The link will cost £17bn and will take 49 minutes ofF the journey. This is exactly the type of capital project that Cost Benefit Analysis was designed to evaluate.
The problem is that the last major review of UK transport needs, the Eddington Report, said this was the dumbest idea ever and that a vastly more beneficial use of the money would be in removing the many bottlenecks in the transport system. Cost Benefit Analysis gives you a Benefit:Cost ratio (BCR), and Eddington said that such a high speed link would give a BCR of about 1.3, whereas smaller schemes, costing £100 to £1bn could provide BCR of 100+!
It would seem that there is a political will to build this new railway. Perhaps because it gives hope to many that such Keynesian work creation schemes solve unemployment (they don't by the way).
You might consider what the costs and benefits of the HS2 scheme are and how they can be evaluated. This is part of the A2 Transport module.
There are already a number of ways to get from London to Birmingham quickly.Birmingham is far from a nice place anyway, they don't deserve it. Distribution of income is one of the key issues of economics. To make further projects on transport, an already successful and proud part of English society is of no use. £17bn to get a few more people in work? Stupid. In addition, its not as if we want these Brummys coming into London any quicker than they unfortunately already are. Silly pears
ReplyDeleteI don't really see what this rail link would achieve. Would it drive economic growth? A bit, possibly. Would it reduce unemployment? Not by much, if at all. Would it help the B of E achieve its 2% +/- 1% target of inflation? No. Could the money be better spent on other things? Yes, of course. As the article mentions, there are numerous smaller projects which would be of far greater benefit. The opportunity cost of building this line would be not being able to invest in lots of better projects.
ReplyDeleteAnd before anyone complains that our transport system isn't good enough, they obviously haven't travelled abroad enough. It's not as good as most of the Far East's networks, but then our investment in the transport sector is far less, so that is to be expected. We're never far from a train station or a bus stop, and that is more than can be said for MEDCs such as the USA, Russia, Canada, Australia etc.
Overall, I think the costs of building this line outweigh the benefits the UK would receive.
"Keynesian work creation schemes solve unemployment (they don't by the way)." Could you back this up please with instances?
ReplyDeleteKeynesian work creation schemes deal with short term joblessness so they are just a 'quick fix' and in time profitable and worthwhile jobs backed up by capital and the demands of the market restore employment. Examples are any Keynesian work creation scheme.
ReplyDeleteThe payback time for this project would be far too long in my opinion. The economic situation that our country is currently in also doesn't help this recovery either. I personally feel that the Eddington Report has a valid point, in which we should invest the money in something such as removing bottlenecks in the transport system. I also think that that this project wouldn't help that much towards solving unemployment, as it would only provide a small and limited amount of jobs, and when completed these workers will then become unemployed again, and add more poeple to the "pool". People whom which are currently using the transport links are managing to go to work without any timing issues, and the shortened amount of time for the travel isn't completely significant compared to the amount it costs.
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