I was asked a very good and very difficult question in comments yesterday:
What, specifically, are the best practices we all should be learning from the lower cost countries? I’m reading a lot of what not to do, but not on what do to.
I’ve gone a lot over bad industry practices leading to high costs in the Anglosphere, especially the United States, especially New York, and to some extent also on bad practices in developing countries like India. These I am contrasting with a set of good practices from a host of low-cost countries like Spain and Italy as well as medium-cost ones like Germany and France.
However, the question remains, what distinguishes low- and medium-cost countries? The differences between them are not small – underground rail extensions in German cities are averaging around 250 million euros per kilometer, and ones in French cities are around 200 million or just less than that, whereas Milan and Turin average around 100 million, and Spanish cities average even less. Germany is a higher-cost and higher-wage country than Italy and Spain, but Berlin wages are not higher than Madrid and Milan wages, and within these countries, richer cities don’t really have higher costs (Milan is cheaper to tunnel in than Naples, Madrid has lower costs than Barcelona and similar costs to the rest of Spain, the cheapest German tunneling seems to be in Hamburg of all places). No: this is almost certainly a real difference in institutions that enables Southern Europe, Scandinavia, South Korea, and Turkey to dig tunnels at one third to one half the cost of Germany.
This argues in favor of doing a deep dive case on a medium-cost example like Paris or Berlin, in addition to the work we’re doing on low-cost Milan and Istanbul. The problem is that it’s not clear, so far, what to even look at. I have a decent idea of what the difference between the high-cost world and the rest of the world is – but applying it to the low- and medium-cost world is dicey.
In-house engineering capacity
So much of the problem in the Anglosphere seems to come from the loss of in-house engineering capacity, and its replacement with private consultants. The latest iteration of this is the penchant for design-build contracts, in which the state contracts with one company to handle the entire process and doesn’t have much if any public-sector oversight. Design-build doesn’t exist in any of the countries in Continental Europe I have any familiarity with; France is looking into it as a reform in the future, but only under the aegis of a large public-sector planning team coordinating the private-sector design and construction. Moreover, Canada’s recent adoption of design-build, coming from an ideology imported from Britain and then falsely claimed to come from Madrid, preceded an explosion in costs.
However, this does not really explain the difference between France or Germany and Scandinavia or Southern Europe. Norway and Spain have separation of design and construction; so does France. Italy and Spain have in-house engineering teams responsible for a great deal of the design, but to some extent France does too, with a large in-house planning team overseeing the private-sector designs.
Procurement issues can’t really distinguish the low- from medium-cost world either. Madrid does not hand out lowest-bid contracts – at least in its big wave of expansion in the 1990s and 2000s, contracts were given 50% on the basis of a technical score marked by the in-house engineering team, 30% on that of cost, and 20% on that of how fast they could finish the project. Paris doesn’t have a 50-30-20 split but a 60-40 one; that may be significant, but I doubt it. Both systems contrast with the American system of lowest bid, or sometimes 30-70 in California. Moreover, Turkey is lowest-bid, but it’s a repeated game due to the country’s fast growth and construction – contractors who screw up do get penalized in future projects.
Citizen voice and NIMBYism
Germany has a huge problem with NIMBYism. Key segments of the national passenger rail network, for example Hamburg-Hanover, remain slow because local NIMBYs who don’t like fast trains have litigated high-speed rail to death. France has had anti-LGV NIMBYism in Provence as well, which NIMBYism is often extralegal (that is, aggrieved drivers blocking roads); this forced the state to change its plans for a high-speed railway to Nice from a mostly above-ground inland route to a tunnel-heavy coastal route through the Maritime Alps and, as the cost was prohibitive, eventually downgrade into a mixture of high- and low-speed rail line.
As I understand it, this is less of an issue in Southern Europe. I do not know to what extent it’s a problem in Scandinavia and Switzerland; Switzerland does have a lot of bucolic NIMBYism, where “bucolic” means “the city as it looked in 1957,” but I don’t think it’s had any that successfully scuttled infrastructure, and overall the political imperative there seems to reduce costs more than anything.
The NIMBY issue is also important in the US and UK. In the US, NIMBYs are not legally strong, but politicians prefer to avoid the appearance of controversy and therefore give local actors whatever they ask for, no matter the cost; many sources told Eric and me versions of this story regarding the high cost of stations on the Green Line Extension (which are, to be clear, maybe 20% of the cost of the whole project). Brooks-Liscow favor this explanation for the internal increase in the cost of highways in the US from the 1970s onward.
I do not know to what extent there’s an institutional explanation here. I do not even know if this is a real difference between on the one hand France, Germany, Austria, the Netherlands, most of the 2004-7 EU accession countries, and Japan, and on the other hand Southern Europe, Bulgaria, Turkey, and South Korea. It’s possible that this is a bigger problem in Northern Italy than I realize.
The most worrying possibility is that this is a real difference, and it comes not from something about institutions, but from surplus extraction. The European core and Japan are rich, and at $150 million/km, subways there would create immense social surplus and decent financial surplus. (The Japanese state is refusing to build at $500 million/km because it wants a 30-year financial payback). Southern Europe is less rich, so there is less social surplus to extract by local actors wanting to dip their beaks in state money; Switzerland and the Nordic countries are rich, but their cities are smaller and farther-apart, so there is less surplus there too.
There are a lot of objections that can be raised to the surplus extraction hypothesis: there is plenty of surplus in Seoul and not much in Vienna or Prague or Bucharest or Warsaw or Tel Aviv, Japan already reached $250 million/km in the 1970s when it was a lot poorer than Korea is today, the surplus hypothesis predicts that there should be higher costs in richer cities within the same country and yet this is not observed, local interference with Métro expansion in Paris unlike with LGVs doesn’t seem very significant.
There’s no good answer to what distinguishes low- from medium-cost countries. I wish more people here and in France were interested in this question – the activist sphere in Berlin seems far more interested in trams and bike lanes than in rapid transit. Nor do I imagine Germans and French are ready to hear that there’s something the Italians and Spaniards and Turks do better than they do. But it’s something Germany is going to need to learn to deal with if it wants better infrastructure; on the same budget, it can get 2-3 times as much as it’s getting now.
I’ve written a bunch about integrated timed transfer (ITT) scheduling based on Swiss and Dutch principles, developed for intercity and regional trains. Here, for example, is how this schema would work for trains connecting Boston and Worcester. But I’ve also seen interest in how buses can connect to one another, so I feel it’s useful to try to adapt the ITT to this different mode. Two particular places where I’ve seen this interest are a statewide plan for intercity buses in West Virginia, and regional integration around Springfield and the Five Colleges; I’m not going to make specific recommendation for either place, since I don’t know them nearly well enough, but I hope what I write will be helpful there and elsewhere.
