There was talk about renaming the Krugman thread for this purpose, but that seems to be going nowhere. Besides which, I feel the Krugman thread should be left to discuss Krugman while this thread can be used for more general economic discussion.
Discuss:
- The merits of competing theories.
- The role of the government in managing the economy.
- The causes of and solutions to our current economic woes.
- Comparisons between the economic systems of different countries.
- Theoretical and existing alternatives to our current market system.
edited 17th Dec '12 10:58:52 AM by Topazan
Ride apps having the capacity to replace personal cars entirely is a prerequisite to people using ride apps instead of buying cars, but no one is going to pay for a ride app when they have their own car and can just drive themselves. The only solution is for the ride app company to build the capacity out first and hope that the customers arrive to take advantage of it.
You can putter around the margins by having your ride app steal business from conventional taxis, but eventually you'll hit a wall there when you've gotten all the taxi traffic (and maybe a bit extra, because your product is presumably cheaper for the same level of service). It's the jump from "replacing taxis" to "replacing personal vehicles" that has to be done all at once or not at all.
Really from Jupiter, but not an alien.Since Uber was mentioned, we have to take into consideration that the compan currently runs into the problem of proper regulation of its drivers -with not a small amount of horror stories attached to it, and tax evasion as none of the money that circulates between user and driver gets to contribute to the state, which is in charge of maintaining the very roads which the drivers use to work.
As for robo-taxis, I doubt that people will give up their cars mainly because it gives them the freedom to travel beyond the city if needed or if they want to go somewhere else. Another issue is how effective would the programming of a self-driving car would need to be to actually perform in real life, and that's not covering the legal implications on what happens if the programming fails and an accident occurs.
Instead of focusing on relatives that divide us, we should find the absolutes that tie us.It needs to be able to replace the convenience of private ownership, cope with peak demand based on patterns outside the control of drivers or automotive manufacturers†, and deal with things such as camping etc. where you obviously have the downside of much-longer-than-normal journeys.
I have to agree with the "it's not going to organically happen just as a byproduct of developing self-driving" line of thought.
† Just look at how many people head to beaches and the like in good weather...
This is a valid point. I still think we'll see organic growth as more and more people join their vehicles to the ride-sharing system. It's not like there's anything to lose, assuming the company insures against damage caused by passengers while your car is running on their network.
What will help is advanced routing software systems, which would approach an AI Overlord in and of themselves. For one thing, for daily commuting you wouldn't hire a ride 30 minutes prior. Rather, you'd sign up for the system and set your typical departure times. "At 7:30 AM, I leave home. At 5:30 PM, I leave work. My commute is 15 miles." There would be some flexibility, of course. The car would be programmed to wait for you, presumably for an additional fee.
Anyway, the software would do the job of scheduling vehicles to pick up and depart at the requested times for each passenger, routing them to avoid areas of high traffic, making sure each maintains a sufficient level of charge, etc. If there is insufficient capacity to fulfill a customer's request, they would be notified and given the option of alternate times.
I would imagine that the system would be very conservative at first so as not to over-promise, and if you were contemplating ditching your car entirely, you'd make sure that there was enough existing capacity that you wouldn't be likely to be stranded at home. Further, only people who could afford flexible arrival and departure times would sign up initially. It's an organic process, not a commanded one.
(I am completely discounting the use of gas cars in this system, by the way. While nobody is making self-driving gas cars, it doesn't notably change the economics except that dispatch and maintenance bays would need fueling as well as charging capabilities and gas cars are more expensive to maintain in general.)
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For long-distance driving, "camping", and similar things, I would imagine you would be able to arrange to use a car for a longer period of time, and there would be inventory reserved precisely for such uses, including larger vehicles and "camper" conversions. Except for the uber-enthusiasts who go camping every week, this kind of infrequent demand should not present any significant strain on the system.
If you are regularly driving 1000 miles a week or something like that, the argument for private ownership remains a strong one, and that's perfectly fine.
If there comes a time when the Fascist State Overlords seize your private car and force you to take a robo-taxi, that'll be an entirely different conversation. The advantages of self-driving are just too strong. The transition will happen by itself. Anyway "freedom of movement" is not an absolute right: you can't drive without a license or take a bus without paying for it.
