"If you run the ministry of hammers, every problem starts looking like a nail". I don't know why... but I really love this statement...

I would rather have a country lose $850 billion on an ambitious domestic infrastructure project rather than wasting $2 trillion on fighting cavemen in Afghanistan

Public infrastructure doesn’t need to make direct profit, it also improves profitability and efficiency of the country as a whole. Imagine if we expected all the roads to be profitable with little tolls everywhere. And yet they exist and no one worries about profit.

lol, it's amazing how certain people (generalized as americans) forgot what "investment" means nowadays, they forgot how their infrastructure was once built to nowhere too, just like their railways and country wide routes, it takes time for it to come to fruition.

When the borrower owes the lender trillions of dollars, the borrower doesn’t have a problem, the lender does.

When Japan started its very first Shinkansen, it was a massive loss and people criticized nobody wanted a train that fast. Half a century later, look how it turned out now.

I am always surprised when channels like this are looking into rail systems profit only by selling tickets. But c'mon, - what about the regions which are getting more developers better than ever before? What about money which are getting attracted to those more rural areas? People are moving, money are moving. Even if you cannot get your money back from the tickets, -you will always get them back with the taxes. Railway will always be there and despite it's gonna change many owners or will go through multiple restructurations, - it still will be there.

Another thing to account for is how much traffic HSR could displace, both on the roads and in the air. Anything which can reduce the time wasted in traffic jam and flight delays should be tried.

8:40 - factual error: There is no way that billboard is in mainland China :)

There’s one thing people keep skipping when they talk about this: the positive externalities of high-speed rail. Many governments choose to operate unprofitable rail lines, because the total value to the economy is higher than the cost…the economy benefits from that additional week of work that a worker used to spend riding busses, now that it only takes a day or two for the same trip on high-speed rail, and it’s easier to send someone to check on an new factory, so issues are more likely to be found, and it’s easier to decide to build one in an area where labor is cheaper, if you know you can get there fast to do the needed supervision and find issues the people on-site may be overlooking. So, the losses to the Chinese economy as a whole from high-speed rail are smaller than they appear when you look just at the losses by the high-speed rail company itself, and I’d really like to see an economics channel acknowledge the existence of externalities , and that the question of whether high-speed rail is losing China money is more complicated than just whether the high-speed rail operator is losing money. The system may well be overbuilt, but unless we first examine the externalities, we can’t actually say how big the losses really are to the economy of China.

The only problem with the infrastructure bill is that a good portion of that money will inevitably go 'missing'.

Two things I think you've missed. First, in the both the US and Australia, there exist free-to-use roads. It's quite reasonable for railways to be similarly subsidised, because they are a policy vehicle. Indeed, it's an obvious distortion to subsidise road and not rail. Second, it is not the no-brainer you seem to imagine to use passenger lines for freight. Canada and the US have few truly viable passenger routes, not because the demand does not (at least in principle-I'm setting aside cultural factors since they are in large part a consequence of earlier policy) exist, but because of a supply problem: if your lines are filled with massive freight trains running at 30 MPH / 50 km/hr, there is no longer any opportunity to run passenger services that are competitive with buses, let alone aircraft. And, to be blunt, that's how the bus companies, car manufacturers and airlines like it. And then there's track maintenance. You've already noted that this is a financial burden, but freight trains are a _lot_ heavier than passenger trains, and passenger train derailments typically (not always-there have been some truly horrifying incidents with flammable cargo) have far higher costs than freight, owing to both higher speeds and the fact that the trains are packed with fragile and irreplaceable humans.

As someone who works at the company that maintains the dutch railways I think you're missing out on a few very important points: Railways shouldn't be counted upon as being profitable, the transport they provide (if they are well placed etc.) weighs far heavier then ticket sales ever could. The benefits of being able to transport non car owning citizens all across the country at high speed is incredibly important for a technologically developping country. Also maintaining railways is far more complex then extually building one. It requires keeping tracks of a meriad of different properties that differ from every piece of metal, cable and cart. Though I doubt that China looked far enough ahead to see these problems comming which is why the amount of time and money that has to be reinvested in the project will be far larger then they expected in the long run.

