By JAMES P. REPASS A major economic forecast released by UCLA's Anderson School of Management, which debunked the economic value of High Speed Rail ju
Published August 19. 2012 4:00AM
"California High Speed Rail Economic Development: Lessons From Japan" was issued to the media in UCLA's June "California Forecast."
While in the past few days independent academics have begun to question the validity of the Anderson report's sweeping conclusions, based as they are on a tiny data sample, the report's impact in the news media has been large. The story has gone viral, and continues to be cited, appearing in hundreds of news reports and blogs across the country as a "serious" criticism of High Speed Rail, which is a bell-weather program for the Obama administration.
The California High Speed Rail system, whose funding and construction was after two decades of debate enabled by a single-vote margin July 6 in the California Senate, and is now officially launched, would compete directly with California's lucrative but highly polluting short-route intercity air carrier market, one of the largest in the United States, and would directly impact the economic fortunes of the aircraft industry, in which the report's author has spent virtually his entire professional life, either as a direct employee, or as a consultant.
"California High Speed Rail Economic Development: Lessons From Japan" looked at a portion of the Japanese high speed rail system implemented in 1964, and from that tiny sample concluded: "Our study of the Japanese Shinkansen system from 1964 to present fails to provide evidence of induced aggregate growth," asserting that it "simply moves jobs around the geography without creating significant new employment."
While admitting in passing that "population growth, pollution abatement, or other factors" might justify the California High Speed Rail project, the report concludes, "As an engine of economic growth in and of itself, California High Speed Rail will have only a marginal impact at best."
The UCLA report was issued in June before the California Senate had voted, and was immediately picked up by scores of newspapers in California and throughout the United States. Headlines typically read: "UCLA study of Japan's bullet train raises questions about California's HSR" or "UCLA study guts the claim that HSR fosters economic growth."
The UCLA study was also used as the basis for numerous editorials slamming High Speed Rail, as "proof" that it was and is a "boondoggle." This, and an anti-rail campaign financed largely by petroleum interests, caused such massive blowback in the state capitol of Sacramento that on the day of the vote the Senate leadership had to lock the doors to the building, and even then, physically locate at least one of the five Democratic senators who virtually went into hiding to avoid voting on the bill; it took three or four "final" calls of the roll for the leadership to get to "21," the minimum vote needed for passage.
The UCLA report was written primarily by Jerry Nickelsburg, according to UCLA public affairs, who is identified in the document only as "Senior Economist, UCLA Anderson Forecast."
He is in fact a former career employee of, and on-going consultant to, the aircraft industry, a fact nowhere disclosed in the UCLA report, or in any press kits issued with the report.
That information however can be found on the website of his consulting firm, Deep Blue Economics, which sells aircraft simulation tools to the airline industry. It boasts: "Deep Blue Economics is a business and aviation consulting company with specialization in the analysis and disposition of business assets including aviation and simulation assets. The associates have over 50 years of experience with particular expertise in start-up operational, financial, route, fleet, and strategic planning and flight simulator capital planning evaluation, disposition, inspection, and appraisal. For more information, please contact Jerry Nickelsburg, Ph.D." It then lists his phone number and other contact information.
Reporters bothering to dig into the UCLA Anderson School faculty website, which were apparently few if any, would have seen that it identifies him as follows: "He received his Ph.D. in economics from the University of Minnesota in 1980 specializing in monetary economics and econometrics. He was formerly a professor of Economics at the University of Southern California and has held executive positions with McDonnell Douglas, Flight Safety International, and Flight Safety Boeing during a 15 year span in the aviation business."
"He also held a position with the Federal Reserve Board of Governors developing forecasting tools, and has advised banks, investors and financial institutions. From 2000 to 2006, he was the Managing Principal of Deep Blue Economics, a consulting firm he founded."
In a prepared statement the National Corridors Initiative, a bipartisan advocacy group for infrastructure investment, said:
"No one would question author Jerry Nickelsburg's right to express whatever opinion he holds, or whatever criteria he uses to justify his conclusions. His credentials are sterling, but even if they were not, it is his right. But for UCLA to release his report under their name without disclosing the author's long-standing aircraft industry background, when that specifically is the very industry that would be most directly affected by construction of a California or any other American High Speed Rail system, is outrageous."
"UCLA is a revered icon, and needs to do better when it puts its name on a document that it well knows will be vacuumed up by the news media, as well as by the Citizens United-enabled, secretly-funded, pro-petroleum, anti-rail, reactionaries who under America's utterly corrupt political system pay for many of our politician's opinions."
James P. RePass is chairman and chief executive of the National Corridors Initiative. He original wrote this for "Destination:Freedom," the online newsletter of the pro-infrastructure advocacy group.