Driverless cars are quickly moving from the pages of science fiction novels to the real world. Different organizations around the globe are working hard to develop a driverless car that meets the qualifications to become available to the public. The Defense Advanced Research Projects Agency known as DARPA has been sponsoring an annual competition for the best autonomous vehicle since 2004 (Wikipedia). The DARPA Grand Challenge is an opportunity for the all of the developers of autonomous vehicles to compete and see how their prototype compares to others. In recent years
the tech giant Google has dominated the competition. While owning a driverless car delivers considerable utility to the owner, the macroeconomic implications are much more complex.
If driverless cars became available for a reasonable price they would immediately cause a huge amount of structural unemployment. Taxi drivers, truck drivers, and basically anyone else who drives a car for a living could potentially lose their job. While this economics implication is more obvious it goes much deeper.
Considering that driverless cars would have to be basically 100% crash proof to be commercially viable it is safe to infer that their would be no more car crashes. All of the jobs, and car parts responsible for making cars safer in wrecks, or repairing wrecked cars would disappear(Forbes). Car sales would initially hit an all time high, but after a while car sales would drop below their current level since people would no longer total their cars(Forbes). This could be offset by the desire for consumers to have the latest technology in their cars. Personal cars could be customized to be a mobile workspace, or be fitted for other kinds of customizations.
The article linked below is the second part of a seven part series on driverless cars. The author goes into more depth of the negative macroeconomic impacts of a car. Later this week I will blog from a more optimistic perspective discussing in more detail the positive macroeconomic implications of the cars.
ForbesGoogle’s Trillion-Dollar Driverless Car, Part Two of a Seven-Part Series, January 24, 2014.