The ITT principles for trains
ITT for trains relies on total coordination of all aspects of planning. The centerpiece of this is the triangle of infrastructure, rolling stock, and timetable, all of which must be planned together. Decisions on infrastructure spending should be based on what’s required to run the desired schedule, based on tight turnarounds, maximal utilization rates of equipment, and timed connections.
The even broader principle is to trade state complexity for money. It’s harder to plan everything together – different departments need to talk to one another, planning has to be lean or else the back-and-forth will take too long, regulations may have to be adjusted, government at all levels has to push in the same direction. The reason to do this chore is that it’s far cheaper than the alternative. Organization is cheaper than electronics and concrete at all levels; American households spend around 20% of their income on transportation, mostly cars, whereas households in transit cities like Paris or Berlin or Tokyo spend a fraction of that, even taking into account residual car ownership and operating subsidies to public transit.
On buses, there’s no such thing as electronics…
The Swiss maxim, electronics before concrete, concerns trains exclusively. On buses, no such thing exists. It’s not really possible to get higher-performance buses to make a more aggressive schedule. Acceleration rates depend on passenger safety and comfort and not on the motors (in fact, they’re higher on buses than on trains – rubber tires grip the road better than steel wheels grip rails). The closest analog is that electric buses are lower-maintenance, since the diesel engine is the most failure-prone part on buses as well as trains, but what this leads to, IMC, is not really a strategy for improving timetabling – IMC’s main benefits are less pollution and lower maintenance costs.
…but there is a surplus of organization to be done
All the little things that on trains go in the electronics bucket go in the organization bucket on buses. These include the following operating treatments to improve local bus speeds:
- Off-board fare collection
- Stop consolidation to one every 400-500 meters
- Dedicated lanes in congested areas
- Signal priority at busy intersections
In addition, bus shelter does not increase actual speed but does increase perceived speed, and should be included in every bus redesign in an area that lacks it.
These are all present in Eric’s and my Brooklyn bus redesign proposal, but that doesn’t make that proposal an ITT plan – for one, it’s based on 6-minute frequencies and untimed transfers, whereas ITT is based on half-hour frequencies (for the most part) and timed transfers. Of note, in a 6-minute context signal priority should be conditional to prevent bunching, but if buses run on a 30-minute or even 15-minute timetable then bunching is less likely, especially if buses have prepayment and some dedicated lanes.
That said, it’s important to talk about all of the above in this context, because a bus ITT belongs in areas where public transport ridership is so low that people view a bus every 15 minutes as an aspirational schedule. In such areas, the politics of giving buses more priority over cars are harder than in a city with low car usage like Paris or New York or Barcelona. There are some positive examples, like Rhode Island’s eventual passage of a bill giving six key bus corridors signal priority, but in Tampa I was told that DOT wouldn’t even let the bus agency bump up frequency unless it found money for repaving the street with concrete lanes.
What about intercity buses?
Prepayment, stop consolidation, and dedicated lanes are important for speeding up local buses. But intercity buses already stop sporadically, and often run on highways. There, speedup opportunities are more limited.
But there may still be some room for signal priority. If the bus only runs every hour or every half hour, then driver resistance may be reduced, since the vast majority of stoplight cycles at an intersection will not interact with a bus, and therefore the effect of the change on car speed will be small.
This is especially important if buses are to run on arterial roads and not on freeways. The significance is that highways are noisy, especially freeways, and do not have the concept of a station – freeways have exits but one takes an exit in a car, not on foot. Therefore, development does not cluster near a freeway, but rather wants to be a few minutes away from it, to avoid the noise and pollution. Arterials are better at this, though even then, it’s common for American big box stores and malls to be somewhat set away from those, requiring bus passengers to walk through parking lots and access roads.
Arterial roads, moreover, often do have stoplights, with punishing cycles optimized for auto throughput and not pedestrian-friendliness. In such cases, it’s crucial to give buses the highest priority: if these are intercity buses rather than coverage service to a suburb where nobody uses transit, they’re especially likely to be full of passengers, and then a bus with 40 passengers must receive 40 times the priority at intersections of a car with just a driver. Moreover, if it is at all possible to design stoplights so that passengers getting off the wrong side of the street, say on the east side for a northbound bus if the main development is west of the arterial, can cross the street safely.
Designing for reliability
The principles Eric and I used for the Brooklyn redesign, as I mentioned, are not ITT, because they assume frequency is so high nobody should ever look at a timetable. But the ITT concept goes in the exact opposite direction: it runs service every 15, 20, 30, or even 60 minutes, on a consistent clockface schedule (“takt”) all day, with arrival times at stations given to 1-minute precision.
Doing this on a bus network is not impossible, but is difficult. In Vancouver, the bus I would take to UBC, the 84, came on a 12-minute takt off-peak, and ranged between on time and 2 minutes late each cycle; I knew exactly when to show up at the station to make the bus. When I asked Jarrett Walker in 2017 why his American bus redesigns assume buses would run roughly every 15 minutes but not on such a precise schedule, he explained how American street networks, broken by freeways, have more variable traffic than Vancouver’s intact grid of many parallel east-west arterials.
So what can be done?
Dedicated lanes in congested areas are actually very useful here – if buses get their own lanes in town centers where traffic is the most variable, then they can make a consistent timetable, on top of just generally running faster. Signal priority has the same effect, especially on arterials as noted in the section above. Moreover, if the point is to make sure the noon timetable also works at 8:30 in the morning and 5:30 in the afternoon, then driver resistance is especially likely to be low. At 8:30 in the morning, drivers see a bus packed with passengers, and their ability to argue that nobody uses those bus lanes is more constrained.
If I have a bad idea and you have a bad idea and we exchange them, we now have two bad ideas.
But more than that. If I have a bad idea and you have a good idea and we exchange them, we should both land on your good idea – but that requires both of us to conceive of the possibility that your idea could in fact be better than mine. This is not always the case. In exchanges between Britain and Australia, both sides think of Britain as the metropole and Australia as the periphery, so ideas flow from Britain outward. The same is true in exchanges between either Britain or the United States and Canada.
We even see this in exchanges between the Anglosphere and the rest of the world. Europe knows what the United States is like. We speak English and read American news to some extent. We have occasional sympathy protests with American causes that we feel are reflected at home; I have never seen Americans do the same with people outside North America except for very small protests concentrated among a particular diaspora, such as small groups of Israeli-Americans protesting Netanyahu’s policies in front of Israeli consulates.
