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The winds of change are upon us …

Autonomous car, electric carEvery action has consequences … and those consequences have consequences … which also have consequences … simple concept, easy definition. Second and Third Order consequences … I read a great article about this earlier today.

Lets take a prolonged drought for instance. They have far reaching consequences beyond the obvious ones.

  • First Order – As a result of a drought, crops fail.
  • Second Order – The crop failures lead to farm foreclosures.
  • Third Order – The farm foreclosures result in out migration to the cities.

From there we can see an additional boatload of orders of consequences. Urbanization and its attendant issues, ecological degradation and everything that implies, implications for taxation on both the rural area suffering population loss and on the urban area needing to accommodate the increased population.

To matters even more interesting, higher order consequences can often be counterintuitive. Like Braess’ Paradox.

Mathematician Dietrich Braess noticed in 1968 that adding road capacity to a congested road system can serve to increase overall journey times over that road network. Oddly enough it has been further observed that removing a roadway can actual improve congestion patterns!

Yup, no typos – removing a roadway can improve traffic patterns. There is a certain amount of self-organization that can occur in complex systems but that is a conversation for another day. There are entire branches of mathematics dedicated to complex systems.

The point I’d like to stay with is that of second and third order consequences.

Anyone alive today should start giving these terms a lot of thought as technology marches forward at an ever quickening pace.

Let’s just consider transportation … just with autonomy and electric cars we are in for revolutionary changes within 5 to 10 years. That’s not idle speculation.

Check it out.

With regards to electric cars consider this: 50% of automobile repairs are directly related to the internal combustion engine. On top of that, electric engines have an order of magnitude less parts than a gas or diesel engine.

An order of magnitude … so if your car engine now has 1,000 moving parts it will only have 100 when you go electric. Simpler and more reliable. And less parts … time to take a look at your investment portfolio.

So that’s pretty straight forward. But how about the 150,000 gas stations adorning the countryside in the US? Granted, these stores do not make their money on gasoline … the profit margin for retailers is tiny … but are you going to stop there on your way home just to buy a Slim Jim if you didn’t already need to stop to get gas?

Also in the US, gas taxes are a huge part of state and federal funding for highways … going to need to be some changes there.

Add autonomy into the picture and things really get interesting.

So … tonight when you got home you plugged your electric car in to recharge (hopefully you have solar power and the car is being topped off by power you generated earlier).

Tomorrow you wake up and walk out your front door where your car is already at the curb waiting for you. It drives you into work at 80mph bumper to bumper with thousands of other autonomous cars all networking to avoid congestion at any point. No need for stop signs or stop lights as the cars have already figured out collectively what needs to be done to get their human cargos safely to their destinations as quickly and efficiently as possible.

In record time, you arrive at work, your car drops you off and goes off to part itself.

You decide to leave work early so you access the car app on your iPhone and minutes later your car meets you outside your office to drive you home.

This is not a scenario from a science fiction movie … it is here in five years and ramps up to full effect in no more than another five to ten years … Wow.

Lower insurance rates, less congested roads, huge reduction in accidents across the board … dramatic improvement in air quality, less stress on the environment, good … good … good … check.

But … just in the US 800,000 auto service technicians, 1,350,000 delivery drivers, 655,000 bus drivers, 235,000 taxi drivers, 1,800,000 heavy truck drivers. Hmmm.

Now I am not saying that these jobs will all go at once … this whole scenario starts playing out in five years and probably will take five to ten years to really mature.

But when we look at the loss of these jobs along with those at the convenience stores and those to be lost to robotics (think fork truck driver in large warehouse operations), I have to ask myself where are the entry level jobs? Where are the careers for those among us who are not college material?

And those are obvious considerations. Don’t think for a minute that this doesn’t directly impact public transportation and even how we use real estate in urban spaces. How about Law Enforcement? Traffic cops, meter attendants …

Auto part stores … still needed but with 1/10th the inventory.

You could spend all day thinking about the sea change about to hit the energy sector … In the US, 71% of petroleum is used to distill transportation fuels. That’s an incredible number and it has mind spinning economic and political ramifications.

Take Saudi Arabia … it’s hard to find exact numbers because 36% of government expenditures are “undefined”.

We do know that the country’s 30 million citizens are heavily subsidized by the government – healthcare, housing, energy, and education are heavily subsidized. Not to mention a 12% unemployment rate at the end of 2016. In 2015, they ran a 20% deficit. 87% of the budget revenues come from petroleum. The times they are a changing. For the short term, they country can weather the storm but the long-term forecast is that tremendous change is coming and coming fast.

None of us can know what the world is going to look like in 15 years … but it WILL look different. As a species, I can only hope that we are watching and learning and considering each impact as the future reveals itself piece by piece.

 

 

 

 

 

 

 

 

 

 

 

 

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