Making Transportation Faster, Cheaper and Safer

New technology can revolutionize transportation, but to realize these gains, policymakers need to streamline approval processes and reform counterproductive regulations

By Brent Skorup

Any abundance agenda must include transportation: moving people and goods more quickly, cheaply and safely. Your transportation options determine where you live, which “affects nearly everything about your life.” Also, after housing, transportation is the largest annual expense for American families. AAA estimates that the average cost of owning a new car—including depreciation, insurance, fuel and other expenses—is now nearly $900 per month.

Simply, improving transportation means improving human flourishing. Transportation advancements have a nonlinear effect on economic growth, an insight made by computer scientist Nick Szabo. Eli Dourado puts the Szabo Law succinctly: “A halving of transportation costs . . . raises the value of the transportation network 16-fold.” The power of this nonlinear effect is seen in the fact that half of global GDP derives from urban areas that collectively use less than 1% of the globe’s land mass. The physical connections—cars, trucks, planes and trains—between and within tiny geographic areas generate highly valuable nodes of commerce, which create comfortable lives for billions of people worldwide.

Technological progress can revolutionize transportation. In polling, Americans cite “technology,” far above any other issue, as the largest source of social improvement in the past 50 years. Transportation technologies—such as drones, autonomous vehicles and electric vertical takeoff and landing aircraft—offer immense promise to allow Americans more freedom in where to live. These technologies also allow government officials and the public to reimagine transportation and reform stubborn problems.

For years, autonomous heavy machinery has operated in closed systems such as mining quarries, farm fields and railroads. Autonomous systems can be brought to autos and aviation, but to make them practicable, roadways and flight paths need to get safer and more predictable. Technologist and venture capitalist Marc Andreessen recently remarked: “The curse of the 21st century: We will have technology that makes miracles possible, and we will never be allowed to actually use it.” This pessimism is understandable, particularly in transportation policy. Transportation technology could revolutionize automobiles and advanced air mobility, but these industries are constrained by public policy third rails.

What’s Wrong With Our Roads

In 100 years, our great-great-grandchildren will hopefully look back in horror at early 21st-century transportation, much as we view medical sanitation in the 18th century—an era marked by preventable mass death before life-saving innovations. In the past decade alone, more than 350,000 Americans perished on U.S. roadways. Millions more survived collisions but were maimed or seriously injured.

In other industries, even the most economically significant ones, policymakers and the public demand essentially zero deaths annually. Tens of thousands of deaths annually from, say, nuclear energy generation, airlines or child vaccinations would likely result in a partial or total shutdown of the industry, despite the economic importance of those sectors. Society’s tolerance for tens of thousands of roadway deaths every year is hard to explain, but automobile abundance must mean that U.S. roadways are more predictable and safer.

Why do regulators demand zero deaths in some industries but tolerate tens of thousands in others? It’s true, the economic benefits of automobile transportation are massive, but autos generate massive losses as well. Setting aside the incalculable social and psychological cost of countless families losing mothers, fathers and children every year, the strict economic costs are massive. The U.S. Department of Transportation and Department of Health and Human Services place the value of a statistical life at nearly $12 million. (They offer ranges and these values are debated, but let’s stipulate their estimates.) That suggests that the 40,000 or so people killed on U.S. roadways annually represent a national economic loss of nearly $500 billion—about 2% of U.S. GDP—every single year. This estimate doesn’t include annual property losses or economic losses associated with millions of severe and minor injuries from automobile collisions.

The fact is, U.S. roadways host tens of millions of problem drivers—drivers who have no valid license (usually suspended or revoked) or are uninsured, underinsured or provably dangerous. A small number of these problem drivers cause immense social damage. In 2020, state reporting data suggest that over 30% of killed drivers had blood-alcohol content exceeding 0.08%, the usual legal limit. According to the National Highway Traffic Safety Administration, nearly 20% of fatal car collisions involve drivers with an invalid license or none at all. Estimates indicate close to 30 million drivers are uninsured, exceeding 20% of drivers in several states.

The social costs of problem drivers are exacerbated by a severe underinsurance problem. In the 1990s, most states began regulating auto insurance to drive down rates and encourage more drivers to get insured. Since insurance companies cannot charge higher rates that would correspond with actuarial risk, they often limit their risk exposure via coverage limits. For instance, drivers in most states can drive legally with merely $25,000 in coverage if they kill somebody. The mismatch is apparent: Most people (including experts at the Department of Transportation) value the lost life of a loved one at millions of dollars. But few drivers have millions of dollars in cash, so auto safety risks are essentially shifted from dangerous drivers to bereaved families.

The public tolerates tens of thousands of fatalities annually because many roadway safety reforms are unthinkable. Having safer roads might mean reversing long-standing federal rules designed to induce Americans to purchase larger vehicles. It would mean reversing state policies of keeping insurance premiums artificially low. And it would mean reforming land use rules to create walkable and bikeable neighborhoods, not optimizing these rules for speed and throughput of vehicles. A rigorous crackdown on dangerous and uninsured drivers from U.S. roads would require intolerable driver surveillance, and enforcement would resemble house arrest for hundreds of thousands of people.

How To Make Driving Safer

Transportation technology won’t be a magic wand for auto safety. Land use rules, road design and insurance rules, among other things, need reform. However, technology can help and is helping. Cameras at intersections and in work zones can help easily identify speeding and hit-and-run drivers. Dashboard cameras in fleet and private vehicles can encourage safer driving and assist in insurance claims. Insurance companies and car manufacturers might design near-field-communications cards—much like today’s keyless ignition fobs—for use solely by insured drivers, to prevent uninsured drivers from getting behind the wheel.

