Tag Archives: economy

Self Driving Cars, Pitttsburg, Uber, and Us, Overlooking the Atlantic

So I’m here in a very nice seaside rented home on an obscure North Carolina island with the family. The kids and grand kids are off in various swimming/biking/exploring modes and rain is forecast. I’ve been working on my congressional campaign, and so distracted from blogging. Nevertheless, there is some new raw material that beg for expression, I’m on the porch watching storm clouds gather for the first time this week, so let’s organize the news of the last month and see if there’s anything that we on the commission need to heed.

Kris retired two years ago and decided that she liked to travel with me as I do locums work. This means that we take a taxi to and from the airport, a truly awkward experience. We call a day ahead, call half an hour beforehand, and still they don’t show up. The drivers are invariably African and hostile until my alcoholic personality disorder kicks in; “Africa, big place, where in Africa?” “Ethiopia.” “The Highlands or coast?” “Oh, you know Africa! The HIghlands.” Kris; “You’re Christian? Did you get kicked, go to Libya?” By this time the guy is wracked with emotion, ready to talk about his family, hopes, past, and we’re at the end of the journey. It costs $13.40. I try to give the guy 15 dollars, if I can find it as it’s often dark or worse yet, raining. Awkward.

Then the people at the airport decreed that Taxis bringing folks from Kentwood had to charge a minimum of 15 dollars. I don’t know how the airport can write a rule like that or even enforce it. We at the city commission should investigate.

This diktat caused me to rebel. I downloaded Uber and we have since had an excellent experience. The price is $7.30, half of a taxi, it automatically goes on my credit card and so is a recorded as deductible cost of doing business, the cars are uniformly interesting (two Priuses) and the drivers are all fascinating (a guy who sold art, several retired executives escaping their wives, an African American who was damned if he would ever work for somebody again.) In creative moments I calculate that if Uber can get us to the airport for 7 dollars, that they can get us to Meijers for 5; maybe get rid of one of our cars……

Then the Economist threw a bomb. It devoted a recent issue to the Uberization of transportation. It’s not what our Uber drivers had envisioned. Uber wants to get rid of all their drivers and instead operate a fleet of self drivers.-enough self drivers to replace most car functions as Americans now use them. They would operate a large fleet, cars constantly running, that would pick people up at their front doors and deliver them to their places of work, doctor’s offices, bars and at Aunt Tillie’s, then go off to pick up yet another customer.. The cost would be minimal, safety high, efficiency nearly perfect.

Wow.

Then Uber announced that they were testing 4 Ford Focuses that had been modified to be self drivers in Pittsburg.    Pittsburg!   Fifth Avenue is the only straight street in the whole region. They had to build the airport 20 miles out of town where it was flat enough to land a DC4 back in the day. It’s ice and snow, steep grades, intersections where 5 streets come together, narrow, 1900s built streets. Everything is lined with worn out brick or cement. No one would test drive a self driver in that environment.

Unless he knew that his product could handle the job. (I would have said “Had the calm confidence of a Christian holding 4 Aces” (Twain) but can’t make it work.)

Daughter who has lived in P’burg for 7 years is here with us, so we ask about the self drivers; Yep, she’s seen more than one. They exist, ugly, roof has a bubble so distinctive enough for it to be known if they fail somehow.

I’d guess that we’ll know that self drivers are viable, efficient, attractive and cheap enough to go commercial by next spring. How long before you can buy one, or before Uber orders a few 100,000 Priuses modified to self drive? another year? maybe 2? These 100,000 cars will replace a million personal cars in people’s garages and on the parking lots.

We on the commission had better think on this.

Some thoughts.

The cars likely will not be built in Michigan, or if they are, the mechanical parts will be mere commodities lacking attractive luxury pricing markups that would stimulate competition and creativity. Self drivers are computers and software with a metal attached.

Public transit in all it’s forms is doomed. Taxis and buses cannot compete with personalized pickup and delivery in a warm (or air conditioned in the summer) car. Passenger railroads (why do we support Amtrack? This company regularly kills and maims the elites in the NY to Washington corridor;  even as I write, there’s been death and over a hundred injured in Hoboken, NJ) and intercity buses will be replaced in their roles of moving people a few hundred miles to other cities or even to Florida in the winter. School buses, kaput.

Will parking lots, parking spaces on streets and the width of roads be affected? If so, what do we do with the extra space; more buildings next to the malls? Parks that never get used?

Will shopping for groceries, clothing and minor purchases be abolished since things can be ordered on the internet and then delivered cheaply when the resident is at home and ready to receive the goods. So what happens to malls, big box stores and strip centers? A warehouse full of dry goods and staffed by robots will no longer need to be located on our main streets.

Will plunging transportation costs encourage people to live further out in the country? I can’t think of any arguments that would support them wanting to live closer together, so scratch the New Urbanism and Smart Cities. That’s my opinion but maybe others can marshal opposite arguments.

