Japanese Experience Probably no country in the world is better suited to high-speed rail than Japan. From Greater Tokyo, one of the world's largest and densest metropolitan areas, rail lines travel to chains of other large, dense cities typically located 25 to 50 miles apart.
As of 1949, most rail lines in Japan were owned by Japanese National Railways (JNR), a government corporation. Although nationalized, JNR was not subsidized and had earned a profit, or at least broken even, every year until it began building high-speed rail lines. As of 1960, Japanese rail lines carried conventional trains at conventional speeds. In that year, autos accounted for just 5 percent of Japanese travel, while rails carried 77 percent.
Then construction began on the Shinkansen, the world's first high-speed rail system. The first bullet train between Tokyo and Osaka proved highly profitable, and it has carried more people than all other high-speed rail trains in the world combined.
Once this line was built, however, Japanese politicians demanded bullet trains for their own cities and prefectures. With one exception, all lines built since the first one have lost money. 14 Japan's experience shows that once a nation starts building high-speed rail, political forces make it hard to stop. Despite the need for huge subsidies that Japan cannot afford, the nation's taxpayers are forced to pay for high-speed lines into the prefectures of every powerful politician in the country.
These and other political factors have driven up bullet train costs, and caused Japanese National Railways to switch from a profit-making venture, before 1964, to a money loser ever since. 15 JNR raised passenger fares, but that only pushed more people off the trains and into automobiles. Total automobile travel surpassed rail travel in 1977 and has kept on growing. Between 1965 and 2005, per capita driving increased by more than 900 percent, while per capita rail travel increased only 19 percent. 16
By 1987, expansion of bullet-train services and other below-cost operations had swelled JNR's debt to more than $350 billion. 17 That high debt load led to a financial crisis, which significantly contributed to the nation's economic woes of the last two decades. The government was forced to absorb JNR's debt and privatize the railways.
As of 2007, rail's share of Japanese passenger travel had declined to 29 percent, which may still be more than in any other country in the world. And the average Japanese person travels about 1,950 miles per year by train, which is definitely more than people in any other country. But only about 20 percent of those rail miles are by high-speed rail. 18 Automobiles carry 60 percent of passenger travel, and the remainder is divided between bus and domestic air.
After adjusting for inflation, Japan has spent about the same amount of money per capita on high-speed rail as the United States has spent on the interstate highway system. 19 Yet the returns to Japan's mobility from its investment are far smaller: the average American travels 10 times as many miles on the interstates as the average Japanese travels by high-speed rail.
A final interesting feature of the Japanese government's emphasis on passenger rail is that it has had a detrimental effect on freight rail. Rail carries only about 4 percent of Japanese freight, while highways carry 60 percent. By contrast, more than a third of freight goes by rail in the United States, while highways carry a little more than one-fourth.
European Experience Europe's experience with high-speed rail provides another cautionary tale for the United States. As in Japan, high-speed rail in Europe is a money loser and it carries relatively few passengers. Italy introduced high-speed trains to Europe in 1978, and France followed with the Paris-Lyon train à grande vitesse (TGV) in 1981. Germany and other countries followed a few years after that.
France has been the European leader in high-speed rail. French trains carry 54 percent of Europe's high-speed rail passenger-miles, followed by Germany at 26 percent, and Italy at 10 percent. More than half of all rail travel in France is on high-speed trains, but in the overall European Union, nearly four out of five rail passengers still travel at conventional speeds. 20
When operating at high speeds, the French TGVs run on dedicated tracks. But TGV trains also operate on conventional tracks at normal speeds. In fact, while TGV trains may be seen throughout France, they only operate at high speeds between Paris and a few other cities. Germany's high-speed intercity express trains operate at their highest speeds only on selected routes, such as Berlin-Hamburg.
High-speed rail has done little to change European travel habits. In 1980, intercity rail accounted for 8.2 percent of passenger travel in the 15 countries in the European Union at the time. 21 By 2000, the share in those countries had declined to 6.3 percent, and it has fallen further since then. 22 Meanwhile, automobiles have modestly gained market share in recent decades. But the real challenge to high-speed rail has come from low-cost airlines. Thanks to deregulation of European airlines, the domestic airline share of passenger travel has more than doubled. 23
Because of the prominence of high-speed rail in France and Germany, rail has a higher share of passenger travel in those countries than in the rest of Europe. But the automobile's share of travel in both France and Germany is also higher than in the rest of Europe. The average French resident travels 7,600 miles per year by auto. 24 By comparison, the average French resident travels about 400 miles per year on high-speed trains. In the European Union as a whole, the average is only about 100 miles per year. 25 Rail's higher share in France and Germany comes at the expense of bus travel, not auto driving.
Rail's declining importance in Europe has come about despite onerous taxes on driving. Much of the revenue from those taxes is effectively used to provide large subsidies to rail. French economist Rémy Prud'Homme estimates that taxpayers "pay about half the total cost of providing the service." 26
And because of the limited ridership on high-speed rail, it has done little to relieve highway congestion. "Not a single high-speed track built to date has had any perceptible impact on the road traffic carried by parallel motorways," says Ari Vatanen, a member of the European Parliament, in his summary of a 2005 conference on European transport. 27
Europe's passenger-travel mix is similar to that of the United States. The big difference is that European intercity rail carries a 5.8 percent share of the travel market compared with Amtrak's 0.1 percent. The massive subsidies Europe pours into high-speed rail may not even explain this difference, given that the European percentage is steadily declining despite those subsidies. Instead, the answer may be that Europe's lower incomes and high taxes on autos and fuel have simply slowed the growth of driving. European planners predict that rail and bus's combined share will continue to decline. 28
As in Japan, Europe's emphasis on passenger rail has had a profound effect on freight rail. While a little more than one-fourth of American freight goes on the highway and more than a third goes by rail, nearly three-fourths of European freight goes on the road and just a sixth goes by rail. Moreover, rail's share of freight movement is declining in Europe—it was 22 percent in 1980—but it increased in the United States from 27 percent in 1980 to 39 percent in 2007. 29
Rail's low share in carrying freight in both Japan and Europe suggests that the Obama administration's hope of getting both people and freight off the highways and onto trains may a pipedream: a country or region can apparently use its rail system for passengers or freight, but not both.
The fact that American freight railroads are profitable while European passenger lines are not suggests that freight, not passengers, is the highest and best use of a railroad system in most places. Thus, a government initiative to spend tens of billions of dollars on passenger rail in the United States might get a small percentage of cars off the road, but a consequence may be to increase the number of trucks on the road.
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