Thinking waaaay outside the box about the long-term effects of autonomous vehicles
This is a new one for VRCG, but, coming from John Tamny as editor of RealClearMarkets, President of the Parkview Institute, a senior fellow at the Market Institute, and a senior economic adviser to Applied Finance Advisors, his long term views about the effects of mobility are worth considering.
He writes:
The future will be defined by economic growth that will make the present appear limp by comparison. Driverless cars will loom large precisely because they’ll free humans from so much work.
It’s what we’re not doing that powers us forward, not what we’re doing. And to be a passenger in a Waymo-equipped car is to see how much time we spend driving at the expense of more productive work.
To enter a Waymo that transports us is to be freed to make calls, write, and work for five, ten, and fifty minutes; all this time formerly spent concentrating on the road rather than working productively. And since time is the most precious economic input of all with the obvious exception of the human element, it’s easy to see where Waymo will propel the human element of economic activity by virtue of it manufacturing enormous amounts of human effort on the job.
From there, stop and consider the cost implications of Waymo and other creators of driverless transportation like Uber. Since the human has been removed from the transportation equation, the cost of transportation will plummet. Economists tell us that economic growth is evidence of prices rising, but they get it backwards. Growth is obviously just productivity, and Waymo is the personification of productivity that will multiply transportation access at prices that continue to decline.
Importantly, what’s mentioned so far is just the driving side of things. Contemplate the production side. As with nearly every instance of human progress, the cost of manufacturing driverless cars will rapidly decline as the creation of them expands across hands and machines the world over. Which means the cost of transportation won’t just decline due to erasure of the human element, but also due to human genius that will rapidly shrink the cost of making what doesn’t require humans to operate.
It’s then interesting to think about the growth implications of the price of transportation declining with such rapidity. Once again, economists tell us prices must rise over time given their odd belief that falling prices deter consumption. There’s so much that’s so wrong with such beliefs.
For one, the desire to consume is at the root of all production. In other words, consumption never needs to be encouraged and doesn’t require prices rising 2% annually as a way of deterring savings. What a bankrupt point of view. Savings are the source of all growth as new ideas are crucially matched with capital.
Second, the productivity that defines economic growth is all about falling prices. And with the cost of transportation set to decline for the reasons discussed (and surely many more), it’s only logical to presume that the prices will alter how we humans get around. As in driverless transportation won’t just be to work, and for humans who used to drive for work, it will increasingly define how get around at all times, including for leisure.
Which means parking lots will more and more take on dated qualities. It’s hard to imagine them vanishing, but surely parking will become less of a necessity such that endless amounts of land and physical spaces will be freed up for more productive use. The latter will include at times cheaper and more expensive land that innovative thinkers will be able to acquire on the way to all sorts of new utilization.
Where will Waymo take us in total? Billionaires and trillionaires will be minted in the process of finding out. For now, it’s easy to see that the genius of human effort is on the verge of being matched with exponentially more time. This is the stuff of economic growth, and a very bright future.