If all you’re thinking about is profit from the railway itself then this analysis makes some sense but as someone who has traveled across China by rail before and after the high speed rail was finished I think you can’t underestimate the important external benefits they give to a city’s economy and social life.

The analysis in this video is highly simplistic. High speed rail is rarely "profitable" in conventional financial terms. Instead, there are a number of direct economic benefits including travel time savings, improved reliability and modal shift from cars/air travel that have environmental benefits. These benefits can be quantified but do not appear in the revenues of transit authorities. Additional benefits include improvements in economic productivity through the expansion of labour markets and agglomeration (cities/people being closer together). What matters is whether the totality of economic benefits outweigh the construction and operating costs. It is clear that the first few phases of high speed rail (not just connecting the core cities but even the 2nd tier cities) achieved many of these benefits given the sheer size and scale of the populations being connected. However, subsequent phases have built high speed rail lines to very far flung areas in the West and it is obvious the economic rationale for these schemes are flawed.

I am a Canadian that has spent over a decade in Canada and the US and over a decade in China (as I spend roughly half of my year in either of the two). This video is clearly done by someone who has never taken (or taken maybe one or two times) the Chinese highspeed rail. This is because the entire video is done with information that is found from news outlets or third party data, but for a lot of the infrastructure, YOU HAVE TO TAKE IT TO TRULY UNDERSTAND IT. An example of this is if I tell you that the New York Public transit faces a $2.5 billion budget deficit, you would think that the transportation department spent a lot of money on infrastructure such as subway and thus is under huge debt. Yet if you are a New Yorker, you know exactly how horrible the subway and MTA services are. The Chinese highspeed rail makes traveling so convenient that I rarely go by plane. I will give you an example: From Shanghai to Beijing, it takes 2 hours and 20 minutes to go by plane. However, going by plane means you have to be at the airport at least 1 hour before, and afterwards, about 1 hour after the plane lands to get your luggage and go out of the airport. This adds to roughly 4 hours and 30 minutes, and this ignores the fact that most planes take off at least 30 minutes later than their scheduled time (and when there is bad weather, this could mean hours). For highspeed rail, it literally takes me less than 8 minutes after getting to the station before boarding, and the same for getting off. This is because the safety checks is no where near as strict as that of for air travel (many fluids and things such as batteries are not restricted). And the entire duration is 4 hours and 50 minutes. Furthermore, the seats are wider and it is also much more comfortable when you don't have cabin pressure. So nowadays in China, travel between the major cities have all resorted to highspeed rail rather than air travel. And I have not yet mentioned the fact that the ticket price is less than a third of the price for plane tickets. There are actually many more reasons from the perspective of the government why developing the rail is so important. 1. All aircrafts are designed by companies from US and Europe, which means that these forms of transport are dependent upon good political relations. By building the railway, this makes China much less dependent on Boeing and Airbus, where each plane has to be imported from abroad. 2. Building trails is infrastructure which allows for jobs and for the "less profitable" routes mentioned in this video, they were built to stimulate the economies in second-tier and third-tier cities. I love how the capitalist point of view is always only about "profit" and "money".

Infrastructure is a public service. The public as a whole pays for it through taxes. It is OK to have losses as long as the economic output of the country as a whole benefits from this service.

However, it sounds like almost all their debt lies with themselves - local Chinese governments, Chinese State Banks and Chinese citizens. That's quite a stable debt situation, no matter the amount almost. Also, losses on infrastructure is fine. Roads are not expected to generate money as well. Each train ride generates a surplus of economic benefits outweighing the costs.

Train station built, new town created. Capital flow in, businesses settled in, jobs created, factories built......these have far more impact than train tickets

There's a city country in the world with an insanely well designed metro train system. Prior to the development of the metro there was an evaluation by the transport ministry whether they should go ahead with either bus or train system for the generation. They decide the train system to be build and the bus complement it. Even though the train broke down often due to over-usage, in retrospective, the benefits sure outweighs it's costs, because everyone now have the ability to reach another part of the country at a fairly affordable price. Can't say it's the most comfortable but still beats staying at home or paying a super high price for private transport. Economics of scale here, if everyone started taking public transport instead of private transport, it makes the world cleaner and greener

is there any chance you would do a video comparison on the economics of Japan's highspeed rail? I think about the efficiency of Japan's infrastructure maintenance often. Like that sinkhole they fixed in 2 days a few years ago.

