Even if prices were lowered by a few percent for some goods thanks to cheaper shipping, that's little help when you have no source of income. This will only exacerbate the demand-limited economic slump we're currently experiencing.
But you are right that it would increase economic inequality.
The only reason self driving tech won't be commoditized will be regulatory barriers. You can imagine why entrenched interests would lobby for such.
If there is competition, then it is true that driving down food/commodities prices will create value for lower income households. But a solid portion of that value will still accrue to the companies running the transit networks using fewer people.
Google has spent years trying to enter the field of self-driving cars. So has Uber. Would not the inherent difficulty they are encountering be a barrier to entry.
I'm not arguing for throwing regulations around willy-nilly. I'm not arguing for regulations at all. I don't know enough to do that with any confidence. I'm just saying that in asking the question "Should we use the force of the state to handle some of the effects of this?", the probability of this increasing income inequality is worthy of serious consideration.
From an epistemological perspective no one does. No one person in this world contains the knowledge needed to manufacture a modern day pencil from scratch.
I don't think the term "income inequality" accurately describes the problem. Someone growing richer doesn't mean someone else had to become poorer. The problem more accurately is that poor people are poor.
In the beginning. Then due to economy of scale (and government regulations), it will be controlled by two huge companies, owning all IP, making any inroads close to impossible.
Think of when the newest major computer manufacturer was founded.
How would one of the conglomerates stop that besides competing on price or erecting regulatory barriers?
It's a commodity market (so little "customizing" benefit), crazy IP with feedback loop (Google and Tesla have more street data than anyone else, so they can perfect their algorithms. As their algorithms are better than anyone else's, people buy there hardware, which gives them more data, ad infinitum. Breaking into such a market will be getting harder and harder for that reason), and quite likely some kind of (strict but bureaucratic) safety regulation.
If companies could squeeze more money out of customers why wouldn't they just do so right now by raising prices?
Such is the nature of competition, and one of the basic reasons why it works. Frankly, I'm surprised it still needs to be explained.
Personally, I imagine a lot of companies will use that extra money to buy out, take over, or otherwise eliminate their competition. I doubt the consumer will win.
And so long as the cost to get into the industry is high (the up-front cost of a driver is effectively 0, whereas AI will be non-0), and the incumbents have the ability to drop their prices lower than any new startup (thanks to the efficiencies of scale), serious new competition will be rare.
Even considering all that, the cost for shipping something is remarkably low to begin with. $400 for an 40' shipping container worth of goods over 300 miles? Drop the driver from the equation entirely, and that cost would only go down by about $100. As a point of reference, a 40' shipping container full of bananas is worth in excess of $58,000 (1000 boxes per container, 100 bananas per box, $0.58 per banana).
Really, anytime a major player has cash on hand, they're going to buy out competition, either through acquisition or buying an equivalent product. When Oracle had liquid assets, they buy Sun. ATT and Verizon consolidated the cell phone market down to ATT and Verizon (and even attempt to merge down one step further). DeBeers buys every diamond producer on the market.
They only have to keep prices the same or negligibly lower in order to profit from this proposal.
1) Challenges that come about due to an aging population
2) An overall slow down in innovation (Cowen's "Great Stagnation" hypothesis)
Innovation is slowing down because companies are preoccupied with irrationally slashing labor expenses, and R&D tends to be quite expensive so it gets cut significantly. The result is less income for consumers, who in turn buy fewer goods, which ultimately leads to even more cuts for labor.
Do we see massive price drops whenever any company outsources their call centre to India? Nope, the price stays the same and the execs pocket the difference in bonuses.
This only works if the seller has monopoly pricing power. Otherwise gas would be $5/gallon all the time.
Do we see massive price drops whenever any company outsources their call centre to India?
Massive, no, but the prices of most things other than housing, health care, and education have in fact been dropping.
Only to the extent they are resistant to market forces.