And most of us in Europe look at the United States with a combination of denigration and disgust, but it’s not everyone, and in a pandemic, the least responsible members of society set everyone’s risk levels. There’s been some American influence on the populist right in Europe – people who see Trump and think “we would like to be governed like that”; this is still sporadic, e.g. the Gilets Jaunes used French populist language and had no connections to the United States, but the corona denialist protests in Germany have imported some American language like QAnon symbols. And more broadly, seeing other countries fail emboldens the pro-failure caucus at home: the Israeli immigrant who told me 2 months ago that “800 cases a day is nothing” Germany-wide would probably not have said this if Israel maintained its May infection rates. Of course the vast majority of denialists here are not Israeli or Jewish, and many are even anti-Semitic, but they look up to the failure that is the United States and not to the one that is Israel.
The corona example above is specific to Germany and is a bad idea that remains a minority position in Germany, but good ideas from the United States have made it to Europe elsewhere. For example, France made it easier to start a business, to the point that incorporation takes a few days and 4,000 euros in a corporate account, regulations on small business are very friendly, and there is elite consensus in favor of making hiring more flexible and some movement in that direction in the Macron administration. On handling racial diversity, Europe is sporadically importing ideas from the US, some good, some terrible, but again there is little attempt at learning in the other direction even when our cops kill a few dozen people per year Western Europe-wide and America’s kill 1,000.
I bring this up, because in transportation, one sees a lot of learning of practices both good and bad, if they come from a higher-prestige place. I may even speculate that this is why the most culturally dominant part of the world has the worst institutions when it comes to building infrastructure: if New York were capable of building something for one eighth the cost of Paris or one sixth that of Berlin, instead of the reverse, then Paris and Berlin would be capable of learning to adopt New York’s institutions.
To speculate even further, this may be why the cheapest place to build subways in East Asia is not Japan but Korea – if Japan were the best, South Korea would have learned from it. There are extensive similarities between these two countries’ institutions in general and urbanism and transportation in particular, coming from one-way learning of Japanese ideas in Korea more than from reciprocal learning. Evidently, Korea first of all learned from Japan that the primate city should be rail-oriented rather than car-oriented, and subsequently learned Japan’s extensive integration of urban rail with regional rail, its combination of local and express trains, its interest in rail technologies other than conventional subways, and so on. If Tokyo and Osaka were capable of building $120 million/km subways, Seoul would’ve picked that up. Instead, Seoul can do this but Tokyo and Osaka are evidently not learning.
In Europe, the same pattern holds. None of the most culturally dominant countries here has low costs. France and Germany’s construction costs are very average by global standards and on the high side by Continental European ones, and both have serious problems with how long it takes to build infrastructure projects. The stars of high-quality, low-cost construction in this part of the world are Southern Europe, Turkey, Switzerland, and Scandinavia. The first two are ridden by cultural cringe – nobody there other than a few railfans believes that they’re capable of doing better than Germany. And evidently, where Germany and France outperform Spain, for example in high-speed rail ridership, the Spanish discourse understands this and tries to correct the situation.
Switzerland and the Nordic countries are dicier, since they are rich and well-governed and everyone in Europe knows this. People in France and Germany even reference various Nordic models as examples to learn from, and, in contrast, the Nordic countries’ willingness to learn from non-Nordic examples is limited. However, these are all small countries that import culture more than exporting it. The vast majority of German culture is produced in Germany and not Switzerland; people in Germany are aware that Switzerland exists and is richer, but Germany’s size lets it get away with not learning. The Nordic countries, likewise, are small enough that other countries are not as regularly exposed to their ideas and therefore treat them as exotic more than as examples to learn from.
I bring up the issue of size, because it is so flagrant in the United States especially, and also in Britain. The US philosophy that economic or social might makes right is not done on a per capita basis, and practically every comparison to another country elicits the “we’re way bigger than them” excuse. Britain engages in the same excuse-making at every comparison to a European country smaller than Germany, France, Italy, and Spain, whereas these four it dismisses on a case-by-case basis; the Australian cultural cringe toward Britain is evidently not about per capita living standards, since Australia’s GDP per capita has been higher than Britain’s for most of the last 150-200 years, but rather about Britain’s greater size and historic status as a world power.
You may be wondering, maybe this is just a way to theorize around the fact that it really is easier to build infrastructure in a smaller country? But no. Turkey and South Korea and Italy and Spain are not small. Seoul is the second largest metropolitan area in the developed world, behind Tokyo and ahead of New York. The common factor to the lowest-cost countries in the world is not size, but rather their status on the periphery of the developed world, either economically or culturally.
Of course, peripheral status is not enough. Former colonies tend to have high construction costs, perhaps because they learn the wrong lessons from the developed world or from China. Italian wages and capital costs are by global standards approximately the same as German ones, so Italy can adapt German ideas where they’re superior, but Indian wages are so much lower and capital costs so much higher that it cannot blindly imitate Japan and expect success. In the developed world, too, we see failure, when countries learn from the wrong examples, that is Britain or the United States; Singapore has severe cultural cringe toward the Western world, but it finds it easiest to adapt British ideas out of familiarity rather than better Continental ones, in much the same way that reform proposals in the United States look to Britain and Canada rather than to Continental Europe or democratic East Asia.
The way forward must be to recognize this cringe, and know to look for ideas that do not obey the global social hierarchy. Southern Europe has a lot to teach Germany and France, and the Nordic countries are not exotic far north utopias but countries with real institutions that can be adapted elsewhere, and Turkey has a very efficient construction sector, and Korea has a lot to teach its former colonizer as well as the rest of Asia.
More to the point, the most dominant places in the world have very little left to teach others. Everyone knows what New York is like. There are many good things about New York, but we’ve done a decent job copying them. London, same thing. It’s time for New York and Los Angeles and Toronto and London to stop exchanging bad ideas and start learning from places that do not speak English as a first language, and not just from the world’s next largest language groups either.
I think we have found the #2 city in urban rail construction costs, behind only New York. This is Hong Kong, setting a world record for the most expensive urban el and encroaching on Singapore for most expensive non-New York subway.
As we look for more data to add to our transit costs website, I looked at Hong Kong to see what was going on. I remembered that its costs were high, but didn’t remember details – I think the project I was thinking of was the longest, the Sha Tin to Central link, but I looked at all recent, under construction, and planned MTR lines. I summarized the results on Twitter, but I’d like to cover this in more detail here.
