Driverless Cars and the Future of American Infrastructure

Economists seem to generally agree that the case for highway expansion in the United States is pretty poor. The returns to new highway construction have dramatically declined since the 1970s. It’s also the case that there are far fewer projects with national significance today than in the past.

Because of this, the focus on public sector investment in highways should be on maintenance rather than expansion.

My new Manhattan Institute report takes this basic analysis and adds two additional factors that augur for focusing on maintenance:

  1. The advent of driverless vehicles. While this technology is still not proven or ready for primetime, with real world tests underway, it seems a legitimate possibility that this will really happen. Driverless cars have the potential fundamentally transform the nature of surface transport in America. Hence it makes little sense to be investing in expanding the current legacy infrastructure when there is so much uncertainty here.
  2. Peak car. Whether or not per capita driving is at or near a plateau is also uncertain, but there was a major discontinuity recently which at a minimum adds additional uncertainty as to future traffic growth.

These factors add fuel to the fire suggesting that building new roads – and also speculative rail transit investments in sprawling cities – is largely unwarranted.

from Aaron M. Renn


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