1) One company develops and ships a working autonomous truck. They start selling to shipping companies, or roll their own. 2) The truck client/shipping company starts competing with other shipping companies by offering vastly lower prices on the same shipping. 3) Retailers flock to the automated shipping company because they're vastly cheaper. The first retailer to move and contract with them enjoys a brief competitive advantage over other companies by cutting retail prices slightly and gaining a market advantage. Eventually, other shipping firms pop up to service the other retailers' need for competitively priced trucking. 4) Supply of automated trucking catches up with retailer demand. Retailers are forced to, again, compete directly with one another on price for the same goods, but now the overhead of paying humans to manage shipping is gone.
The doom and gloom comments about overcharging for products is a little ridiculous, IMO. Uber, Apple, Amazon, and Google are at each other's fucking throats for market share in this space. You bet your ass they'd fight tooth and nail with one another on price.
This remains to be seen. When corporations find ways to cut costs this typically results in higher profits (which there's nothing wrong with that per se) with consumers maybe seeing some cost reduction but not necessarily. Outsourcing of manufacturing jobs is a prime example of that.
Yes, and if our billionaire overlords are feeling generous, perhaps some of those savings will "trickle down" to us peasants.
But probably not...
> Yes, many jobs will be lost. But the prices of many goods will decrease.
If you're talking about what I first thought of, which is things like groceries, housewares, the "every day things" that we all buy and consume without really thinking, I'm not sure that A: The prices on these items could go much lower than they already are and remain profitable, or B: That the producers of said goods (majority MASSIVE corporations with impressive names and product rosters, and the most likely early adopters of this technology) would reduce the prices in accordance with the reduction in cost. The trend now among these companies seems to be to squeeze every last cent out of every last consumer, and if you're proposing to your given board of directors to buy all these new trucks (or change contracts to a company that has) why would you then cut the prices?
I would hope there would be market pressure to do so from at least one good actor, but I don't know how certain that is at all.
This is the wrong analysis. Price of goods is say, (Supplier Cost)+(Transit to Store)+(Profit Margin)=MSRP
You're saying that MSRP can't go down without hurting Profit Margin.
He's saying, Transit to Store will decrease, allowing MSRP to decrease without affecting Supplier Cost or Profit Margin. (Or Profit Margin can increase while MSRP remains the same)
Capitalism has a tendency to optimize for a monopoly.
Healthcare is expensive. Education is expensive. Land (in some places) is expensive. But man stuff. Stuff is cheap.
http://www.ers.usda.gov/data-products/chart-gallery/detail.a...
Similarly, if Apple could reduce its shipping costs to near zero by teleporting the raw materials to Foxconn and then teleporting the finished goods directly to retail outlets, they'd still charge $600 per iPhone, even though they have competition from other phone makers in the form of Android.
The Invisible Hand doesn't always work the way it did in Adam Smith's time.
This is a major point of automation. Yes, many jobs will be lost. But the prices of many goods will decrease.
The problem is that the current transition threatens to be so rapid as to seriously disrupt society. Perhaps new jobs will eventually be created to make up for those lost to automation (or perhaps not), but they won't be created fast enough to avoid the pain of all the rapid job losses that are coming.
Thankfully, society seems to be coming around to the idea that resistance is futile, and we need to address this problem before it becomes too overwhelming. Personally, I feel one of the most realistic options would be to reduce the standard work week to 4 days and/or 30 hours. People need to be kept busy, or society overall tends to start to crumble around the edges. This would mean people will need to shift their perspective on income, as it will likely be reduced. But this shouldn't be too bad, since all the automation will likely lead to reduced prices all around. Reducing your income by 25% may sound bad, but if practically everything becomes ~20-30% cheaper then you should have essentially the same standard of living, but with fewer working hours. Isn't that what we more or less would all like?
No matter what we wind up doing however, chances are there will be some period of difficult transition. All we can hope to do is make it as short and relatively painless as possible.