Small correction: Hoover Dam was build during the "Great Depression" not the "Great Recession". Depression was 1930's Recession 2008. Not trying to be a know-it-all, just trying to help you make a better product :)

I am surprised that almost nobody talks about 1). environmental benefits because railways transportation has far lower emissions than flight in long run; also reducing vehicles on the roads 2). Social benefits- enhanced mobility allows everyone to travel within one country quickly and cheaply is difficult to measure but immensely beneficial for everyone; 3) increasing domestic tourism industry 4) military mobilization - HSR allows the China government to send their troops to every corner of the country quicker and in bigger numbers ; 5) Better build now whilst the Chinese labor costs are still low than later

Mate I love your videos, hit the nail on the head with this one!

I'd rather be in an economic crisis with good infrastructure than in an economic crisis with bad infrastructure.

I misread the titel as "...higher than Everest" and did some math. If you stack 100 dollar bills accounting for the 850b debt it would be 100x heigher than the tallest mountain on earth.

It's not about profit. It's an expense to bring more life to the areas that get less traffic, boosting industry, populations, and economy long term. Not to mention genuine convenience for the people using it. Less is workable, sure, but not beneficial.

Key infrastructure should always be govt owned to ensure the services reach to every citizen- it is not always about profits/ govt has to serve public needs

I feel you can justify the cost of unprofitable routes because it does help a lot of people move around, which you need. It is sort of like having a post office that delivers every where, which most people agree is helpful even if some mail routes are at a loss. That said, a normal rail line instead of a highspeed one, was probably fine for that.

Who says railways have to be profitable? The value they provide is in economic opportunity to the places they connect. Roads cost nothing to use, yet are expensive to maintain. Most of them are funded through taxes. But nobody is suggesting to close down roads because they are not profitable. That's not their purpose. Same applies to railways.

Excellent information ! Thank you so much for putting out this video.

Top video mate. Nice to see Australian contents on you tube.

problem with just closing unprofitable lines: not just the jobs get lost, but also the ability of the people to move around gets severely impacted. it‘s the best option financially, but public transport shouldn‘t work like a normal company, it should serve the people, not investors or owners. that‘s why i think the best option is to have public transport nationalized

Its like building a power line to a village of 100 people in the mountain. Its not profitable but its your obligation as a state that serves its citizens to build it. Cause you just made 100 people lives much better. Not only that but these 100 people will go and start buing electrical appliances, putting money back to the economy. Same with running water, same with telephone/Internet lines, same with cellural networks and of course same with Public transportation.

Rail networks should be considered as public amenities not exactly a profit making endeavor, governments doesn't exist to make profit. So for the greater good of the people it's better to maintain connectivity even if it doesn't return a profit. Having said that a normal rail infrastructure with a mixed use of cargo and passenger trains would make more sense.

Feels like a very American way to look at thing: public services have to be profitable

I still don't get why we shouldn't expect our governments to complete their infrastructure projects quicker. Are you saying that it should be done slowly to not overspend in good times and have it come crashing down in bad times?

Toronto has been building a single LRT line for the last 10 years.

I love the poster at 8:50. Great job mate!

The Peng Shaui billboard!! Love it! That accent and the inconsistencies when using 'routes' and 'rail lines', btw in Australia, we pronounce it as 'root'.

Government: Privatise the trains. Government: Buys the trains with a company they just set up...

2:18 this is just a flat out incorrect characterization of trams. They don't have the "same traffic problems as buses". Usually only part of a tram route is on a road shared with cars. When they have their own designated rail, they are much faster and smoother than buses, they have a much higher carrying capacity, and they're electric powered. I've taken many buses and trams, and trams are always a much better traveling experience. And about route flexibility- city buses travel on fixed routes just the same as trams, so why exactly do you need your public transit to be "flexible"? Maybe in Australia the city planners don't know what they're doing, but here in the Netherlands the trams are fantastic.

