Some scattered thoughts at this late hour:
1. Scott Sumner has a nice report from Foreign Policy magazine’s Top 100 Global Thinkers conference. He writes:
My favorite speaker was Google’s Sebastian Thrun , who remarked that California was wasting a fortune on a train that would connect two obscure Central Valley towns in 2020, by which time self-driving cars would be more energy efficient (and convenient) than high speed rail. His friend remarked that in-vitro meat could cut agricultural greenhouse emissions by 95%. (I doubt it.) Both seemed to think policymakers in Washington were clueless about technology.
The observation affirmed two things I’ve been mulling over recently. I remember reading Nouriel Roubini’s Crisis Economics in the wake of the financial crisis. He predicted that the debt crisis would yield a long period of deleveraging, causing a long depression generated by the “paradox of thrift.” His prescribed the traditional Keynesian response of large public expenditures toward repairing the U.S.’s national infrastructure–he was particularly strongly in favor of building more and better rail in the U.S.. This was just before driverless cars became such a hot topic. Now, I’m no fever-swamp Austrian, so I do agree with the mainstream Keynesian economic theory that suggests we should try to make government spending countercylcical to the extent that we can. But issuing a lot of debt in order to build lots of high-speed at that time probably would have been unwise, because those investments couldn’t have paid dividends for very long–they’ll be completely overtaken by technology in just a few years after the projects would have been completed. Sumner, above, also notes Thrun’s remarks that policymakers in D.C. are clueless about technology in general. I have no reason to doubt this claim. This highlights the kind of trade-off we always face in setting policy. We know, from theory and empirical data, about a lot market failures; we know how markets tend to underinvest in technology and research that will only be valuable in a very long time, because it’s hard for individual investors to capture those benefits. But the proposed alternative solution–government–is also subject to predictable failures, due to the pressure it faces from lobbyists, and the limited knowledge and expertise of bureaucrats. So it’s not always clear that government is the right way to ‘correct’ a market failure, such as underinvestment in long-term R&D and technology.
I’m excited not just by how driverless cars will change transportation policy, but also by how they could totally revolutionize domestic life. In fact, I wonder if in the future we won’t have driverless cars so much as driverless RVs. Like, I’m imagining a family living in a spacious place in the Catskill mountains, sleeping in beds in an RV that’s pre-programmed to start driving toward Manhattan at 7 a.m. At 8:00 a.m, still on the road, getting close to Manhattan, they all wake up and cook breakfast in the kitchen and read the paper, as a family, inside the driverless RV, which then drops kids off at school uptown, before taking parents to work downtown. At 6pm, the driverless RV picks parents up at work, so they’re getting dinner ready by the time kids get in the car, after practice at 6:15pm, and they’re on their way back to the Catskills. Family dinners inside a driverless RV may seem a bit utilitarian right now–but I think we’ll get used to it, and it’s better than no family dinner at all, ruined by too-long commutes. If driverless cars allow people to do more of their normal daily functions while commuting, then this will (1) be a gain for human welfare, and (2) massively change residential geographic distribution. Ex-ex-exurbs could become much bigger, as longer commutes become more tolerable.
Lastly on this diversion, I wonder how much of Google’s good deeds we can attribute to some things that we are traditionally told are bad — its monopoly power, its perhaps less-than-perfect commitment to the interest of its shareholders. It’s now clear how Google’s driverless cars can be really awesome for society, but it’s less clear how they fit in with Google’s core business–and that’s totally cool with me. It’s like we’re enjoying the benefits of a benevolent monopoly, with a lot cash to throw around, that its happy to spend on its own pet projects and not give back to shareholders. Benevolent monopoly. Nice ring to it.
2. Today, being an entrepreneur is almost synonymous with working for a techie startup, or doing something with apps. Apps are great, very helpful for making our lives more convenient. Seriously. But the fact that people seem so unwilling to pay much at all for almost anything on the web or on their iPhones suggests to me that maybe their unsatisfied needs in that space are not so great. It seems to me that really, really ambitious entrepreneurs shouldn’t be focusing on creating some derivative of Yelp or Pandora or Facebook, but should be trying to find ways to undercut the enormous expenses of education and health care. Since people are right now, already paying $50,000+ a year for college degrees, that’s proof enough there’s a lot of money to be made in that space. And a lot of good to be done for the world, too. Right now, middle-class incomes are stagnating, at the same time that more and more of that income disappears into education and health care. In the future, as Asia continues to industrialize and technology replaces a lot of old jobs, it’s not at all certain that middle-class incomes will start to rise again. The best we can do might be to focus on improving quality of life through lowering these massive expenses.
I don’t know how to revolutionize higher ed and health care. If I did, I’d be keeping it secret and trying to get rich. But I just think our society should be trying to generate more excitement about how technology can be used to revolutionize medical care, education, transportation, and urban design, rather than trying to guess which new startup based around a single app might do well for a couple of months.