The projects and their costs
Tung Chung Line extension: a planned line for construction in 2023-30, a total of 1.8 km underground, HK$18.7 billion, or around US$3.1 billion, or $1,730 million per km. Even giving it 1.8 km seems like I’m doing Hong Kong a favor – the extension is 1.3 km, and the other 500 meters are overrun tracks at the Hong Kong Island end, which I don’t ever count elsewhere since it is not in-service trackage. In addition to the tunneling (and single underground station), there is a single at-grade infill station, whose contribution to the budget is approximately zero.
West Island Line: 3 km underground, HK$18.5 billion. This is around US$3.4 billion, or $1,130 million per km. Only six lines globally are more expensive than this: phase 6 of the Circle line in Singapore, and the five New York lines, of which three are not even open yet. This is not even regional rail, but construction is entirely within the Hong Kong CBD, explaining why it is so expensive even by local standards.
Sha Tin-Central: 17 km, HK$87.3 billion, or around US$14.5 billion. This is $850 million per km. The line is not even fully underground, just 90%: the northernmost segment, totaling around 10%, is elevated. This line near-ties Crossrail and the Melbourne Metro Tunnel for most expensive line in the world longer than about 5 km – New York is building short lines, the longest (Gateway) around 5 km depending on source. The line is partially regional rail: it includes a 6 km extension of the East Rail Line under Victoria Harbour toward Admiralty, but the other 10 km is not regional rail.
Tuen Mon South Extension: 2.4 km, HK$11.4 billion, all elevated, in an outlying residential area. This is $790 million per km, making it the world’s most expensive el – New York’s most recent els, the JFK and Newark Airport connectors, were positively reasonable by this standard, only around $270 million/km adjusted for inflation (but don’t worry, the PATH estimates in the near future are a lot worse).
Kwun Tong Line extension: 2.6 km, HK$7.2 billion (same source as West Island). This is around US$1.3 billion, or $500 million per km. It’s the standard high cost of projects around the world, common for regional rail tunnels and CBD tunneling, except that this is strictly on the Kowloon side without as much older infrastructure to cross – it even misses a connection to the East Rail Line.
South Island Line (East): 7 km, HK$16.9 billion, around US$3 billion – see same source as West Island, or SCMP reporting. This is $430 million per km. This is not a fully underground line: as explained here, 2 km is on viaduct, serving Ap Lei Chau. Notice also that the original cost estimate was HK$7 billion, but by the time construction rose the budget had risen to $12.4 billion, and the final budget was $16.9 billion.
Is Hong Kong in the Anglosphere?
I’ve argued before that the single biggest predictor of an urban rail project’s cost is whether it is in the Anglosphere – the correlation of an Anglosphere dummy in our database is 0.54, more than even whether the project is underground or elevated. So it’s worth asking, is Hong Kong in the Anglosphere? There are arguments both ways, but I believe the preponderance of evidence points to yes.
- Hong Kong was under British rule until 1997.
- The legal system is traditionally based on English common law, even if there’s been a recent shift toward Chinese law.
- There is extensive exchange of knowledge with the core (white) Anglosphere, with managers who’ve moved around like Jay Walder, political leaders who have second passports in the UK (like Carrie Lam) or sometimes Canada or Australia, and Anglo media that reprints MTR press releases about its property development model.
- The design layout of the MTR has obvious British influences, including for example the use of cross-platform transfers between the core lines. Similarities with China are the result of convergent evolution (China is influenced by the USSR, which was influenced by Britain). There are some similarities with Japan, like the smartcard system’s use as electronic money, but they are smaller.
- Hong Kong’s love of privatization and high inequality is very Thatcherite. Again, the similarities with Japan are smaller – Japan’s privatization is slower, and Japanese corporations rely on mutual obligations whereas Hong Kong (like Singapore) expects brutal working hours of employees without offering them lifetime employment in return.
The one non-British aspect of the MTR is its use of property development subsidies (and before anyone asks: no, the costs above are just infrastructure, not property development). MTR expansion is funded by a mixture of property development, for which the MTR receives land at below-market rates, and more direct subsidies.
However, this is still more an Anglo aspect than an Asian one. Democratic East Asia notably does not give corporations land for below-market prices, not in the 21st century. Moreover, the British fascination with the Hong Kong model, which fascination is not present in France or Germany or probably anywhere else with reasonable construction costs and democratic constraints on the state, suggests that the elites in Britain and the US would like to be governed this way, just as many would like to be governed by the Lee clan. There is, in contrast, almost no curiosity about democratic East Asian governance, even after that 200 million people region proved itself to deal with corona better than any other.
Corona is a little awkward to bring in because Hong Kong’s infection numbers look like those of an East Asian democracy (it has the civil service of one), whereas the most similar country to Hong Kong on most matters, Singapore, has those of a Gulf state full of indentured migrant workers who got infected at extremely high rates. But for engineering, it doesn’t seem terribly important what the immigration numbers are – for example, Sweden and Norway are extremely similar to Finland even though they have way more immigrants, and likewise Saudi Arabia is similar to the other, immigrant-heavier Gulf states. So overall, Hong Kong’s public transport situation can be seen as very similar to Singapore’s – and Singapore has very high costs as well.
What does this mean?
I don’t know. Singapore and Hong Kong’s costs are probably higher than those of the core Anglosphere, but I am uncertain – Singapore’s big projects are not unusually expensive by Canadian or British standards, and the Sha Tin-Central link is legitimately difficult, the kind that Sweden would build for $250 million/km rather than for $130 million/km. So it’s hard to tell whether there is something about Hong Kong that goes beyond standard Anglo dysfunction.
I do not know what Hong Kong’s historic costs were. I expect them not to be so high – Singapore’s weren’t through phases 1-5 of the Circle line, and only exploded with the Downtown and Thomson lines, and Canada’s only exploded in the late 2000s and 2010s as it decided to privatize state planning and adopt design-build contracting.
However, in the present and near future, Hong Kong is a model to study purely for its failures, much like Singapore. The leaders of Hong Kong, in their rush to emulate Chinese repression tactics, should perhaps also learn something from Chinese construction techniques – or, ideally, Korean ones, Korea being the only Asian country among the world’s cheapest. People in other countries should aim to study Hong Kong’s infrastructure construction as an example to avoid, and not one to emulate.
I’m probably going to write this up more precisely with Eric and send this to a journal, but for now, I’d like to use our construction costs database to discuss the cost ratio of subways to elevated lines. The table I’m working from can be found here; we’re adding projects and will do a major update probably at the end of the month, but I don’t expect the new data to change the conclusion. Overall, the data is consistent with a subway : el cost ratio in the 2-2.5 range, but it’s not possible to get more precise estimates despite the breadth of the data.
