force from others. Thomas Paine, for instance, wrote, “There are two distinct classes of men in the nation, those who pay taxes, and those who receive and live upon the taxes.” Similarly, Jefferson wrote in 1824, “We have more machinery of government than is necessary, too many parasites living on the labor of the industrious.” Modern libertarians defend the right of productive people to keep what they earn, against a new class of politicians and bureaucrats who would seize their earnings to transfer them to political clients and cronies.

Natural Harmony of Interests. Libertarians believe that there is a natural harmony of interests among peaceful, productive people in a just society. One person’s individual plans — which may involve getting a job, starting a business, buying a house, and so on — may conflict with the plans of others, so the market makes many of us change our plans. But we all prosper from the operation of the free market, and there are no necessary conflicts between farmers and merchants, manufacturers and importers. Only when government begins to hand out rewards on the basis of political pressure do we find ourselves involved in group conflict, pushed to organize and contend with other groups for a piece of political power.

Peace. Libertarians have always battled the age-old scourge of war. They understood that war brought death and destruction on a grand scale, disrupted family and economic life, and put more power in the hands of the ruling class — which might explain why the rulers did not always share the popular sentiment for peace. Free men and women, of course, have often had to defend their own societies against foreign threats; but throughout history, war has usually been the common enemy of peaceful, productive people on all sides of the conflict.

… It may be appropriate to acknowledge at this point the reader’s likely suspicion that libertarianism seems to be just the standard framework of modern thought — individualism, private property, capitalism, equality under the law. Indeed, after centuries of intellectual, political, and sometimes violent struggle, these core libertarian principles have become the basic structure of modern political thought and of modern government, at least in the West and increasingly in other parts of the world.

However, three additional points need to be made: first, libertarianism is not just these broad liberal principles. Libertarianism applies these principles fully and consistently, far more so than most modern thinkers and certainly more so than any modern government. Second, while our society remains generally based on equal rights and capitalism, every day new exceptions to those principles are carved out in Washington and in Albany, Sacramento, and Austin (not to mention London, Bonn, Tokyo, and elsewhere). Each new government directive takes a little bit of our freedom, and we should think carefully before giving up any liberty. Third, liberal society is resilient; it can withstand many burdens and continue to flourish; but it is not infinitely resilient. Those who claim to believe in liberal principles but advocate more and more confiscation of the wealth created by productive people, more and more restrictions on voluntary interaction, more and more exceptions to property rights and the rule of law, more and more transfer of power from society to state, are unwittingly engaged in the ultimately deadly undermining of civilization.

From Chapter 1, “The Coming Libertarian Age,” The Libertarian Mind, by David Boaz (New York: Simon & Schuster, 2015). See also www.libertarianism.org.

Posted on April 19, 2019  Posted to Cato@Liberty

Robert A. Levy Center for Constitutional Studies: Impact Since Our Founding

Cato’s Robert A. Levy Center for Constitutional Studies and its scholars take their inspiration from the struggle of America’s founding and Civil War generations to secure liberty through constitutionally limited government. The Center’s scholars address a wide range of constitutional and legal issues, especially by encouraging the judiciary to neither make nor ignore the law but rather to interpret and apply it through the natural rights tradition inherited from the Founders.

Scholars affiliated with the Robert A. Levy Center for Constitutional Studies, both resident and non-resident, conduct rigorous legal research on a wide range of subjects: constitutional theory and history, the Supreme Court, property rights, environmental law, and others. The Center publishes the annual Cato Supreme Court Review, released at its annual Constitution Day Conference, featuring leading legal scholars analyzing the most important decisions of the Court’s recent term. Center scholars also write and commission books, monographs, articles, and op-eds; conduct forums on legal issues of the day; lecture and debate across the country; and file amicus curiae (friend of the court) briefs with the Supreme Court, all aimed at encouraging a climate of ideas conducive to liberty through constitutionally limited government.

Posted on April 19, 2019  Posted to Cato@Liberty

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