Do good street lighting, traffic lights and signs mean much to a robot? No, but there will be many years before human drivers no longer struggle with steering wheels and brakes? How important will street maintenance and snow removal be in this pending storm of change?

The accidents that are reported for self drivers in Palo Alto, where these have been standard for years, are almost all caused by humans disobeying the law while the patient self drivers are scrupulous in heeding the law. The patrolling for- and punishing of speeders, drunks, and unlicensed drivers will disappear, so there go lucrative traffic fines, busybody drug courts and the fill in the hours work of lurking for speeders that police do. Also, we should anticipate fewer accidents with their fires and injuries that occupy the fire department.  Maybe we should cut budgets and recruitment.

The latest fad in policing is DDACTS, in which our police concentrate on known high crime areas looking for minor traffic violations and vehicle defects that serve as an excuse to “stop and frisk” the drivers without ruffling constitutional feathers. Gone. Those old Pontiac and Toyota beaters will be soon retired and the traffic in poorer areas will resemble that of the wealthiest suburbs. And all the self drivers will soon have traces of cocaine and marijuana detectable, just as it is on our US currency.

Will our fleet of cars, fire engines, plows, utility trucks self drive? Quite probably, to some extent so we’ll get some cost savings.

The folks who will first use self drivers are the old who are still living in their own home. They can more easily take care of themselves if they have the increased mobility, so forestall moving into retirement villages. So what happens to the explosive growth of these corporations that depend on a aging and dependent population?

I think that air traffic will be relatively spared, so our connection to Kent County’s airport will be an advantage.

Well the rain passed us by, a watery sunshine, temperature 78, moderate wind,  and I see an osprey hunting off shore.  Commission meeting next Tuesday, so gotta get back in the next few days. Life in retirement is hard but yo gotta do what ya gotta do..

I Get My Comments Published in the NYT, Expect Hate Mail

The problem with economics and other soft sciences is that a series of unsubstantiated pronouncements constitute an argument. We have no reason to trust any of these explanations, much less the standard liberal bromide that we need to tax money away from savers and give to spendthrifts. All of these theories are propounded by Keynesians who got the Japanese and Europeans into the pickle in the first place. My problem is that we in the USA have exactly the same trajectory and Keynesians in charge as did the Japanese and Europeans. The throwing money at the dartboard to pick a solution has failed and no one has any better ideas.
Economics, as a “science” does not have the power that would justify allowing the Fed and Congress, or any other central power to engineer the economy. Capitalistic societies have booms and busts, deflations and inflations, localized collapses and even disappearances of productive life. Visit any ghost town or recall the 1840, 1870-90, 1930 deflations, the panics, most short lived and self correcting in the history of the USA.
There may not be anything wrong with deflation. Little people who save can gain by putting money under their mattresses and won’t lose it to inflation. Investors will need to be much more careful to be sure that their projects make sense, our government will struggle and be hampered in its attempts to “help” people.
Finally, under socialism, planned economies, welfare states and the like there are no booms, only chronic busts.

A Visit to Washington State; Rural Poverty, the Solons in Olympia, HUD, and What Disruptions We Need to Foresee

Kris and I vacationed last week in Washington State, mostly on the Olympia peninsula, staying at a low key “farm” B and B, at some distance from the usual tourist haunts.   We had a great time, hiking, biking and just talking in the evenings with our hosts, Joy and Joe. We learned something disconcerting during those lazy talks. It seems that this spectacular coastal region of the state was home to thousands of lumber related jobs which all disappeared when the environmental movement became ascendant 20 or 30 years ago. Tourism has not filled the void and so rural poverty now dominates the peninsula outside of the few tourist magnets. Obese, tattooed smokers loitered around the few gasoline stations and unpainted single-wides were hidden behind the lush evergreens. There is drug abuse, domestic violence and petty crime. (The perps won’t walk very far, and the rest of the peninsula is untroubled and spectacular.)

Interestingly, this  was much worse 20 years ago as the lumber industry collapsed casting tens of thousands out of work and into pauperism. This caused a political outcry heard in Olympia. The State of Washington upper class decided that it could solve two problems at once by moving its chronically welfare dependents out of the slums in Seattle and Spokane where they seemed trapped and out into the pure air of the Olympia peninsula where their welfare checks would inject money into the lagging economy and cause prosperity(!).

The result was pretty much what you’d expect. Crime skyrocketed and law enforcement resources were strained to the maximum. Schools could not cope with the influx of culturally and educationally incompatible kids. The freshly introduced adults had never had to think independently or act when stores, doctors and government offices were 50 miles distant. Housing and environments were trashed. There still weren’t any jobs.  Folks of all stripes left when they could, leaving behind the current lower class who live off casual jobs in the few businesses, pop off an occasional elk, or get welfare, basically the “disabled” receiving SS benefits.

