NCPA - National Center for Policy Analysis


July 22, 2010

Michigan leaders who are enamored with building new light-rail passenger lines should look to Greece's experience with its railway system, says Russ Harding, director of the Mackinac Center's Property Rights Network.  

  • The New York Times reports that Greece's Hellenic Railways is bleeding red ink at a rate of $3.8 million per day.
  • The total debt of the Greek railway system has increased to $13 billion, or roughly 5 percent of Greece's gross domestic product.
  • Greek government officials who are interested in selling a stake in the state railway system may have difficulty finding a buyer -- the Greek rail system pays three times as much for interest payments on its debt as it takes in on revenues. 

Light-rail systems are a darling of urban planners and environmentalists who share a utopian dream of separating people from their cars.  Nevermind that light rail systems lose money almost everywhere they are built, requiring taxpayer subsidies to keep them operating, says Harding.  Michigan taxpayers are subsidizing Amtrak at a rate of $7.3 million dollars a year to provide daily service on lines linking Grand Rapids to Chicago and Port Huron to Chicago. 

After a decade of budget deficits, elected officials in Michigan have yet to fix the state's structural budget problem.  The first principle that elected officials in the state should adopt is: Do no more harm.  The Greek experience with their passenger rail system serves as a good case study on how to harm an economy.  Let's hope Michigan leaders are paying attention to the Greek tragedy, says Harding. 

Source: Russ Harding, "Derailed: Michigan Should Heed Greece's Experience With Light Rail," Mackinac Center, July 21, 2010. 

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