Creative Destruction Is So Cute, Ctd

Google Car

Brad Plumer deflates some of the hype over Google’s new driverless car prototype:

Now, before anyone gets too excited, note that self-driving cars are still a ways off from reality, especially given all the legal and regulatory hurdles they face. (And, for now, Google’s cars will only go 25 miles per hour — so the cars won’t run on highways.) But why not dream a bit? It’s worth thinking through what a future filled with self-driving cars might actually look like. Boosters often claim that the technology will have massive benefits for everyone: traffic jams will become a rarity, deadly crashes will drop dramatically, commuting will become far less stressful. We’ll all be happier, healthier, and wealthier. Maybe so. Yet self-driving cars could also have a number of downsides and unexpected consequences, too — from more suburban sprawl to layoffs for the nation’s millions of truckers and taxi drivers.

McArdle examines Google’s approach to the liability issue:

Essentially, Google is building a driverless golf cart, not a driverless car. With a top speed of 25 mph — therefore making collisions less likely to be fatal — there’s less risk that your vehicle will hurt someone if something goes wrong. There’s a lot to like about this approach. Of course, it means you lose some speed. On the other hand, most commutes aren’t that speedy. And I think many people would rather have a 45-minute commute during which they can read than a 35-minute commute during which they have to listen to talk radio while white-knuckling the steering wheel and silently wishing elaborately horrible deaths on the drivers around them. It also offers Google a way to prove the concept at relatively low risk.

But she also sees downsides:

The 25-mph speed is dictated by a regulatory threshold; try to take your car to 45 mph, and suddenly you’re in a different regulatory class, with higher safety standards (read: a lot more weight on the car) and various other requirements. So while in theory it’s easy to start slow and incrementally improve, in practice, Google is eventually going to have to get regulators to let it push beyond the current limitations.

Joshua Gans counters:

[A]s McArdle notes, slowing down cars to golf carts speeds of 25 mph as Google appears to be doing, does change the picture as it reduces the probability of accidents substantially. In which case, it seems that the liability system is working as intended. It isn’t stopping driverless cars but promoting their development in a healthy direction.

For this reason I have started to wonder whether the ‘regulation kills innovation’ theme is far more nuanced than many have been thinking. Why do we think that regulation will hold back driverless cars rather than actually promote them?

In Timothy Lee’s view, driverless cars will mean the end of mass car ownership:

Because the US is a high-wage country, it’s cheaper to own a car that sits idle 23 hours per day than to hire a human driver for one hour every day.

But as Uber CEO Travis Kalanick pointed out at the Code Conference today, that’s going to change once cars can drive themselves. Renting a car instead of owning one has a lot of advantages. People will be spared the hassle of buying gas, changing the oil, and taking the car in for repairs. Both workers and their employers will be spared the expense of finding somewhere to park our vehicles. Driverless taxis will improve average fuel economies too.

Edward Niedermeyer adds, “Google’s decision to abandon traditional vehicle controls is what will keep auto executives up at night”:

[T]he overwhelming fixed costs of the traditional business model has always hindered automakers from really changing things. The companies are also largely made up of people who genuinely love cars and driving, making them highly adverse to autonomous technology. By fostering the automotive enthusiast culture, to the tune of trillions of dollars over the last century, automakers have created performance-related profit centers that pad their bottom lines. Good luck convincing Google’s robot driver to upgrade to the turbocharger or sport suspension.