The biggest revolution will be fully autonomous vehicles. Their deployment has been slow because roads are so unpredictable. However, autonomous vehicle (AV) companies have quietly signaled great trust in their systems. As of the past few months, members of the general public can hail driverless vehicles in Austin, Phoenix and San Francisco. There will be deployments in other large cities this year.

State and local leaders should prioritize making AV use (and traditional rideshare services) accessible to high-risk and young drivers in suburban and exurban areas, where public transportation and taxis are absent. Drivers with a suspended or revoked license or without insurance often face two terrible choices: They can drive illegally or be homebound, which often means losing a job or dropping out of school.

Policy entrepreneurs can help solve two problems—getting riskier drivers off the roadways and ensuring a reliable stream of customers for AV companies. With typical auto costs around $900 monthly, it would make sense for many parents to purchase a subscription to an AV or rideshare service for their teenagers, rather than acquire a third or fourth family vehicle.

Thinking Outside the Commercial Airline Box

We’re entering a new era of aviation—much like the arrival of the jet age beginning in the 1960s—with potential for a revolution in air travel and air cargo. Aviation abundance would mean creating air traffic management rules that allow for tens of thousands of small, new aircraft, including cargo drones and private aviation services that even middle-class people can afford to splurge on.

The U.S. needs private aviation—business jets, charter flights and commuter shuttles. My colleague Bob Graboyes and I identified what we call the Nashville-to-Asheville problem: point-to-point regional flights that could be done in a small plane but are uneconomical for large commercial airlines. In 2021, there were nearly 900 U.S. city pairs with at least 30 passengers traveling between them daily but with no nonstop service.

Today, charter flights today start at about $4,000 per hour, out of reach even for a small business owner or an upper-middle-class family. If costs could come down substantially, supply could finally meet the immense pent-up demand for rapid private air travel. Despite these high costs, private aviation is seeing record demand. Even at around $9,000 hourly, private jet companies have waitlists. Commercial aviation in the 1960s was largely the preserve of the rich, yet today even middle-class families and students often splurge for flights. Hopefully private aviation will follow that trajectory.

Cargo drones—ranging in size from unpiloted large aircraft flying across oceans to Amazon drones flying across neighborhoods—also represent a promising market. The market for air freight is highly elastic, as Eli Dourado highlights: Halving the price of air freight might increase demand three times.

Electric and hydrogen-powered aircraft will allow for newer, more efficient aircraft designs and less maintenance. Further, while autopilot has been in existence for decades, takeoffs and landings are still done manually. That’s starting to change, and completely autonomous flights will become more common—with a pilot keeping watch at first in person and eventually remotely. Drone companies have an employee remotely monitoring as many as 24 in-flight aircraft at once, an operator-to-aircraft ratio that is regularly improving. Eventually remote operation will come to large cargo planes and passenger aircraft. Replacing a 200-lb pilot in the cockpit with a capable autonomous system will have a small cost-saving effect on operating a Boeing 747 but a huge effect on the operation and economics of a four-passenger plane or electric vertical takeoff and landing aircraft.

Clarifying Aviation Public Policy

Federal plans for how to safely integrate millions of new private aircraft and drones into U.S. airspace are vague today. There is a risk that the rigid legacy air traffic management system will extend into and limit advanced air mobility (AAM) operations. To prevent that, Congress should endorse a national system of AAM and drone corridors developed by federal and state transportation departments for urban and regional air mobility. These corridors should be safely separated from existing air traffic routes and exclusive to new airspace users.

To create corridors for small drones, federal transportation officials should collaborate more closely with other levels of government. The Federal Aviation Administration (FAA) tried to get drone industry members to work with local officials so that drones would not violate local trespass, privacy and nuisance laws. The agency created a working group in 2017 to determine how state and local rules for drone operations would complement federal rules. However, The Washington Post detailed the dramatic falling-out among group members, and little has been done since then. As a U.S. Department of Transportation inspector general report to Congress in 2022 noted, “[The] FAA has not yet resolved the role of State, local, and tribal governments in the development and enforcement of Federal UAS regulations.” Meanwhile, drone companies and startups are bleeding cash waiting for approvals to operate.

Creating new, high-altitude corridors for these new technologies will spark a contest between AAM firms for the corridors. Different business plans, aircraft types and helipad service operations will often create incompatibility between operators, meaning operators must compete for the airspace. One proposal for efficient and fair allocation of corridors, discussed in federal reports and by researchers, is to introduce airspace markets. As researchers at the Massachusetts Institute of Technology, funded by a NASA University Leadership Initiative grant, noted recently, “Using multiple AAM traffic scenarios,” airspace auctions “perform similarly in delay and fairness to other prioritization methods, while exhibiting superior performance on metrics of weighted delay and fairness.”

Transportation officials and, more importantly, the American public need to reimagine what transportation can look like. It can be simultaneously safer, greener and more affordable, but policy entrepreneurs will have to identify difficult issues, such as why 40,000 annual sudden deaths are acceptable on roadways but in no other area of life. Technologies such as autonomous vehicles should be encouraged to help get problem drivers off the roads. In aviation, public policymakers should strive to make private aviation affordable for a much larger class of Americans. Further, entirely new aviation sectors, such as home parcel delivery and autonomous air freight, are emerging but need a clearer regulatory path before they’ll see mass deployment.