In December, 2012 China opened the high-speed rail line between Beijing and Guangzhou. The distance of  2,298 Kms between these cities will be covered by high-speed trains at less than 10 hours going at over 300 Km/hr. The trains effectively cut the travel time in half between these major Chinese cities. With the addition of this line, the total high-speed rail line in China equals 9,300 kms according to a post in FT beyondbrics blog. Already the country takes the first place in total high speed rail line length ranking. China plans to expand the network to 18,000 km by 2015.

The top countries in terms of existing high-speed line network at the end of 2011 are China, Japan, Spain, Italy, France and Germany. The following chart shows the high-speed rail network of select countries:

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Source:   Chart of the week: high-speed rail,  Dec 30, 2011, FT beyondbrics blog

In addition to China, other emerging countries like Turkey and Brazil are also planning the construction of high speed rail networks. It is shocking that the U.S. has a tiny high speed line compared to the other developed countries. It is sad that the only high-speed train service is the Acela Express in the Northeast of the country that runs at top speed of  just 240 km/h (150 mph). It connects just five cities and its speed is very low compared to comparable services in other countries including China. Though the country’s size is huge and very well suited for high speed train network, the auto-oil-airline industrial complex makes sure that Americans are held hostage to their products and services. This situation is unlikely to change for the foreseeable future.

Will high-speed overtake the airline industry anytime soon?

The answer is an absolute no due to many reasons.  Despite the growing popularity of high speed trains in countries around the world, the industry is not a major threat to the airline industry according to a report published by The Boeing Company. From the Boeing report:

Limited competition with commercial aviation

Our long-term forecast considers the impact that other technologies, including high-speed rail (HSR), have on air travel. In 2010, worldwide railways carried 45 percent less passenger traffic, but 45 times more cargo traffic than commercial aviation.

The total distance covered by railway networks was a mere 2.5 percent that of the aviation network. Analysis of the data shows that (1) railways are well suited for carrying passengers over relatively short distances (terrain permitting), whereas aviation excels for longer journeys; (2) railways are an efficient mode for overland cargo transport; and (3) aviation is very effective for creating large transportation networks without heavy investment in infrastructure.

It has been almost 50 years since Japan introduced the world’s first modern HSR service between Tokyo and Osaka. By the end of 2012, China will be operating 13,000 kilometers of HSR–more than the rest of the world combined. Yet, HSR still accounts for less than 2 percent of the world’s railway lines, and only six nations have HSR networks with tracks longer than 1,000 kilometers.

Capital intensive, sizable life-cycle carbon footprint

China’s unprecedented HSR program entailed a 2-trillion-RMB investment in a 13,000-kilometer network. In addition to the large capital investment, the infrastructure construction had significant impact on the environment. In 2009 alone, China’s HSR program consumed 20 million tonnes of steel and 120 million tonnes of concrete. The carbon emissions associated with just the raw materials amounted to approximately 150 million tonnes of CO2- -roughly equivalent to a quarter of the annual CO2 emissions for all the world’s airlines. Yet, Boeing analysis shows that passenger traffic on the 2012 HSR network would account for less than 2 percent of the domestic revenue passenger-kilometers flown by Chinese carriers in 2009.

Here is another chart showing the top high-speed rail countries in 2012:

Source: Current Market Outlook 2012-3031, Boeing

Also checkout: High Speed Rail Maps of Europe and North America (TFS)

In his State of the Union address last month, President Obama proposed raising the Federal minimum wage from the current $7.25 to $9.00 per hour. 19 States already have minimum wages of over $7.25/hr and the state of Washington has a minimum wage of over $9.00/hr.

As expected this topic is being hotly debated by economists and media pundits. From a report analyzing the impact of a higher minimum wage in Council of Foreign Relations:

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An important question which follows is what impact this would have on employment.  A recent paper by Texas A&M economists Jonathan Meer and Jeremy West found that whereas the immediate impact on unemployment of raising the minimum wage by 10% is very small, its impact on long-term job growth is more substantial: 0.35 percentage points.  The logic is that raising the minimum wage is a greater deterrent to hiring than it is a motivator for firing.

Using their findings, the 19% rise in the effective minimum wage proposed by President Obama would decrease long-run job growth by 0.7 percentage points.  Put in perspective, this is significant.  Over the past twelve months, average year-over-year job growth has been 1.8%.  Knocking off 0.7 percentage points would reduce it to 1.1%, which is barely more than the 0.9% average year-over-year growth in the labor force over the past twelve months.  As today’s Geo-Graphic shows, this could materially slow the fall in unemployment from its current high level.

Source:  Obama’s Minimum-Wage Hike Will Hit Employment, CFR

But how does U.S. minimum wage compare to other OECD countries?

The U.S. wage rate is actually lower than many other developed countries. The U.S. ranks in the middle among the OECD countries.

I disagree with the results of the study Texas A&M economists. Contrary to their conclusions I would state that higher minimum wages should help the economy in the long-run. Putting more money into workers’ pocket should help stimulate demand which the U.S. economy desperately needs now. This is especially important in the current situation where  workers’ real wages have remained stagnant or even went lower when corporate profits are at record highs. For example, Australia has had one of the highest hourly wages  for years among developed countries . In 2011, it had the highest hourly rate at close to $14.00 among the OECD countries. Despite the high wage rate, Australia has a vibrant growing economy and the economy remained strong even during the global financial crisis. So the theory that higher minimum wage would adversely affect employment rates is incorrect.

The following chart shows the latest real hourly minimum wages for OECD member countries:

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Source: OECD