One important thing to understand is that not everything in a country should be for profit. Education, transportation, health care and housing should be affordable and available for everyone and it’s the responsibility of the government to make sure of that. That’s why we pay taxes

Infrastructure projects do very little for very few as an economic stimulus. A company gets a few projects and split up their existing crews to handle all three projects. They work on each site just a couple of days per week and no work the next four/five days. The company with the projects rake in the cash but very minimal impact for anyone else. It also takes decades to start a project

Special thanks to Public for making this video possible! ❤️ Get between $3 and $100 to in free stock ➡️ public.com/EE

I am now 50. I remember riding with my parents, on the Interstate, through Sioux City IA and amazed at all the road construction. I was also amazed when they finished that stretch last year.

Has anybody ever noticed that in the Belt and Road initiative, China provides all parts and labor and although the country gets what's built yet it has to pay for all parts and Labor and then China charges interest for money it already has back in labor and supplies?

good points well made. regulation is a hassle but less hassle than the colossal f-ups that happen when people who are sure of themselves just go ahead without doing enough background research and testing.

This whole video is based off the assumption railways need to make a profit, but why would we assume that? Railways (like all public transit) can be an incredible public good, same as schools, parks, and fire departments.

"If you run the ministry of hammers, every problem starts looking like a nail". Someone's a fan of Charlie Munger~

The Chinese workers who built a hospital in 10 days must have had The Home Depot theme on full blast. Could also have been the RDR2 House building theme.

Has the US highway system ever made profit? Who said public infrastructure was supposed to be profitable?

Workers don't move freely on the High Speed Rail, they take the regular trains. That being said, I sat on the HSR, I'm impressed, and based on my interactions as well as friends who live over there, the middle class in the cities ride it. And well, in the long term as Japan has shown, this is the quality supply side economics China needs and the US needs.

As someone who works in the rail industry and has done high speed rail projects, the different forms of rail transport are like a set of differing tools. You use the right one in the right place. By the way, Spain is doing exactly the same, expanding a good limited system in unprofitability. High speed rail is very high cost, both to build and maintain and should only be used for very passenger routes. Unfortunately, as you made clear it is often enmeshed in politics. For lower passenger routes, normal rail is fine.

yup making Tofu Hospital in 20 days by using LEGO Toys

Yeah infrastructure spending is great. Here in Spain the government built airports on almost all provinces that didn't have one (lots of them of 100k population or less) and nowadays most of them are empty with 0 flights. Such a waste of resources.

The sheer number of "experts" on China and finance here is very impressive !!! Haha 🤣😃

"if they sell it, companies would only want to buy the high profit railways" Tell that to the Australian government. Make them purchase both high traffic and low traffic rails.

Another solution is to use HSR rail as "boosted" regular railways. They do it in the Netherlands : running regular trains between low-frequency HSR trains, to better use the capacity of it and boost regular trains without the major upkeep cost of fully HSR trains. Those regular trains are slower but can still run up to 200km/h while being cheaper to maintain. It would add revenue and link smaller cities together. Which means they could eventually run fast freight trains, but still cheaper than hauling everything in trucks. Seriously, they just built too much HSR. Their profitable routes need more tracks, but they ran out of money to build them while there is empty useless tracks.

The "Where is Peng Shuai?" sign in the railway station animation was a nice touch. lol.

Er…. Masses of rural Chinese travelled into the cities via trains, particularly the industrious south to work, and they return home over Chinese New Year in what have been one of the biggest annual shift in population in the world, and that started in the late 80s, not 2000s. It certainly wasn’t a recent phenomenon that people started travelling for work. If anything, that has been at a much smaller scale as labour intensity reduces and workers gradually stopped travelling as they no longer need to work in the cities.

Rail infrastructure is an investment that takes decades to _start_ paying off. Those trains to nowhere will become trains to somewhere in due time, because easy rail commuting will make it more practical for people to live in those areas.

In the UK we have what is far higher cost per capita in the ludicrous HS2 project, a train route neither wanted nor, more importantly, needed. A vanity project, no more no less, fatally flawed in so many ways.

Where I live we have a ship that doesn’t sail, a plane that doesn’t fly and a long boardwalk that goes nowhere.🤔🤔🤔

One thing that's misunderstood about infrastructure. The big benefits from infrastructure is only on the new stuff. That controversial omnibus bill has a ton of money but the vast majority of the infrastructure spending is for replacement. Replacing infrastructure is necessary, even vital, but it already has most of the benefits grandfathered in. That doesn't bring votes.