Our database has 11,559 km of total length, but not all of that comes with cost estimates yet; subtracting lines for which we don’t have costs, we get 11,095 km. The total cost of all the lines in our database is, in PPP-adjusted but not inflation-adjusted dollars, $2.302 trillion, for an average of $207 million/km. Nearly all of the items are recent – the majority by length are still under construction, and only 10% opened by 2010. So inflation adjustment is minor, though nontrivial.
Moreover, looking only at 100% underground lines, we get 3955.3 km, for a cost of $945.3 billion, averaging $239 million/km. The other lines are mixed or elevated. The purely elevated lines total 2490.4 km, for a cost of $408.1 billion, or $164 million.
To be slightly fancier but use the same underlying data, the linear estimate of cost per km, treating the tunnel proportion as the independent variable, is 153.1406 + 117.5787*tunnel-proportion; this has a larger spread than just averaging pure subways and pure els, coming from both the inclusion of more data and from not weighting by line length.
However, even the larger spread has a subway : el cost ratio of 1.77, lower than found elsewhere in the literature. Why?
Els are disproportionately build in higher-cost countries
The most important quantitative fact coming out of the analysis of construction costs is that the most important independent variables are country-level dummies. The correlation between the tunnel proportion and cost per km is just 0.163; the correlation between cost per km and a dummy variable that takes the value 1 in the US, Canada, Britain, Australia, New Zealand, and Singapore and 0 elsewhere, is 0.543. If we instead set the dummy variable to take the value 1 in the countries I consider cheap – Spain, Portugal, Italy, Greece, Bulgaria, Switzerland, Sweden, Norway, Denmark, Finland, Turkey, South Korea – then the correlation with plain cost is -0.18, and since linear correlation is better at detecting high outliers than low-but-positive ones, we can take the reciprocal of cost and then the correlation is 0.258.
So it’s useful to figure out where the most els are being built. For example, China has 5,933 km in our database – that is, a slight majority – of which 3,851 are confirmed tunnel and another 1,046 are unconfirmed (Hangzhou in particular is bad about reporting tunnel proportions). Excluding lines with unconfirmed information, we have 9,842.6 km of which 6,436.4 are in tunnel, or 65% – but China is 3,851/4,887, or 79%.
In the lowest-cost countries, els are not common. In Spain, 205.7 km out of 253.8 in our database are underground, or 81%. The Korean lines in our database are 100% underground, and as we add more data, this will hardly change. Overall, the countries I consider cheap have 927 km of rapid transit in the database, which number will rise as we add more Korean data, and of those, 730.1 are underground, a total of 79%. What’s more, one third of the non-underground length in cheap countries consists of a single 63 km item, tagged CR3, consisting of surface improvements for Marmaray (the tunnel is costed separately, as BC1); 63 km is hefty, but as a single item, it is less visible to unweighted correlation estimates like the regression.
So if els are uncommon in China and in cheap countries, where are they common? The answer is high-cost developing countries and Gulf states. India has 1,046.7 km in the database, of which only 235.8 are underground, or 23%; when I continue my series of posts on rapid transit traditions and get to India, I will of course mention the predominance of els. Moreover, these Indian els are spread across many items – there are 29 Indian items, since individual lines in Mumbai and phases in other cities each get their own lines, which matters for unweighted correlation estimates. Similarly, Thailand is 20% underground, Vietnam 50%, Pakistan’s single line 6%, Bangladesh 48%, the Philippines 55%, Malaysia 22%, Indonesia’s single line 38%, Panama 12%, Saudi Arabia 14%, the UAE 22% – and all of these are high-cost. In the developed world, the el-happiest country is Taiwan, only 40% underground in our database, and it’s on the expensive side, its average cost at 40% underground still amounting to $240 million/km, and its three all-underground lines averaging $375 million/km.
It makes sense when you think about it. If construction costs in a country are higher, then it will look for ways to cut costs by building less visually desirable els (typically in developing countries) or slower light rail lines (as in the United States). If we included at-grade light rail lines, then our table would also have a wealth of high-cost American lines; as it is, we’re likely to add some at-grade heavy rail lines like the Silver Line in Washington and, if it actually begins construction, the planned PATH extension to Newark Airport.
So instead of averaging in the entire database, let’s look internally to countries, chosen to be big enough to have a mix of projects with different underground proportions. I’m also going to ignore some cases where I worry about comparability – for example, in France, above-ground lines are represented mostly by a metro extension in Toulouse and by the most outlying parts of Grand Paris Express, and I worry about comparing those with Parisian and inner-suburban tunnels. The worst exclusion has to be that of China: while there is a wealth of data there, China built more els 15-20 years ago than it does now, so comparing subways to els in (say) Shanghai is to some extent a comparison of costs in the 2010s to costs in the late 1990s and early 2000s. In that, China is hardly different from the United States – New York built many els from the 19th century until the mid-1920s, but subsequently built an almost 100% underground system.
In Japan, we go back to the 1990s, so using dollar amounts does have inflation artifacts. Thankfully, the yen has had no inflation, so we can just plug in raw yen numbers and convert at the 2020 rate of 100:1. The 100% underground lines in Japan have averaged $382 million per km, the elevated ones $123 million/km; the ratio is 3.1. The regression estimate, again using ¥100 = $1 throughout, is cost = 149.8978 + 255.9496*tunnel-proportion; the ratio using this method is 2.7.
India has a single 100% underground line in the database, Line 3 in Mumbai, built for $449 million/km. The pure els in India cost $158 million/km, for a subway : el ratio of 2.8. Looking only at els in Mumbai, the average inches up to $167 million/km, a ratio of 2.7. Inflation adjustment would have marginal impact as all of these lines are recent, the earliest priced in 2011 terms. The regression estimate (for all of India, not just Mumbai) is cost = 151.6146 + 222.2716*tunnel-proportion, which yields a ratio of 2.5.
As mentioned above, Taiwan’s three pure subways average $375 million/km. But as a note of caution, they are all regional rail tunnels, and we know from evidence in countries that build 100% underground metros and regional rail tunnels (Finland, Sweden, France, Britain, Germany…) that the latter are more expensive.
With that caveat, the four pure above-ground lines in Taiwan average $170 million/km, a ratio of 2.2. The regression estimate is cost = 183.3252 + 163.0895*tunnel-proportion, a ratio of 1.9. This is a lower ratio than in India and Japan, despite the caveat; the reason could be that the underground lines in the dataset are in Kaohsiung, Taoyuan, and Tainan, whereas the lines in Taipei and New Taipei are elevated, as the database so far does not include the older Taipei MRT lines with their city-center tunnels.
