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The Road Less Traveled
Can Driverless Cars Hold Off the Pension Tsunami?

For years, we at Via Meadia have been sounding the alarm about ominous fiscal headwinds facing America’s state and local governments—particularly, the multi-trillion dollar pension deficit accumulated over decades of dishonest accounting and bipartisan political fecklessness. But today, we thought we’d highlight one trend that could potentially buy politicians more time to deal with the looming crisis: Driverless cars. Governing magazine reports on some of the ways that this new technology could help shore up shore up strained state and local budgets:

Its new report, Autonomous Vehicles & Municipal Bonds, [Morgan Stanley] puts the net positive impact on municipal budgets in excess of half a trillion dollars. That number takes into account more efficient roadway use and a dramatic reduction in parking garages and parking spaces. With parking facilities no longer needed, those properties can be turned into higher-level development, which would provide municipalities with a boost in property taxes. Offsetting those gains, Morgan Stanley foresees losses of roughly $1.3 billion from such revenue sources as fuel taxes, license fees, parking fees, speeding tickets and personal property taxes.

It’s not just parking garages: Fleets of self-driving cars could also reduce strain on expensive public transportation systems. And as Governing reports, autonomous vehicles are expected to reduce the number of accidents and traffic stops, freeing up more resources for urban police and fire departments.

None of this means that policymakers can or should become complacent about the pension problem, which is an order of magnitude greater than the potential savings from self-driving cars. But it is a reminder that if and when state and local governments get back on sound fiscal footing, it won’t just be thanks to union-busting and benefit-cutting, but also to investment and innovation in the private sector.

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  • Andrew Allison

    Dream on. First, half a trillion dollars doesn’t come close to funding the gap. Furthermore, the sordid history of public employee pensions tells us that the any savings will be spent on propping up the unsustainable promises rather than reform. It’s safe to bet that any supposed savings will be offset by the estimated roughly $1.3 billion from such revenue sources as fuel taxes, license fees, parking fees, speeding tickets and personal property taxes. All of this assumes that there will be such a thing as a driverless (as opposed to self-driving) car anytime soon. Sure wish I could lay my hands on some of what Morgan Stanley and TAI are smoking.

    • ljgude

      Indeed. It seems to me that it will take a breakthrough comparable to the technological explosion that followed the Space Race to deal with US debt. In nanotech or energy perhaps. Steve Bannon, despite the image provided in his press clippings, says the 2008 financial crisis is the fourth great turning in American history – the first three being the Revolution, the Civil War, and the Great depression and that even if we begin to seriously address it will take a generation to deal with.

      • Andrew Allison

        I fear that the only way that US debt will be dealt with is to extend, pretend and devalue. A breakthrough such as you describe seems unlikely to give the US the sort of relative economic advantage it did in the past due to speed with which technology spreads worldwide. Ironically, fossil fuel might be the answer — the US, like AUS, has enormous reserves of coal, and is well on the way to becoming a major oil and LNG exporter — if the environazis don’t prevent their export.

        • ljgude

          I agree. It is unlikely and as you say the rapid spread will lessen any advantage the US had in the computer revolution. And yes, extend and pretend will continue until it can’t. While the left and many on the right are wetting themselves about Steve Bannon the anti Semite, or white supremacist, he is one of the few I have encountered who recognizes that the 2008 financial crisis is an existential national threat and needs to be dealt with. So yes by all means lets make money on energy, black and green, and everything else we can. That Man in the White House is sure upsetting the chickens – even some of the Liberal Internationalist elites here at TAI not to mention my Muslim friends who believe they are about to be interned like they were Japanese. or something

  • Fat_Man

    There is a strain of analysis that starts with the premise that computer driven* cars will be rented by passengers on a single use basis. I am very skeptical about that. I own a car, a nice one. I like it, it is mine, and it has my stuff in it, the entertainment device has my settings. If I were renting vehicles at random, I wouldn’t be able to do that. The first time my wife gets into a automated vehicle, in which some one has just vomited, will be the last time she does that.

    *I say computer driven because there are already driverless cars on the road, lots of them, because the human sitting behind the steering wheel is not paying attention.

    • CapitalHawk

      Well, I generally agree with you, but our view is that of older, better off people. Younger people and poorer people probably will use these types of vehicles fairly heavily. Especially in urban areas.

      • Gene

        Which is fine. But inevitably some of those younger people will get ideas about how car-owners like me need to penalized and punished for keeping and driving our personal iron. God help us when they gain political power.

        • rheddles

          No it won’t be the politicians, it will be the insurance companies.

        • CapitalHawk

          Nah. They will think those things and then they will have a kid or two. Then they will try to (a) use a car share service and (b) comply with the laws on child car seats and find out that those two things don’t co-exist very happily at all (nor do taxis and child car seat laws, for that matter).

          Did you know that hospitals won’t let you take your baby home unless they see that the baby is locked in a car seat in the backseat of the vehicle? That’s when the eye opening begins since very few hospitals (even in large relatively urban areas) are near a subway stop.

  • FriendlyGoat

    Out here in rural land, I really can’t think of anything I could possibly be less interested in than a self-driving car.

    • vb

      I live in Germany, and before any self-driving car gets approved, it should be tested on the parking lot of my local supermarket. I want to see three weeks of films showing how it deals with the narrow lanes, narrower parking slots, grocery carts, and kids that break away from their mothers.

      • f1b0nacc1

        This is the real problem. Ironically enough, autonomous cars will find it easier to cope with rural areas (much simpler environments) than crowded urban and suburban areas, with lots of unpredictable moving objects.

    • CapitalHawk

      Why? Having recently driven halfway across the country, there is nothing that I would have liked more than a self-driving car. If I’m in the car for an hour driving, whether in grid lock traffic or in the country, I would like to take a nap.

      • FriendlyGoat

        To each his own. I have enjoyed driving all my life and used to do a lot of it. Even though my trips are shorter now, I like my own gas pedal, my own brake and my own steering. Maybe there could be advantages of autonomous vehicles for all of us as we get older, but I don’t feel ready for it yet. I certainly don’t wish to see the day when all of us oldsters might be told we can no longer drive and MUST use the self-driving technology for the supposed safety of everyone else. (But that’s probably coming at some point.)

        • CapitalHawk

          Well, I grew up where there was plenty of open road and I did (and do) enjoy driving in that type of situation – especially when you are in no particular hurry to get somewhere. But the truth is that that is a rare occurrence for me and I presume most people these days. Most of my driving these days is one of two things (a) long haul trips and (b) rush hour traffic. I’d happily turn both of those over to a computer so I can (a) work, (b) read a book, (c) nap, (d) comment on TAI, etc…

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