In Wisconsin here in the US, construction work never ends like ever lol and the worst part about it is that when they do finish a road the rent seems to go up to everyone who lives on that road.

Keenly interesting all the way through. And meaningful!

The "Where is Peng Shuai?" sign next to what is supposed to be Chinese HSR is just *chefs kiss*👌

“losses from unprofitable routes were made up for by highly profitable routes” sounds exactly like Amtrak

Clearly you don’t know how projects work in the USA: Planning, permits, hearings, more permits, EIS I, EISII, more hearings, more EIS III, lawsuits🤦‍♀️most projects that actually building is less than 50% of the total cost.The rest are lawyers, judges, planners, EIS geeks, more lawyers, etc

This man just said the Hoover Dam was built during the Great Recession 🤣

Didn't finish all this video. I'm living in China now, and I have to say the High Speed Railway changed Chinese live a lot. You may not imagine how the train station looked like before HSR during Chinese New Year, and how hard for a person to get back hometown for the festival. Chinese HSR system is way from good enough. Japan may be better, at less the trains are easier to take and connected to every city. We just finished 1/10 or less to build a HSR system to connect every city in this huge country with a huge number of population. Even you may think we got a debt problem, we take it.

1. These bullet trains are part of broader city planning. Further urban landscaping projects are made possible because of these trains. 2. Compare of aviation, bullet train saves carbon footprint. And it saves people's time in commute when compared to regular train. I believe infrastrutures like this need not to make profit on its own, the same way fire stations dont need to make a profit. Think of it as a utility service.

You should join Gordon Chang's research team for the next edition of The Coming Collapse of China.

So a couple of routs are not proftable. Is it really worse than US subsidizing its entire highway system and urban sprawl though? I want to see numbers on that.

The difference is with any engineering project its far easier to do it from scratch vs major renovation of something that's in place. China is largely doing it from scratch, the US is largely fixing in place with is harder. Engineering from scratch almost becomes cookie cutter, renovating what's in place means every project is done differently depending on its age and the regulations in place and what shortcuts they could get away with.

Governments be like: this is fine

Has Amtrak generated a profit? Infrastructure projects have so many benefits for the public good. This is where the PRC has a primary (BIG PICTURE) focus as opposed to America which struggles to even maintain its crumbling infrastructure. Even though many of these capital intensive projects do not appear to make a profit on paper, that argument fails to acknowledge the job creation in both construction and maintenance. By facilitating transportation of people and goods, GDP is enhanced. I am no economist but it would seem the "long term" benefits in a country which is so densely populated would completely exceed the initial investment.

@ 0:38 where did you get this stock footage please ? I need to have the whole version of that (don't Ask me, i'm a model maker and i look for ANY kind of stuff showing old trucks as visuals for my hobby)

I have taken the high speed rail lines several times, in China. My wife is from Chengdu, a city of about 16 MILLION people. Her grandfather is buried at a cemetery in a small town about an hours drive away. The first few times we drove or God forbid took a bus it was a very involved trip. Then came the high speed rail line. Yes we had to go to the train depot but once on the train, we were in that town in only 20 minutes. Also, it was cheap, not much more than taking the bus which would have taken well over an hour. We had not been to that town in about 3 years. It was amazing how much they had grown since the new rail line was installed. Also, in 2018, we took her mom and dad on a trip to a city, that previously could have required flying. Her father had multiple health issues that made his doctors recommend not fly. Thanks to the high speed rail he was able to go with us on this trip. I love to fly cuz it gets you to your destination very quickly but I must say spending several hours on a train crossing the Chinese countryside was absolutely amazing. Small towns that were now connected to the bigger cities and going through the countryside and getting to see a part of China that is very different than large city life was a truly wonderful experience. America's real line is not profitable and if it were not for government subsidies Amtrak would have gone out of business decades ago. Nowadays most City people in China own cars and usually very nice ones at that. However, many of them pre-pandemic to choose to travel by the train because it is quicker than driving, cheaper than airlines and more comfortable than buses. Yes I have been on my fair share of bus trips in China as well and they pretty much suck.

I rode the high speed train from Wuxi to Shanghai in 2019, it was like 72miles in about 35minutes. Quite impressive. You could put you water bottle on the ledge below the window and it would just sit there. Anyway, don’t know about financials, but the trains, subways, I was on, were very nice.

