Putting the Cart Before the Horse (Imagining a Future with Self Driving Cars)

A recent technology that has generated a lot of press is the self-driving car. Such cars have already been successfully tested on real city streets. It seems only a matter of time before this incredible technology will be put to wide use.

The benefits to society are numerous: Commuters will reclaim lost hours. Fuel efficiency will rise. And most importantly, tons of lives will be saved.

But what effect will such a technology have on our economic system? More specifically, what effect will it have on opportunities for ordinary people to make money?

Consumers will surely want these cars, and most likely buy them in large numbers. Thus, car companies may experience a short term bump in car sales, as people rush to switch over to this new self-driving technology.

However, the manufacture and sale of self-driving cars will not require more human employees. By and large, the process of getting a self-driving car from the factory to a consumer’s hands will be the same. And once all cars are self driving, any short term sales bump will likely end.

Meanwhile, what about all the people who drive for a living? People like truck drivers, cab drivers, delivery drivers, bus drivers, and limo drivers? Seems like all of those people will soon have to look for new jobs.

Moreover, the ability to transport goods across land without paying human drivers will make distribution costs decline. The cost of shipping is one of the few remaining advantages that local retailers have over online giants like Amazon. If shipping costs drop significantly, more local retailers may go under, taking their human employees with them.

There are other tangential effects. What about people who work at auto-body shops? Self-driving cars will have far fewer accidents, and so body shops will see a precipitous decline in business.

Or how about the Department of Motor Vehicles? If self-driving cars are widely adopted, how many people will still going bother with getting a license? What will happen to employees of the DMV?

The list goes on.

Taking all of this into consideration, it seems reasonable to assume self-driving cars will destroy more jobs than they create. Fewer jobs means fewer opportunities to make money. Therefore self-driving cars will actually make it harder for ordinary people to survive. Suddenly self-driving cars seem like a very bad move for society.

But wait a minute—just a moment ago we were excited about this technology. Self-driving cars will save lives, remember? How can self-driving cars be a bad thing?

Faced with this paradox, it seems crazy to draw the conclusion that self-driving cars are the problem. The idea of relinquishing or limiting such an innovative technology is so absurd that it can easily be dismissed.

Another conclusion is that our economic system itself is the problem. More specifically, that our economic system may not be as equipped to handle recent technological advances as we’d like.

Now, let’s go back in time and consider another technological advance: the car itself.

That advance was disruptive as well. These so-called “horse-less carriages” put a lot people in the horse-drawn carriage industry out of business. Jobs held by ordinary people were destroyed.

But the net effect on jobs was positive. Car manufacturers put numerous people to work in factories. New industries sprung up to service the needs of cars and car drivers. And the ability to transport people and goods faster enabled the creation of numerous other businesses that would have previously been impossible.

With this historical example in mind, lets return to the present. Maybe I spoke too soon. Perhaps self-driving cars will enable economic opportunities we can’t currently imagine. Perhaps tons of new businesses to fill the void are just around the corner.

But I’m not so sure these hypothetical new businesses will make up the difference. The truck driver of today may not be analogous to the carriage driver of yesterday. What if the truck driver is more analogous to the horse? In other words, one way to look at cars is that they put horses out of business. And horses never recovered. While we still employ horses at race tracks and horse shows, these uses do not in any way replace the horse’s previous dominance as a mode of transportation. Luckily the horses don’t seem to mind. I’m not so sure about the truck driver.

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