An interesting debate over whether automated cars would produce economic growth.
Ryan Avent of the Economist argues “yes” … but I am not so sure. For one thing, automated cars will likely be a shared resource, at least in cities. That means fewer cars, which is certainly good for the environment, but maybe not so good for economic growth — at least in terms of the way we measure GDP. Also, another very important question is whether new technologies like automated cars will raise median incomes (which have been stagnant in the U.S. for decades). Kind of hard for me to see how that would be the case.
I think Robert Gordon raises some valid points, although he is really getting slammed by the techno-optimist/TED Conference community. What do you think?
Martin Ford 
Well technology is moving very fast, so it hard to comment/discuss unless the discussion is narrowed down to say ‘impacts of driverless car in 2020’. What may not be achievable in 2020 may be achievable in 2025.
I feel driverless cars would have real impact on the economy (whether positive or negative), only when these cars are advanced to a stage where they can drive without a driver/passenger and are affordable. Then a family(excluding those in top 1 percentile) living in suburbs can afford a car to drop/pick children to school/classes, spouse from work, etc, etc. Then it will also allow driverless trucks for transportation. Until then it will remain a novelty for those who can drive and have money and will not have much impact on economy. It may help those with some form of disability, but such people don’t form mass market.
I don’t feel traffic congestion can be eased (or travel time can be shortenned) easily until at least some percentage of cars are not driverless on the road.
Another important point to keep in mind is, it is very much possible that people working in large cities would be working even more remotely reducing the need to travel to work to great extent.
from a techie .
Automated cars will neither raise growth nor employment. Once cars are automated vans, trucks, buses, etc will be too, so not only will there be fewer cars on the road but fewer vehicles of all kinds. Vehicle manufacturers will switch to personal robots for cleaning, gardening, etc but they will not mean more jobs because the vehicles will require less drivers and operators plus the whole order, production and delivery chain will be increasingly automated. The same IT that produces automated cars will automate a greater proportion of other work.
Growth is the difference between the fall in prices due to productivity gains and the money created to bring prices up to par – but as governments cannot get this right they overshoot and prices go up; it is the price rises that they call inflation but originally, it was the money creation itself that was known as inflation. Inflation has the same consequences no matter whether prices rise or not.
For the last few decades, we have seen the automation of factories and a whole lot more such as mining, chemical, steel, oil, gas, and all other heavy industrial processes. Work grew in services particularly retail and food processing but these are now automating. What is left to work in? There is an upsurge in coffee shops, etc. but as unemployment grows elsewhere wage deflation [in the UK half those between 18 and 65 are either unemployed, underemployed or working part time while prices still rise faster than incomes] will make employing people uneconomic so automation will become more attractive. I am looking out for the first cafe with nice decor, music, etc but self service.
There really are no other mass employment opportunities. Firms will find using automation an increasingly attractive proposition. Demand will fall because incomes will fall, firms will have to cut costs again and the best way to do this is to replace workers with machines. This will create a vicious circle of wage deflation, cost cutting and de-employment. Governments will try to maintain prices [they abhor deflation] and growth as the only way they can balance their books without cutting costs as fast as the private sector but they will have no choice but to do so because money creation will cause too many distortions, bubbles, etc let alone increase costs on industry that will remain in fierce competition with China, Brazil, etc so will have to accommodate deflation but they will not find it so bad. We won’t have to work much but the goods will be there anyway because they will be made by machines. People will increasingly work part time, intermittently, do odd jobs for cash, environmental stuff and then all work will peter out. What we do then is a discussion for another time.
“What we do then is a discussion for another time.”
Drugs. Immersive video games. sex. Growing fat and happy and lazy. Basically bread and circuses in the technofeudal world that will be.
Of course, that is the best course scenario.
War. Famine. The haves vs. the have-nots once and for all. Winner take all.
It would be an interesting project for researchers to take a look at what we as a civilization have lost (say in the last 100 years or so) in the way of skills and abilities versus what we’ve gained. The gains are obvious, but my fear is that those attributes lost are not only irretrievable, but the number of those lost traits/skills/attributes is accumulating steadily and at an ever growing pace. A pace which which will one day overtake whatever gains we make. Will we one day awake to find that humans themselves are a redundancy? What would Einstein think? Just imagine, one of the greatest minds the world ever knew who never had a cell phone, a PC, a kindle, and on and on. A man who actually hand wrote much of his work. A wise man once said, “Just because you CAN do something, doesn’t mean you SHOULD”
I agree with you autonomous cars per se in GDP terms will not mean growth since they will maybe divide in halve and probably much more the car consumption. BUT the overall household disposable income will increase since less will be spent on overdeveloped and marketed individual cars. That means the car industry will become the new steel industry rather sooner then later. But it also means reducing our footprint which is certainly necessary if we all want to stay here more or less sustainably.
I use an (electric) bicycle for short trips in fine weather, a car at other times. A combination of autonomous shared car plus wholly owned bicycle would suit me very well. I would only rarely have to wait for transportation. It would cut my annual cost of transportation significantly, eliminate the need for a garage at my house, or of public parking in the city.
Yes, I foresee huge savings in a mixed system, and a short term, 20 years perhaps, boost to the economy.
The knock on effects of driverless cars should be beneficial to the economy in the longer term.
Driverless cars should have fewer accidents. This means:
Less injuries, less lost work days potentially lower health care costs.
Less property damage, body shops go out of business, insurance rates go down
There will be short term disruptions as the effects flow through the economy but paying less for remediation, will contribute to growth.