There are no pure subways in Thailand; even the underground MRT’s extension is only 20% underground. However, the under-construction Orange Line is 75% underground, and costs $531 million/km. Overall, the regression estimate is 155.9491 + 350.2821*tunnel-proportion, which includes a number of lines in Bangkok and a cheaper half-underground line in Chiang Mai. This is a ratio of 3.2; excluding the one Chiang Mai line, this rises to 3.9.
Our database is consistent with the observation in the literature that the subway : el cost ratio is about 2-2.5. But a crude averaging of global costs would lead to an underestimate, since higher-cost countries are more likely to be building els. This is partly coincidence – former colonies in the developing world tend to have high costs and also wide throughfares where els are more politically acceptable – and partly the use of els to reduce costs where the country’s ability to afford subways is limited.
This reinforces the need to look at other treatments for reducing costs more carefully. It’s plausible that some policy treatments are not found in low-cost countries because those treatments are undesirable for some reason but do reduce costs. Thus, it is critical to look at both the best industry practices and the variation in practices within the parts of the world one considers best.
In the last post, I criticized the idea of large-radius suburban circle, using the example of the Berlin Outer Ring, at radius 10-26 km from city center. In comments, Andrew in Ezo brought up a very good point, namely that Tokyo has a ring at that radius in the Musashino Line, and ridership there is healthy enough to fill a train every 10 minutes off-peak. Of course, the Musashino Line’s intersections with the main JR East lines, like Nishi-Kokubunji and Minami-Urawa, have the ridership of a city center station in Germany rather than that of a station 25 km out. So to discuss this further, let’s drop midsize cities like Berlin and look at an actually large city: New York. Consider the following possible circle in New York, at radius 20-25 km:
See full-size version here (warning: 55 MB).
Most of the radial extensions I’ve already discussed in previous posts – for example, here. Here these extensions go somewhat further in order to meet the ring, including at Newark Airport, on Staten Island, in Bay Ridge, at Floyd Bennett Park, in Canarsie, at Starrett City, near the Queens/Nassau County line, and in Yonkers.
The ring is 151 km, of which around 87 km would be above ground, mostly replacing highways like the Belt Parkway to reduce costs. Of note, this cannot be done adjacent to an extant highway – the fast car traffic deters nearby development, making transit-oriented development impossible. So key road links around the region have to go, which is fine, since people should be transitioning from driving to taking trains. With some additional elevated construction including through City Island, across the Long Island Sound, and in low-density parts of North Jersey where demolishing houses even at $1 million per unit is cheaper than tunneling, construction costs could be reduced further. But it’s still a $20-25 billion project at average world costs, maybe $15 billion at Nordic or Korean or Southern European or Turkish costs.
The only way to pay off the costs of such a line, not to mention to fill enough trains to support frequency that can take untimed transfers (at worst a train every 10 minutes), is to have very high ridership, on the order of 400,000-500,000 per day. This is for a line that misses Manhattan and all of the big secondary job centers, like Downtown Brooklyn and Long Island City. Is this plausible?
The answer is not an obvious no. Sufficiently aggressive TOD could plausibly create ridership. But it’s still questionable. There are really a few different forces pulling such a line in different directions:
- Using existing rights-of-way to reduce costs, hence the use of the Belt Parkway and not the denser development around Avenue U or even Flatlands.
- Serving secondary nodes like JFK, Coney Island, EWR, and Yonkers. Potentially it would be plausible to veer inward in New Jersey in order to hit Downtown Newark, at the cost of a few extra kilometers of tunnel, making the line radial from Newark’s perspective, whereas the line as depicted above is circumferential from Newark’s perspective since it goes around city center.
- The need to connect to radial subway and commuter rail lines, which means serving stations, opening plausible infill stations, and extending some lines toward the ring.
There are different ways to resolve this tension; the line I depicted is not the only one. For example, a higher-cost, higher-ridership version could veer inward in the Bronx and Queens, aiming to connect to Flushing and Jamaica and then replace the AirTrain JFK, leading to a ring of radius closer to 16 km than to 20-25.
I only bring this up to point out how many things have to work if you want such a ring to work out. Keeping costs to even semi-reasonable levels requires demolishing highways and engaging in aggressive TOD, which is only possible in an environment of total political victory over NIMBY and pro-car interests (note: these two are not the same!).
This is not the history of the Musashino Line. The Musashino Line originates in a freight bypass around the built-up area of Tokyo, which eventually turned into a circumferential passenger line. This is why it connects to the radial lines near but not at the busiest regional stations – at Nishi-Kokubunji and not Kokubunji, at Minami-Urawa and not Urawa, at Shin-Matsudo and not Matsudo or Kashiwa.
But even when the line is new, there are always compromises on right-of-way. Uncompromised right-of-ways are 100% possible, but not at 25 km radius, because the cost is too high to always go to the most important secondary centers. They happen when the radius is smaller, like Paris’s 8-10 km for M15, because then ridership can be high enough (M15 projects nearly a million riders a day). Farther away, ridership drops and costs rise because the line gets longer faster than per-km costs drop, so compromises are inevitable.
I am not proposing the ring above as a definitive crayon. I’m just mentioning it as something that highlights the difficulties of circumferential public transportation in the suburbs. Even as it is, the strongest segment of the ring is most likely the one in the city taking over the Belt Parkway, which could replace busy buses like the B15, B1, B3, B6, and B82. The suburban segments are weaker – there isn’t that much commuting across the Hudson that far north, and building up such commuting requires heavy commercial TOD in Yonkers, Mount Vernon, and New Rochelle.
In dense urban cores, it’s valuable to run circular rail lines. They connect dense near-center neighborhoods to one another without going through the more congested center, and help make transferring between parallel lines more efficient, again through avoiding central business district congestion. Some of the largest cities in the world even support multiple circles, line Lines 2 and 10 in Beijing, or the various overlapping circles of Moscow, Tokyo, and soon Paris. However, this system of radial lines through the center and circular lines around the center cannot go on forever. There is a limit to how far out one can build circles, which is much sharper than the limit of how far radial lines can go. Lower-density suburbs can have radial lines connecting them to city center or to near-center nodes of activity, but circumferential lines are likely to be weak.
For a concrete example, take Berlin. It has the Ring through fairly dense neighborhoods, supporting 5-minute frequency on the S-Bahn during most of the day. But it also has the Outer Ring, built in the 1950s through East Berlin and the Brandenburg suburbs to surround West Berlin and permit the construction of the Wall; today it runs regional trains, and one segment through East Berlin runs the S75 every 10 minutes, but there is no train making the entire orbit, just trains using short segments to position themselves to a better radial entry into the center of Berlin. It looks frustrating – there is circular infrastructure, why not use it? But there’s a solid reason not to run it as a true circle.