The 10 day Chinese hospital was prefabricated and dropped into place. I recall.in the 60s the Mayor of our biggest city, Auckland, NZ wanted light rail as an efficient people-mover for the expanding city. He was shouted down as it was "too expensive." Now, we have tears and massive motorways with thousands of driver-only fuel hungry cars and........regular traffic jams. They are still tinkering with light rail but need an underground system.

The problem with Chinese High Speed Rail is that it’s cheaper and quicker to fly. I live here and would much rather take HSR than fly or drive. However the HSR is always more expensive and slower than one of the other two options.

In Norway, we had a piece of "highway" going from Kristiansand (region capital, and 5th largest city) to the capital where the speed limits were 50 km/h (about 31 mph). There was also no passing lanes or zones for several miles either direction. Got stuck behind a caravan? Sucks to be you. Since 1960s, the local government had one task. Figure out where the new 2 lane highway should be built, and the government would build it. There really isn't anything there except a few houses, and a village the "highway" went through. A few years ago, the state took over and plotted a route and now we have a brand new road. The local government had tried to figure this out for 60 years! 60! That's a lifetime! Several generations! I'm sure the over-reaching cruel goverment squashed some mosquito swamps and a farmer lost a field.. but I'm so happy we finally got a high speed highway all the way. It was the last missing piece in over 500 km of road.

I completely disagree with your video. A little more research and you’d see they are connecting small towns so they can have access to the big cities for work. We in the west forget one way to reduce housing cost is to provide faster connections between smaller towns and cities. that way people decongest cities thereby in turn lowering living cost in cities. During the pandemic a lot of people migrated out of Toronto to the smaller towns and provinces and this in turn caused rent to drop because demand was dwindling. So if China is connecting small towns we shouldn’t look at it as a lose rather as a gain cause the market gets more exposure as more people get involved. Moreover, govt corporations shouldn’t worry about making profit on transportation for the public because the human and economic gains far out way the loss, I mean the uk transportation system is famous for not making profit but still lives on because of what it brings to the economy.

here in CA we r spending $100B between two cities no one will travel between and will be on the hook to keep it running.

China's hospital built in ten days had sewage backing up into it and was torn down just a couple months later.

“Hey look at how cyberpunk China is, isn’t it amazing?! They have the half life 2 tram car that goes nowhere unless a 3rd party develops portals!”

It’s good to see huge infrastructures made, but the maintenance would be a nightmare

8:40 I laughed so hard at the "Where is Peng Shuai" billboard

Watch this every day I wake up. Love it, keep it coming. :) 😊Australian here. :)

You don't want things to "just get done", you want things to "get done right".

Argument about “unprofitable” lines is a bit dumb… We never say “oh the interstate highway system lost 10 billion this year”. Rail infrastructure is essential, just like road is. That is especially true in China, where more people travel by rail. Also: it takes time to build ridership. Italian system didn’t expand much this decade, but the ridership vastly increased. Same will likely happen in this case. China is actually building a lot of local transport like metros and commuter lines, which will only increase ridership.

The only option is to fund the debt from the Government and keep the system working. Yes, it costs a lot budget-wise but it is ok if we consider GDP and social impacts of such infrastructures. Maybe Chinese Gov could create a new rail company, which will build traditional rail links to improve connectivity in a cheaper way, get some profit from them and help repaying the debt of the HS company. Or, if not with direct payment, it could "hope" for the increase in the national GDP thanks to the new traditional rail links in order to reduce the weight of rail losses.

hah that billboard on the trainstation in 8:50, nice touch :)

I don’t understand why people believe that passenger railways should be profitable, while highways should be a government expense. Will your next video be on how unprofitable the US interstate highways are?

I think the social and economical benefits of high-speed rail far outweighs its costs, when viewed holistically. It may lose money, if you look at it purely in isolation, but the economic and social activity it spurs is undoubtedly beneficial overall. I feel like the maker of this video is quite narrow-minded.

At the begining of your video you called the great depression in the U.S. the great rescession. It was not a a recession and there is very clear difference.

Chinese: we have a debt problem American: I wouldn't call that debt

loved the billboard on the train station! very subtle, but strong