Source: Adam Smith Institute

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Source: Adam Smith Institute

URL: http://www.adamsmith.org/news/press-releases/high-speed-fail-%E2%80%93-there-is-no-case-for-hs2

Economic Principles: opportunity costs, marginal benefits, limited resources, unlimited wants, capital, scarcity, efficiency, labour, production, economic problem, return on investments, and demand.

News Analysis Assignments

Introduction

The case of the High Speed 2(HS2) is a failed one because it does not make any economic sense. The benefits of the of the HS2 were over estimated, with the total costs incurred in the fundamentally flawed project being exorbitantly high as compared to the revenues that the project is supposed to generate. The huge costs of the project to the taxpayer will be exorbitant and will not be able to match the opportunity costs projections, especially if it is compared to London to the Channel Tunnel (HS1) and other international examples. The HS2 will not make enough money make a tangible return on investments\; thus it will bring marginal benefits. The few tangible benefits that will be realized from the project will be so minimal to cover the operational and construction costs, and the most of the uptake projections were very optimistic.

The funding of the project came at a time when there were limited resources from the tax payers point of view during the period of austerity and increasing debt interest debt payments. Given that HS2 will be a state funded project, with seventeen billion pounds being spent on the first phase, and another fifty billion pounds to be used when the project expands to Scotland. There exist unlimited wants from the public by giving the government more pressure to construct more tunnels, and it costs much more per kilometre to build a railway.............