See map below:
A schematic of service patterns can be seen here.
The line’s origin as a bypass means it doesn’t serve any of the nodes near its radius, like Potsdam (too built-up), Spandau (in West Berlin), or Märkisches Viertel (also in West Berlin). The only node it does pass through is the soon-to-close Schönefeld airport, which only became important well into the Cold War; moreover, a branch parallel to the line to the southeast serves the soon-to-open Berlin-Brandenburg Airport, with plans to run many different kinds of regional services entering Berlin from both the Stadtbahn and the North-South Main Line. So a circular service would, by itself, just connect various outlying areas like Marzahn, Hennigsdorf, and Falkensee to the airport. By itself, this doesn’t support very high frequency.
Now, what the line could do is work as a network together with radial lines, connecting to them to facilitate travel not passing through the center of Berlin. However, there is not much point in transfers unless they are either high-frequency or timed. High-frequency transfers are out – the radial lines that penetrate the Outer Circle run 2-3 trains per hour. This forces the transfers to be timed.
Timed connections on lines that intersect crosswise rather than parallel with cross-platform transfers are completely possible. The trains can’t be too long, but that’s fine, a 4-car train with stair and elevator connections could have 2-3 minute transfer windows and still exchange passengers in all directions. It’s worth establishing at sufficiently important stations where a cross-platform transfer is not possible; as a four-way transfer, it’s not even that much more involved than a cross-platform transfer with timed wrong-direction transfers like Wittenbergplatz between U2 and U1/3. However, this is for one station.
All of this goes out the window when a circle intersects 12 different radial lines. Such a scheme can only work if all of the transfers are timed, or at least a large majority of them. Otherwise, people might as well take the train through the center and connect at Berlin Hauptbahnhof, or even stay on the same train if it runs through like RE 1 or RE 3.
In theory, you can time a short succession of transfers on the same line. All it really takes is to make sure that the circular line takes a half-integer multiple of the takt interval between every pair of transfer points, allowing both-direction transfers everywhere. On a few stretches of the line, it’s even plausible, with a 20-minute takt – the line would be fast because it’s so far out and has to few stops, so 7-10 km in 8 minutes (10 minus 2 for the transfer window) is not outside the realm of possibility.
Except that some segments between transfer points are still bad, like between the two just west of Spandau, or on both sides of the crossing with S5 and RE 1 in Lichtenberg. And even if they weren’t, this runs into the problem that trains are not infinitely punctual. Having 12 knots between a circular line and radials around Berlin, or even just 10 if weak ones are dropped, means that suburban Berlin would have more knots every 20 minutes than Switzerland has today every half hour (8), and not too many fewer than Switzerland is planned to have every half hour in the 2030s. The required schedule discipline is intense, especially in a big city defined by crowded rush hour trains.
This has implications elsewhere. Paris has its Grande Ceinture, which is tempting for a regional rail ring, but the frequency at which it can support a full RER line is not high; instead, the region is breaking the line into segments, to be turned over into tram-trains, with some segments diverging from the mainline to serve nodes near but not on the line.
In general, what this means is that if you’re not connecting to a major city center, there’s only so much service you can run. If you’re within the densely built-up area, as the Ring is or as the various orbitals Paris has (M2/M6, T3) or plans (M15), then it’s fine – untimed transfers are fine when trains come every 5 minutes, and overlapping one-seat rides like Prenzlauer Berg-Neukölln and Ostkreuz-Tempelhof and so on can help fill the train as well. But once frequency drops below about a train every 10 minutes, untimed transfers no longer work, which means that services that rely on connections only work if the connections are at a handful of key points, not at 12 different radii around the city.
Go here to see the our construction costs website. The static dataset is here, but I encourage people to go to the site, which has some interesting mapping – in particular, because the coverage is close to comprehensive, it is easier to see where many subways are being built (China!) and where they are not.
There are still gaps in coverage, plus some numbers that I am not perfectly certain about because the projects are still under construction. Please email us if you have corrections or additional data, whether it’s current or historic. For example, I wish I had complete historical data for Paris, Berlin, and Tokyo – in all three cities I have current data, and in the first two I also have early 20th century costs, but I don’t know what the postwar costs were, or the 1930s costs in Berlin. (In London and New York I have better though still imperfect historical costs, they’re just not integrated into the site yet.)
And please thank everyone who has worked on this. The lines in the database that I added are not even a plurality of the database – the Chinese data comes from Yinan Yao, the Arab data comes from Anan Maalouf, we’re adding massive amounts of current and historic Korean data due to Abdirashid Dahir, Marco Chitti has added some Italian data, Eric has been invaluable in checking some of the Spanish-language numbers, and the Turkish data comes from Elif Ensari, who also built the website and is responsible for the data visualization and mapping.
I recently heard of state-level American standards for climate resilience that made it clear that, as a concept, it makes climate change worse. The idea of resilience is that catastrophic climate change is inevitable, so might as well make the world’s top per capita emitter among large economies resilient to it through slow retreat from the waterfront. The theory is bad enough – Desmond Tutu calls it climate apartheid – but the practice is even worse. The biggest, densest, and most desirable American cities are close to the coast. Transit-oriented development in and around those cities is the surest way of bringing green prosperity, enabling emissions to go down without compromising living standards. And yet, on a number of occasions I have seen Americans argue against various measures for TOD and transit improvements on resilience grounds.
The worst exhibit is Secaucus Junction. The station is a few kilometers outside Manhattan, on New Jersey Transit’s commuter rail trunk, with excellent service. So close to city center, it doesn’t even matter that the trains are full – the seats are all occupied but there’s standing room, which may not appeal to people living 45 minutes out of Midtown but is fine at a station that is around 10 minutes away today and should be 6 minutes away with better scheduling and equipment.
The land use around Secaucus is also very conducive to TOD. Most of the area around the station is railyards and warehouses, which can pretty easily be cleaned up and replaced with high-density housing, retail, and office development. A small section of the walkshed is wetlands, but the large majority is not and can be built up to be less ecologically disturbing than the truck traffic the current storage development generates.
Politically, this is also far from existing NIMBY suburbia. In North America, the single-family house is held to be sacrosanct, and even very YIMBY regions like Vancouver only redevelop brownfields, not single-family neighborhoods; occasionally there are accessory dwelling units, but never anything that has even medium density or visibly looks like an apartment building. Well, Secaucus Junction is far from the residential areas of Secaucus, so the most common form of NIMBYism would be attenuated.
