Coyote Blog

David Zetland sent me this writeup on a plan I had not heard of -- apparently Amtrak has a $150 billion plan to improve speeds on the northeast corridor

Take, for example, Amtrak's proposal to bore a 10-mile rail tunnel underneath Philadelphia. As Steve Stofka, a transport blogger, explains, this proposal would require the most expensive type of tunnel imaginable—"It is freaking expensive to bore a ten-mile-long tunnel through an alluvial floodplain under a highly urbanised area—and to maintain it, since it will reside below the water table," Mr Stofka writes. At $10 billion, he notes that the project would be about three times as expensive per mile as the Gotthard Base Tunnel under the Swiss Alps. And all this is for marginal improvements in speed and access. The tracks around and through Philadelphia aren't, generally, big obstacles to high-speed rail—the tunnels in and around Baltimore, Maryland are. It would be much cheaper to replace Baltimore's terrible tunnels than to build a fancy new one under Philadelphia.

The Philadelphia tunnel, unfortunately, isn't even the worst part of Amtrak's plan. That honour goes to a $7 billion renovation of Washington's Union Station (pictured), which Slate's Matthew Yglesias rightly calls"insane".

It is amazing the number of goofy ideas folks have generated to try to substitute for prices in matching supply and demand.  And none of them ever work.  David Zetland has a good example in the world of water, where politicians are willing to jump through just about any hoop to avoid matching water supply and demand via prices.

I was familiar with the dynamics of the all-pay auction (I always called it the Wargames auction -- the only winning move is not to play).  I had never thought of it as a good analog for lobbying expenditures, but it makes a lot of sense once David Zetland made the point.  Good video at the link.

I while back, I wrote that I could fix our Arizona water "shortage" in about 5 minutes.  I pointed out that we in Phoenix have some of the cheapest water in the country, and if water is really in short supply, it is nuts to send consumers a pricing signal that says it is plentiful. 

David Zetland (via Lynne Keisling) follows up on the same theme:

The real problem is that the price of water in California, as in most
of America, has virtually nothing to do with supply and demand.
Although water is distributed by public and private monopolies that
could easily charge high prices, municipalities and regulators set
prices that are as low as possible. Underpriced water sends the wrong
signal to the people using it: It tells them not to worry about how
much they use.

Unfortunately, water is one of those political pandering commodities.  Municipal and state authorities like to ingratiate themselves with the public by keeping water prices low.  At the same time, their political power is enhanced if shortages are handled through government rationing rather than market forces, since politicians get to make the rationing decision -- just think of all those constituencies who will pour in campaign donations to try to get special rights to water from the water rationers.