Lefties love trains, probably for much the same backwards-looking reasons they love windmills. But implementation is a problem for Western Lefties – with the financial disaster of California’s still non-existent over-lawyered HSR line being the stand-out example.
Anyone who has ridden China’s HSR cannot help but be impressed by its speed, cleanliness, and efficiency. But the financial side is not going so well.
"… In February this year, a group of Chinese commentators said a report by the National Audit Office (NAO) had found that China’s high-speed railway saw an “about 100 billion yuan of total loss” in the nine months ending December 31, 2024. NAO’s website did not officially announce this widely reported figure. …
… The article pointed out that China’s high-speed railway network was 45,000 kilometers at the end of 2023, but only 2,300 kilometers, or 6% of the total, could make a profit. It said that out of all 16 high-speed railway lines, only six in coastal cities are profitable. …
… He said the public should focus more on the high-speed railway network’s social value than its commercial value."
And that is the crux of the matter. Are there cases where the “social value” (whatever that means) of something outweighs the “commercial value” (of which direct profit is just one measure)? Of course, it’s an extremely complex question and I’m sure that the correct answer is context-specific. It seems that in the West we’ve focused on short-term commercial value, which might just be worst choice of all.
As usual the proper political economy approach to network effects is to eliminate all taxes on activity as well as Monopoly regulation and replace them with a single tax on liquidation value of net assets assessed by market bids kept in escrow.
It was kind of ironic that I first proposed this in 92 and the next year I was working with science applications international corporation to privatize toll roads.
Monopolists hate this and entrepreneurs love it once they get out of the mind control of monopolists.
As for “eminent domain” there are techniques involving conditional bids that permit routing around defectors in the prisoners dilemma. If you automate the execution of transactions under these conditional bids, it gets pretty difficult to game the commons even in the absence of eminent domain.
FYI: I worked with ChatGPT to help refine the following points:
Underinvestment in infrastructure – Deferred maintenance and lack of modernization reduce long-term competitiveness and quality of life.
Neglect of strategic industries – Critical capabilities (e.g., semiconductors, rare earth element production, manufacturing) have been outsourced or allowed to erode. On the topic of manufacturing, this video about manufacturing a very simple product in America from the YouTube channel SmarterEveryDay is as much enlightening as it is concerning:
Innovation stagnation (and increased corruption) – When the goal is fast profit, incentives shift away from transformative, often risky research towards protecting incumbents. This opens the door to regulatory capture, favoritism, and rent-seeking—corruption that further suppresses genuine innovation.
Workforce instability – Gig work and short-term contracts increase precarity and reduce long-term skill development.
Vulnerability to crises – Fragile supply chains and lack of redundancy can lead to cascading failures when disruptions occur.
Erosion of public trust – When institutions chase short-term wins, they may sacrifice integrity or public interest, leading to cynicism, which weakens civic engagement, and social cohesion.
Institutional amnesia – As leadership cycles shorten and institutional memory is undervalued, we keep repeating mistakes, failing to retain hard-earned lessons, best practices, or long-view strategies.
Prioritization of individual gain over generational wellbeing – Decisions are often made to maximize personal or immediate benefit, even when they undermine opportunities, stability, or livability for future generations. Here is a link to the segment on “time preference” from an interview with Anthony Deden, chairman of Edelweiss Holdings, a privately-held investment holding company—the entire interview is worth waching:
Financialization over real productivity – In pursuit of short-term commercial gains, we’ve increasingly favored financial engineering—stock buybacks, derivatives, asset inflation—over investing in real, tangible value: building things, developing skills, producing goods. This shift reflects a mindset where manipulating balance sheets is often more rewarded than producing durable goods or services. While it can generate impressive quarterly results, it ultimately inflates paper wealth at the expense of long-term resilience, innovation, and broad-based prosperity.