And yet, there is no concerted effort at TOD. This is not even just a matter of unimaginative politicians. Area advocacy orgs don’t really push for it, and I’m forgetting whether it was ReThinkNYC or the RPA that told me explicitly that their regional rail proposal omits Secaucus TOD on climate adaptation grounds. The area is 2 meters above sea level, and building there is too risky, supposedly, because a 2 meter sea level rise would only flood tens of millions of South Asians, Southeast Asians, and Africans, and those don’t count.
This goes beyond just wasting money on needless infrastructure projects like flood walls, or leaving money on the table that could come from TOD. In the 2000s, New York City was emitting 7 metric tons of CO2 per capita, which was better than Germany and a fraction of the US average. This must have gotten better since – New York had an abnormally high ratio of building emissions (i.e. energy) to transportation emissions (i.e. cars), and in every developed country I’m aware of, only energy emissions have fallen, not car emissions.
A bigger New York, counting very close-in suburbs as New York, is an important part of the American green transition. To have the emissions of the inner parts of the city within the city is a luxury people pay $3,000 a month in rent for; to have it in exurbia means having a smaller car than everyone else in an environment in which accumulating lots of stuff is the only way one can show off status. Breaking the various interests that prevent New York (and Los Angeles, and San Francisco, and Boston, and Washington) from growing denser is a valuable political fight. But here, no such breaking is even needed, because the anti-growth interests think locally, and the only locals around Secaucus Junction live in one high-rise development and would if anything welcome more such buildings in lieu of the warehouses.
And yet, Americans argue from the position of climate resilience against such densification. Normally it’s just a waste of money, but this would not just waste money (through leaving money on the table) but also lead to higher emissions since housing would be built in other metropolitan regions of the US, where there is no public transportation. Once adaptation and resilience became buzzwords, they took over the thinking on this matter so thoroughly that they are now directly counterproductive.
Somehow, the goal of avoiding catastrophic climate change has fallen by the wayside, and the usual American praxis of more layers of red tape before every decisions can be made (about climate resilience, design for equity, etc.) takes over. The means justify the ends: if the plan has the word climate then it must be environmentally progressive and sensitive, because what matters is not outcome (it’s too long-term for populists, and all US discourse is populist) but process: more lawsuits, more red tape, more accretion of special rules that everyone must abide by.
Question. In what ways can a recession be useful for forcing inefficient public-sector agencies to lay off redundant workers and reduce bloat?
Every recession, going at least back to the Great Depression, you get economists and others who are certain that high unemployment can discipline firms into greater productivity. Back in the 1930s, this was Joseph Schumpeter saying that there was no need to fear a depression because it was good, like “a cold douche.” Liquidating unproductive firms and forcing the rest to get leaner was supposed to improve economy-wide efficiency. Today, you can find people arguing the same for inefficient public-sector agencies strapped by budget cuts.
It doesn’t happen. Productivity decreases in bad economic times; labor-saving productivity improvements happen when wages are high, not when sales are low. Cash-strapped firms do not have the ability to invest for the long run – they just sell portions of themselves and shrink to be easier to manage, to limit the loss.
In public-sector public transportation, this really is the same. The best time for converting a metro line to driverless operation is when unemployment is 3%, not when it’s 15%. When unemployment is 3%, it’s possible to place workers in the private sector, which means they’ll work well through the transition. This goes doubly so when the productivity improvement lets one person do a job that previously took three rather than eliminating the job entirely: workers can go on strike if they’re unhappy, and transit as an industry is very amenable to unionization, to the point that unions have succeeded in organizing the tech shuttles in Silicon Valley in an otherwise union-hostile setting. (Of note, American public-sector anti-union successes have mostly been about screwing young workers, who are already the least empowered within the union, rather than doing anything to 20-year veterans who are about to retire with a full pension.)
The issue here is that very, very few workers are redundant on a next-day basis, even in severely overstaffed agencies. New York can eliminate subway conductors but requires some planning in advance to do so, for example to move mirrors around and place CCTV cameras to enable drivers to see the platform and close the doors. American commuter rail agencies can eliminate rail conductors, in what is as close to next-day redundancy as I can think of, but even that requires hiring fare inspectors for proof of payment checks and often also buying ticketing machines at outlying stations where previously passengers bought tickets directly on the train.
More often, eliminating a large amount of waste requires spending a bit more money in the short run. It can be on capital, like more ticketing machines. It can be on labor, like more dispatchers to make the buses run more regularly to reduce delays and bus driver overtime. But it’s usually not something that can be done by the Chainsaw Al school of management. It takes time, and in a lot of cases, the cooperation of the workforce is necessary.
Time and time again, we see transit managers who think in terms of just cutting avoid making long-term investments to improve efficiency. We see hiring freezes, wage freezes, reticence to engage in any long-term hiring and planning even in temporary recessions, and hostility to electrification even among American governors who propose to spend billions of dollars on parking more trains in city center between the morning and afternoon peaks. Even below the top political level, managers who develop a siege mentality never think in terms of long-term improvement. That’s not what will get them ahead; avoiding short-term controversy will, and they adapt to bad practices readily.
The workers adapt, too. If they expect sudden layoffs, their morale will tank and so will their productivity doing anything but the most routinized work. Maintenance workers will skip things – nobody will notice until it’s too late. Cleaners will slack, and if the message sent from the top is that it’s time to retrench, it will be hard to argue for aggressive standards for cleanliness. Even absent unionization, productivity will flounder, and there will not be much room to replace truly lazy workers if there is a hiring slowdown.
So what works for increasing efficiency? The answer is growth. Kopicki-Thompson’s report on best practices for rail privatization has a chapter about the history of the breakup of Japan National Railways in the 1980s, which makes the connection between growth and efficiency clear. Between 1980 and the breakup of JNR into seven constituent JRs in 1987, the company laid off two-thirds of its workforce, after complex negotiations with the unions, some of which were militant socialists. Japanese work culture is that a man is expected to work for the same firm for his entire working life, from age 22 for a university graduate to retirement at 65; JNR had to place these workers in the private sector for a mid-career layoff. This could happen because Japan’s economic growth in that era was famously high, to the point that Americans soon bought business books about how to think like a Japanese manager.
It is best to instead use weak periods to plan for the long term. If there’s stimulus spending, take it and go build things. Even if there isn’t, remember that the recession won’t last forever and plan in advance. Part of the plan should be knowing which workers are supernumerary and making a plan to place them at private-sector jobs as soon as they become available. But don’t expect to be able to send masses of pink slips in a recession; that must be saved for when jobs elsewhere in the economy are plentiful.