The 1989 sci-fi comedy film Back to the Future II gave audiences a glimpse of what transport would be like in the far-off future date of 2015. Flying cars would merge and flow seamlessly in midair motorways, allowing for cities to be large, low-density, and free of congestion. (Something that is ordinarily a geometric impossibility.) And, of course, there was Marty McFly’s famous hoverboard:
Now it’s 2014, and I’ve got to ask: Dude, where’s my hoverboard? Why haven’t any of the promised revolutionary breakthroughs in transport technology actually happened?
Or, more generally: Should New Zealand wait for new, unproven technologies to solve its transport problems, or should it invest in existing technologies instead?
A few people, including the new Minister of Transport, have called for New Zealand to look to driverless cars as a solution to road congestion. Matt reviewed the state of the debate in a recent post. I’d like to look at the issue from an economic perspective instead.
Economists often use the concept of a “production possibilities frontier” to display the alternative production and consumption options available to an economy at a point in time. Here’s an example of a hypothetical PPF for an economy which only produces two goods (“guns” and “butter”). Points inside the curve (like point A) represent underutilisation of resources, while points outside the curve (like point X) are impossible to sustain.
Importantly, the shape and position of an economy’s PPF depends upon the technology (and techniques) that are in use. Over the long term, economic growth means shifting the curve outwards by adopting better, more efficient technology. And I’d like to stress “adopting” rather than “inventing”. While some countries have done well by developing new technologies, the best way for underdeveloped countries to raise their living standards has been to adapt proven technologies. Technology transfer is almost always easier and cheaper than inventing totally new technologies.
This is how east Asian countries like Japan, South Korea, Taiwan, and (most recently) China have become wealthy. They didn’t wait around for unproven pie-in-the-sky ideas to come along – they just figured out how to do the same things that successful countries were already doing. If Japan had decided, in the 1950s, to await the semiconductor revolution rather than figuring out how to make cheap copies of American consumer electronics and cars, it would still be a poor country.
The same is true for New Zealand’s transport system. In economic jargon, our transport system is far behind the technology frontier. While we have an extensive and relatively well-managed road network, we have failed to adopt a number of technologies and techniques that have been proven elsewhere. As a result, Auckland has:
- A suburban rail network that can’t provide metro-style levels of service due to the lack of the 3 kilometre City Rail Link tunnel – in spite of the evidence from numerous overseas cities that frequent rail systems are efficient ways of moving a lot of people without congestion
- A serious lack of safe cycling infrastructure – in spite of the fact that cities that have made cheap, efficient investments in cycling have reaped the rewards in terms of health and wellbeing
- A single busway, and slow (but steady) progress on further busways – in spite of the fact that they are a cheap and easy-to-implement ways of getting high-quality rapid transit to underserved areas of cities.
Because these technologies already exist, we could implement them now and reap the benefits immediately. If we want to rapidly improve our transport system – i.e. move our PPF outwards – we should look to existing but underutilised technologies rather than awaiting this decade’s version of Marty McFly’s hoverboard.
A recent CityLab series on the future of transportation makes this point clearly. The cities that are moving ahead rapidly are largely investing in proven technologies like bus rapid transit, light rail, and cycling infrastructure. (As well as low-cost improvements to existing technologies like bike share.) They are not holding off on smart investments while awaiting new technologies.
By contrast, there are three big reasons why waiting on unproven technologies like driverless cars will make us worse off.
- Waiting for new technologies imposes a significant opportunity cost. If we use the future promise of driverless cars as a reason to avoid investing in the City Rail Link, safe cycling infrastructure, and busways right now, we will sacrifice years of better transport outcomes.
- Waiting for new technologies is risky, because new technologies may not ever succeed. An in-depth Slate article on driverless cars highlights how far they need to come before widespread deployment. There are big problems to solve in navigation and safety in poor weather conditions. Computers are still not very good at dealing with unpredictable situations.
- Even if the technology was available today, it would still take decades to replace New Zealand’s entire vehicle fleet. New Zealanders own 2.7 million passenger cars, and it would cost tens of billions to fully replace them. New cars entering the fleet today will still be on the road in 15-20 years. In other words, we wouldn’t see the benefits of a fully driverless vehicle fleet until the 2040s or so.
In addition, many people actually enjoy driving quite a lot and wouldn’t really want to be chauffeured around by a robot. Driverless cars are not a good substitute for a V8!
While driverless cars (or hoverboards for that matter) sound exciting, we can’t afford to pin all of our hopes on them. The pragmatic, proven way forward for transport in a big city is the same as it’s always been: Give people good transport choices by investing in efficient rapid transit networks, frequent bus services, and safe walking and cycling options.
It may seem boring, but as an economist I’ll take tried-and-true over utopian fantasies any day.