I bring this up because I foresee a similar problem for Kentwood arising from new rules  that the zealots in HUD at the national level are proposing. It seems that this federal department means to eliminate poverty, racism, and what have you, by with holding funds from communities that are not able to show that they have dispersed all classes of citizens into each other; this scheme is supposed to elevate those who can’t afford “decent housing” to the cultural, educational, employment level of those who have earned their presumably “unfair” places in their pleasant, peaceful communities by working and saving for their selfish advantages. (All of this is based on a theory and one or two anecdotes-social engineering is like that.)

Historically, a community like Kentwood could declare that it conformed with HUDs mandates and get the money (which is all that counts.) This didn’t work, so HUD has done extensive study on the epidemiology of where minorities, poor people and the deprived live, or don’t. They have used several “innovative” study techniques and claim infallibility in diagnosing our social pathologies. All of this is in service of intending to tell communities exactly what/where/how they will make provisions to distribute the underprivileged into our neighborhoods.

And therein I see the similarity to the Olympic peninsula of Washington. I don’t know how many of our tax dollars we recover via these HUD grants, but if it’s substantial, we in Kentwood might want to look more deeply into that and similar failed social engineering experiments and marshall the arguments necessary to forestall the lusting of the central planners who are even now collecting comments before implementing their rules

We all have Credit now, and that’s Less than Nothing. Why I worry about Deflation and our Kentwood Debt

“Die Moor Soldaten” was a song written during the 1930s by International Socialists imprisoned by German National Nocialists.These political prisoners were worked to death, forced to dig ditches all day and fill them back in at night. The poor wretches would have understood the difference between credit (debt), and money(cash).

Debt, or borrowing, is a negative, a ditch from which one must make a greater back breaking effort to move dirt up and out as the hole becomes deeper and the nearby mountain of dirt becomes higher each day.

Money is a positive, the bulge that a hill of dirt makes above the field from which it’s easy, in the short term at least, to move dirt downhill back into the hole. Too bad that modern economists, who don’t understand the difference, wallow nostalgically in the Keynesian and Hayekian landscape of “money” of “printing money” and of “managing money” as though it were an important commodity in modern economies. It’s not. We use plastic at stores and borrow to buy houses; no one pays with 100 dollar bills.

Money, be it old money, gold, rapidly depreciating Venezuelan Bolivars, a balance in a checking account or savings at a bank is wealth. It is better than nothing. One can dispose of the stuff easily, spend it like a drunken sailor, just like our “Moor Soldaten” found it easier to push the loose soil back into the hole. It flows effortlessly through our hands like dirt followed gravity in those north German moors.
Government historically diluted the gold and silver in their coins or issued fiat currencies and so could cause money inflation, effecting citizens’ economic behaviors in the short term. Keynesianism worked (maybe) before modern economies evolved to borrowing to sustain itself.
Credit, be it on a card, bank loan, mortgage, or an obligation to pay a defined benefit pension is less than nothing; it’s a negative, a hole in the ground from which one it takes increasing effort to dig deeper to move the dirt out of the hole and onto the hill. As debt became better understood by average people during the recent financial unpleasantness, it acquired a reputation as a burden and fewer took on. I’m old and established, one of the few who still carry a credit card; it’s paid off monthly. Young people at the check out counter in stores no longer carry credit cards; they use debit cards (cash in the bank) because they’ve learned to fear digging a hole of debt for themselves. Home ownership in the USA is shrinking.
The Fed no longer prints money but rather asserts that it creates credit, assuming that consumers, businesses and lenders would continue to use the “easy money.” But credit creates money only if it borrowed into existence. Borrowing is no longer fashionable. The Fed’s Keynesian policy pretends that the hole created by citizens taking on more debt wasn’t getting deeper and that lifting the dirt out of the hole wasn’t growing beyond normal human capacity. Trying to stimulate spending by making credit readily available depends on convincing the wretches in the hole that they are on level ground easily pushing dirt around. But those prisoners have been squeezed by the financial unpleasantness of the last few years and see that the field is not level, that moving dirt uphill is harder the more of it that there is. So, personal debt in many advanced countries shrinks as folks pay off their credit cards and rent instead of taking on mortgages. Consumer spending is stable or shrinking, confounding the Nobel prize winning economists who fantasize creating cheap credit to “stimulate” the economy into high drive (and also Ron Paul who has predicted the inflationary blowout for 40 years now.)
The Japanese “stimulated” the economy with low interest rates and high spending in 1990 and have been in deflation have been in deflation for 25 years. Most European countries, following the same formula after the 2008 panic, have negative cost of living indices.

Our Fed in the USA is still trying to get us Americans to shovel the same old dirt denominated in cash and money. It’s not working. It pretends to “stimulate” the economy with cheap credit and worries publicly about deflation as our consumer price inflater hovers around 1.6%. The Fed plays in its own sandbox with an outmoded financial model, stubbornly ignoring today’s economy.
Credit is not money. The US economy is not outside of history