By the way, we're talking Level 4 or Level 5 autonomy here, not the Level 2 autonomy that Tesla is currently at. The company seems to believe, however, that it is only a year away at most from being able to push up its autonomy classification.
Edited by Fighteer on May 4th 2020 at 6:36:34 AM
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"@Redmess: "I was watching a documentary about Ireland and the Irish Tiger/Phoenix, mainly how the country attracted multinationals with tax benefits, and how that impacted the Irish economy.
It doesn't really seem like a very healthy model to me, though, since a lot of these companies seem to mainly attract foreign workers who are willing to move on to New York after a few years."
I happen to be reading Thomas Piketty's most recent book, "Capital and Ideology", and he has some things to say about this national strategy as it relates to the EU. In short, he regards Brexit as regrettable, but not surprising, because he thinks that the EU has been encouraging it's members to "race to the bottom" in terms of lowering taxes. This is a consequence of the EU having a common currency, and therefore no controls over the transfer of currency across member borders, but lacking a unifying policy on taxes. Therefore, any EU member that wants to retain capital investment has to offer a competitive tax rate. Low taxes on high incomes then in turn reduces the member's ability to fund social programs that benefit the working class, and the result is the proliferation of populist ideology. According to Piketty, both Brexit and Ireland's budgetary policies are basically the chickens coming home to roost.
I'm done trying to sound smart. "Clear" is the new smart.
Funny, that's the first explanation for nationalist populism and Brexit that makes sense as an economic argument rather than an ideological one.
I might as well put this here too:
Hongkongers' support of pro-democracy shops 'violates the free market' says Beijing.
Outside of confirming their state capitalist stance (thank you DeMarquis for informing me that existed), I'd like to ask how the economist tropers here would weigh in, as I am but a novice to economic matters.
Edited by TheWildWestPyro on May 4th 2020 at 3:21:28 AM
Before even reading the article, the headline alone has me slapping my forehead.
Very first line of the article reads: "Beijing’s office in Hong Kong has slammed shoppers’ support for pro-democracy businesses as “violating” free market principles."
Ok, that makes a tad more sense (as in, why they would even say such a thing), but not much. In a free market, the consumer is always right. Something in me wants to say something snarky like "Only the Chinese Communists could claim that consumers have an obligation to pick the "correct" stores." Probably elitist of me.
Next the article includes more context:
"In a statement issued on Saturday, the office said “extreme radicals” had initiated illegal assemblies, disturbed shops and hurled petrol bombs during the May 1 holiday, despite demonstrations remaining low-key. It accused opposition lawmakers of using the “yellow economy” promotion to secure seats in the Legislative Council election in September, claiming that Hong Kong’s economy had been “kidnapped” by politics."
I now feel that I understand what the government is so worried about: they apparently are claiming that opposition politicians are promoting certain businesses over others for political reasons. Sounds like a smear campaign, but I am not in possession of the facts.
Edited by DeMarquis on May 4th 2020 at 6:25:28 AM
I'm done trying to sound smart. "Clear" is the new smart.Like much that happens in China, the economic argument is a paper-thin facade for a political argument. It happens in the U.S., too (c.f. debt hawks).
Edited by Fighteer on May 4th 2020 at 6:41:38 AM
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"As money talks, there's a great deal of pro-Beijing businesses in favor of the CCP and the Hong Kong government, but there's also businesses that sided with the protesters.
As the protesters enjoy the majority of support from the people against a very entrenched establishment, they have decided to stick to helping out the pro-democracy businesses.
The government still has its supporters, who band together to smash up pro-democracy businesses. In the past, the radical protesters used to vandalize pro-Beijing businesses, but that appears to have died down.
There is a single stepping stone, stealing public transport traffic.
That however comes down to cost, while a robo-taxi can be more expensive than the public transport alternative it can’t be that much more expensive if you want to draw people in, it also has to be quicker, which means operating in either rural or suburban areas, where a drive is a viable alternative to public transport.
That and robo-taxis could replace some under-used public transport routes, instead of an empty bus going through five villages every hour you could have three robo-taxis that will pick you up from the old bus stops and drop you off at them.
