Daniel Sutter: Drones, self-driving vehicles, and the future

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Two firsts occurred recently for drones and self-driving vehicles. On June 30, the first highway death in a self-driving car occurred when a Tesla Model S on autopilot hit a tractor-trailer near Gainesville, Florida. Then in July, a Reno, Nevada, 7-Eleven conducted the first Federal Aviation Administration (FAA) approved drone delivery. The historic delivery included Slurpees, donuts, coffee, and chicken sandwiches.

Drones and self-driving systems for vehicles are both emerging under Federal regulation. While we need rules governing these technologies, the government can also make rules to protect established commercial interests. Whether politics will bless these technologies or block them to protect established economic interests remains to be seen.

So far regulators are allowing development. In June the FAA released its long-awaited rules for commercial drones, to replace the current system of special permits. Drones will have to be registered and operated by holders of a drone pilot license, with operation at night or out of the pilot’s sight restricted. Many commercial users seem ready to move forward under these rules.

National Highway Traffic Safety Administration (NHTSA) director Dr. Mark Rosekind strongly supported self-driving vehicles last month in San Francisco. This was noteworthy, because although self-driving cars have had encouraging road tests, the inevitable fatal accident could have afforded an opportunity to apply regulatory brakes. Dr. Rosekind announced in San Francisco, “I can tell you that no one incident will derail the Department of Transportation and NHTSA from its mission to improve safety on the roads by pursuing new life saving technologies.”

Drones and self-driving cars illustrate the never-ending economic clash between the past and the future. The successful economic practices of the past have built the established businesses of today. New products and technologies threaten established businesses. Life is good in America today, with a high standard of living, people living longer than ever, and the ability do things that would have been unimaginable 100 years ago. For the future to prevail over the past, we must be able to envision how a future that does not exist yet could be even better than today.

Both drones and self-driving cars could significantly improve the future. The Association for Unmanned Vehicle Systems International projects that drones could generate $14 billion in economic value annually within three years. Such projections are often self-promoting hooey, but uses for drones in surveying and agriculture surely indicate enormous potential value creation. And I await drone package delivery from Amazon.

The benefits of self-driving vehicles loom even larger. Over 30,000 fatalities and 2 million injuries occur on America’s highways annually. The NHTSA calculates that if we put a dollar value on all of the losses, auto accidents cost our nation $1 trillion a year. And 94% of traffic accidents are attributable to driver error. Even assuming an occasional crash, self-driving cars could potentially eliminate a majority of accidents.

Self-driving cars could provide the handicapped or elderly mobility comparable to other Americans. Adults could consume alcoholic beverages without killing or injuring themselves or others when driving home. Americans drove 3 trillion miles in 2014, and these drivers’ time could be freed up to safely text, talk on the cell phone, or read.

Self-driving technology could reduce costs in transportation, as 3.8 million people work as motor vehicle operators. Trucking has provided America millions of good jobs, but companies have been struggling to recruit younger drivers. Technology might avert a truck driver shortage and lower the price of many goods for consumers.

The legal burdens the taxi industry has placed on ridesharing companies Uber and Lyft, however, illustrate why regulation might deny us the benefits of drones and self-driving vehicles. Cities have used regulation to protect existing taxi monopolies. Just recently, Austin, Texas, voted for regulations ending ride sharing service there.

The NHTSA’s Dr. Rosekind may sincerely want to allow self-driving cars to develop. But numerous businesses threatened by self-driving vehicles (or drones) could seek to throttle the competition. If politicians side with the established interests, even the best intentioned regulators will not prevent regulation from being used to protect the past from the future.

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Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University and host of Econversations on TrojanVision. The opinions expressed in this column are the author’s alone and do not necessarily reflect the views of Troy University.

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