A free-market “yes” to Texas high-speed rail

Photo by JR Central

With a limitless supply of wasteful government spending to target, including their own “Congressional Pig Book” outlining 232 federal earmarks totaling $14.7 billion dollars, my friends at Citizens Against Government Waste have better things to do than write an inaccurate and misleading slam against the privately funded Texas Central high-speed rail project.

Attacking a private venture project is straying from the path of an organization whose mission is “to eliminate waste, fraud, abuse, and mismanagement in government.” The Texas Central Rail project is not a government project.

Is Burlington Northern Santa Fe a government project? Kansas City Southern? Union Pacific? No, of course not. These are all private, for-profit rail corporations, and Texas Central would simply be joining that list. Rail is not inherently governmental, and it’s not inherently bad, either.

But it’s not just CAGW president Tom Schatz who is confused on this topic. Many of my conservative friends seem to think that their principles are antithetical to rail technology. Well, they aren’t. Rail, passenger rail, and high speed rail are just technologies, and technology is neutral. Rail projects are not inherently contrary to conservative principles; in fact, rail is usually the most efficient way to move goods and people over distance. What offends conservative principles is government getting out of its limited-government lane and competing with the private sector. Government-subsidized freight rail (Conrail) and government-subsidized passenger rail (Amtrak, California High-Speed Rail) offend free-market principles.

The Texas Central Rail project is backed by private venture capital, and whether it is successful should be determined by markets, not by the Texas Legislature or the Reason Foundation or CAGW. Private investors will scrutinize the business model and projections, and if private investors don’t think the project will work, they won’t invest. There’s nothing novel at all about this — this is how every new venture in every industry works.

Investors, by the way, are far better at such analysis than government is. Some Texas legislators seem to think it’s their responsibility to determine whether or not the Texas Central business model makes sense. Legislators, that’s not your role, any more than it was the California Legislature’s role to determine whether the Apple iPod would succeed. It’s government’s job to set rational rules and establish a level playing field, and let entrepreneurs and capitalists try things. If they succeed, we all benefit, and if they fail, we benefit from that too, as the private sector incorporates those lessons into future ventures.

Conservative Texans like to brag about Texas’ growth as a rebuttal to the policies of blue states like California. But all that growth puts new demands on infrastructure. How do Texas conservatives reconcile their pride in Texas’ growth with their limited-government principles? Through private infrastructure. The genius of private infrastructure is that we can grow the Texas economy without growing the Texas government.

Here’s what I know about capitalism: If the Texas Central Rail project has a decent chance of success, it will attract investors and get built. If investors don’t show up, it will never break ground. Either way, Texas taxpayers won’t be on the hook. That’s the free-market, capitalist approach. Legislators and advocates who believe in private enterprise, capitalism and limited government and who also try to stop the Texas Central rail project are betraying their own principles.

High-speed rail projects in California are as different from the Texas Central Rail project as California is from Texas. Our private high-speed rail system will be up and running while California’s government-funded boondoggle drags California into insolvency.

Tom Giovanetti

President, Institute for Policy Innovation