“And the Bunny nails it!” ~ Gabrael “If the UN can get through a day without everyone strangling everyone else so can we.” ~ CyranOh, those are definitely coming. I should point out that most commuter trains are already mostly run by computers, with a human driver to supervise in the event of an emergency, and also to look out the window to make sure there's nobody hanging out the side before the doors close.
As for municipal buses, they tend to operate on fixed routes, so the AI solution is almost trivial compared to general self-driving. We could get those up to Level 4 or Level 5 without a titanic amount of effort.
Those aren't really economic disruptions, though. The number of people employed as bus drivers and train conductors is fairly trivial compared to other parts of the transportation industry, like taxis and trucking.
Edited by Fighteer on May 5th 2020 at 8:03:33 AM
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"Good. The gig economy is terrible for employees, and just encourages bad behaviour from companies.
Apparently Tesla is profiting from tax exemption on electric company cars, as well as not having to rely on car dealerships.
Edited by Redmess on May 6th 2020 at 5:01:07 PM
Hope shines brightest in the darkest timesTesla's been doing dealership-free car deliveries for years. Obviously it would have a competitive advantage if dealerships can't operate. It ain't rocket surgery.
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"Bing, correct! Tesla's struggle isn't to sell cars but to make enough to satisfy demand.
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"The history of auto dealers in the U.S. and around the world is a fantastic one, well worth a complete study all by itself. At a very high level, auto manufacturers started recruiting dealers because of the high cost of investment in physical sales locations, sales personnel, inventory, etc. If someone else is willing to put in that investment and take on the risk of holding the inventory, manufacturers can concentrate on building cars.
It's much the same with service: if dealers maintain the service facilities, manufacturers don't have to. Dealers benefit because of the high markup on service and parts, while the cars themselves can be sold at very low margins. Dealers also profit from higher margin used car sales, extended warranties, and so on. Most of the profit of the automakers is in selling parts to the dealers.
In the early days, the automakers held most of the power and frequently changed the rules or even revoked franchise rights to set up their own sales locations at a whim. Laws were passed in most states giving dealers exclusive rights to sell cars. Now the dealers hold the power in the relationship, for good or ill.
When Tesla came along, it didn't want to go to the hassle of setting up dealerships; in fact, it didn't want dealerships at all. Instead, it would sell cars directly to customers, who would pick them up at sales locations (or have them delivered directly to their homes). The sales offices would have minimal inventory: most of it for test drives and service loaners.
Dealer organizations in many states lobbied heavily against this, losing in some and winning in others. Now, since physical sales locations haven't been able to have customers inside for months, the direct sales model is winning out.
But, you point out intelligently, doesn't this mean Tesla has to set up all its own service centers, and doesn't this mean it won't have a network of shops ready to service its cars? You are absolutely correct, and this is a major weakness for the company. Tesla is profiting on sales of the cars and breaking even on service, the opposite of legacy automakers.
As an aside, because battery-electric vehicles have fewer moving parts than internal combustion engine vehicles, they tend to require a lot less service. Since this is the largest source of gross margin for auto dealers, they have been very reluctant to sell BEVs, engaging in both active and passive resistance when asked to do so by their parent automakers. Part of their resistance to Tesla is because even if they could get dealer licenses to sell its cars, they couldn't make as much money off of them.
Dealers serve a useful purpose and employ a lot of people, but they have grown stagnant and their primary impetus seems not to be to improve the experience for the customer but to preserve their business model.
Edited by Fighteer on May 6th 2020 at 4:00:39 AM
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"1 in 5 American workers has filed for unemployment benefits since mid-March
.
33.5 million unemployed in the US. That is 21 percent unemployment.
And not all these people will receive paid benefits either, so this is not just temporary. A lot of people are going to suffer for a long time because of this.
Hope shines brightest in the darkest times

A lot of these concerns are around the details, which would be worked out over time.
I think it is inarguable that, over time, self-driving will be cheaper than hiring a driver. I don't see any way you could reasonably argue otherwise. If you assume that the technology will not become exponentially more expensive over time, then you can already buy a car with the capability to become a robo-taxi for about $40,000. If that represents $5,000 of the price, and the median wage of a taxi driver is $26,000 [1]
, you could charge half the fare and come out ahead in less than four months. It hardly seems like it's even a comparison.
Edited by Fighteer on May 4th 2020 at 4:01:17 AM
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"