Pages

Wednesday, March 1, 2017

Florida's Government Built a Train — And It Didn’t Go Well

Most of these Government sponsored projects, wait, all of them, never make an economic profit. Of course, proponents of these deals will always cite the revenues that the municipalities will earn from these projects. The revenue projections maybe correct, yet these proponents never cite the actual economic cost for these projects.



The tax dollars to underwrite these projects come from the Federal Government, namely, the Dept of Transportation. After those dollars flow to the local municipalities, the locals will have a planning organization to work with the Civil Engineers, and the like, to facilitate the project's creation. Since none of these individuals work for free, the costs mount up just from the planning stage. Include the cost to acquire the materials, and the economic costs continue to rise. Oh yes, there needs to be land to construct the rails for the train....enter eminent domain, hence raising the cost exponentially.


Once the project is completed, behind schedule, on average, the local politicians assume that charging ZERO for the fares, the rail project will make money. Econ 101 tells us that lowering prices will increase demand for that good or service, but in this case, it does not cover the sunk cost of construction. In short, the project continues to lose money, yet all the individuals involved are paid handsomely.



In conclusion, these projects are simply a wealth transfer from the tax payers, to the folks involved in the construction and maintenance of the rail project.



The Article is listed here:

Florida's Government Built a Train — And It Didn’t Go Well: "The state of Florida is well known for many things: beautiful beaches, outrageous headlines, and being the setting for the wacky antics of the Golden Girls."

No comments: