The next technology leap in automobiles is already well underway. General Motors promised a week ago that by 2020 it will be saving customers a trip to their local dealerships by doing wireless updates to their vehicles. Lexus has already performed these broadcast updates, although one software download was not written correctly. As a result, many started their vehicles the next morning only to have their infotainment system malfunction; ironically, an update forced them to take a trip to their local dealership.
Of course, this first level of invisible communications is child’s play compared to what is coming in the near future. More important, it’s not just your automobile company that will want access to your vehicle, whether you desire to grant access or not.
This debate has already started in England because of changes in the electronics of vehicles starting next year. As pointed out in this column previously, the first group that wanted access to the online data created by every vehicle in England was the insurance industry. Forget Progressive Insurance’s Snapshot, which promises lower rates based on your real time driving as they monitor you — in contrast to the past, when you received lower rates automatically if you went accident- and ticket-free.
Britain’s insurance industry realizes the financial value of knowing exactly how every last driver motors across the island daily. What does this truly mean? Consider this: You may drive 10 miles over the speed limit every day and never incur a speeding ticket. But with these new telematics systems your insurance company can mark you down as a person who speeds every day. You may stop at a pub on the way home three nights a week and have one pint; you’re never intoxicated, but your insurance company will categorize you as a drinker because they can “see” your vehicle parked in front of your libation headquarters.
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The ability to know everything about you in real time should be somewhat frightening to most. Because it’s the ultimate in information gathering and its potential for abuse is far too great.
Meanwhile, over here in the States there is going to be a different movement once telematics become the norm in our vehicles. It was best summed up in the opening paragraph of a June 20, 2017, Wall Street Journal story:
For years, we economists have claimed to have a miracle cure for heavy traffic. It’s “congestion pricing”: Charge drivers more to use roads and bridges during the busiest times, and clogged roadways will clear up overnight. Now, at last, technology can make that miracle a reality.”
At this point it might be good to remind everyone that scientists proclaimed on March 14, 1989, as witnessed in a Washington Post article, that Cheez Whiz seemed to be a breakthrough food for fending off cancer. For some reason this medical breakthrough has not been adopted by M.D. Anderson — possibly because Ritz Crackers mitigate the effect of CLA, the ingredient in Cheez Whiz that supposedly prevents cancerous tumors. Keep this story in mind; we’ll refer to it again later.
But back to our economists in the Wall Street Journal, salivating over the idea of the next step in vehicle telematics. Here’s their plan: Because we will be able to see who is out on the road at any given time and also whether traffic is moving at normal speeds, at slower than normal speeds, or at a dead stop, we can do real time congestion pricing on our highways and city streets. Now think about that one for just a moment. You could be driving on Interstate 30 on your way to Dallas one day when traffic slows at Eastchase Parkway, as it tends to do in the morning. Suddenly your vehicle informs you that a congestion charge is now in place for the next four miles, say $5. Then up the road in Grand Prairie, there’s a wreck that stops traffic dead on the freeway, and you get the warning that you are now paying $10 for the privilege of being stuck in traffic.
Put another way, every road because a variable fee toll road and your vehicle is the mobile collection booth.
Our economists claim a number of things about this plan to lighten Americans’ pocketbooks every day, including that they would not charge as much for a traffic jam if it involved an accident or road construction. To which one should reply, yeah, right: The cost of using the TexPress lanes skyrockets every time an accident snarls the public lanes on the freeways.
But the economists also claim that by doing this in real time on all roads across the country, congestion will ‘magically’ disappear, reducing the need for new roads and simultaneously raising all sorts of cash to modernize our decaying infrastructure. Believe it or not, the example they use is how the wholesale electric market moved into dynamic pricing with deregulation over a year ago, and now the price of electricity jumps in peak demand periods. Like when it’s 102 degrees outside in Texas.
But that example destroys their own thesis. One does not see a huge fall-off in electricity demand just because electric rates jump substantially in the wholesale market during peak demand. Homeowners certainly don’t rush to dial their thermostats up to 85 in the middle of the day, or unplug their refrigerators because they were warned that wholesale pricing jumped with the temperatures. And I’m fairly certain business owners don’t do that, either — nor factories shut down as a result. No, everything stays the same; we just end up paying more money for it. (There are programs to shutter large electric corporate users, not because of a price surge but when the grid doesn’t have enough juice.)
So that was really a somewhat stupid example to make for a group demanding that we start charging motorists every time we are on the road, any road, anywhere, and gouging motorists during times of heavy traffic.
After all, does any sane person believe that if congestion pricing over the airwaves (billed to your bank account or credit card, if you have one) is going to stop people from getting on the roads because they have to be at work at 8:00 in the morning? Or leaving for lunch at noon? Or driving home when the workday is done? No.
We all saw how to reduce traffic on the highways of Dallas Fort Worth to where congestion was almost eliminated. That happened right after the Financial Meltdown of 2008 and lasted a couple of years. So the real answer to highway congestion is to lose tens of millions of jobs in America, to where those individuals don’t have to go to work anymore. A caveat: There are a few economic downsides to a traffic plan so incredibly short-sighted and callous.
We’ve Already Tested This (Bad) Idea
It turns out the world has had the ultimate test program on congestion pricing in place for the past 14 years. And we know exactly how things work when congestion pricing is used excessively.
That’s right, in 2003 London’s then mayor Boris Livingston put an $15 congestion fee on anyone motoring into London’s Central District. By the fifth anniversary of that charge, which added $300 a month in expenses for those Brits guilty of holding down a job in London, the mayor badly wanted to increase the congestion fee to over $30. Now, this was one money-making proposition, as it started bringing in £252.4 million annually, although with expenses, they claimed to only be netting a mere £89.1 million. But the real question is whether or not it achieved its purpose in lowering congestion in London.
According to the Metro newspaper on January 19, 2017, “Transport London data shows the annual cost from traffic delays in the capital soared by 30 percent in the two years from 2012/13 to £ 5.5 billion.”
The Independent newspaper reported in 2008 that the overall traffic into London’s central district fell by 21 percent between 2002 and 2006. However, because people still have to move around, the number of taxis on the road rose by 13 percent, buses and coaches by 25 percent. Here’s the kicker: Despite fewer cars being on the roads, congestion rose markedly between 2005 and 2006. That’s pretty odd: A huge congestion charge actually created more congestion. I wonder why those economists didn’t put that salient point into their article trying to move this concept forward in America?
But the BBC also covered this story in February of 2013 and reported that the real net drop in traffic levels, again using Transport London’s own data, was a mere 10.2 percent. And even that’s misleading, as it also shows “journey times for drivers have remained flat since 2007.” But that story does go on to relate how 30 other British cities claimed they too would go to congestion pricing if the London experiment proved its worth.
For the record, not one of them has done so.
Who Are They Working For?
Does anyone remember when we used to have a great deal of faith in both scientists and economists? After all, both were looking to somehow find the real truth of any given situation. As it turns out, some years after that study showing the concentrated levels of CLA in Cheez Whiz could help fend off cancer in the human body, it was revealed that Kraft contributed to that university study. That type of conflict of interest seems to happen far more than any of us care to admit. As they’re pushing automated congestion charging, now possible because of the onboard telematics in many cars (soon to be all new vehicles), who knows who these economists are shilling for?
Again, the real-world test has already been performed and the results are in. London had a minimal drop in overall traffic volumes, but no real improvement in congestion and the subsequent loss of time spent stuck in traffic — yet London motorists have been relieved of billions of pounds of their money to achieve these non-results. And on seeing that, officials in 30 other British cities said, we’re out. If these columnists in the Wall Street Journal were real economists and truly on a quest to find the ultimate truth, they would have shut down their own idea because they would have to accept what has happened in England.
But they didn’t, nor did they even mention that well-known real-world test. That suggests that possibly they’re being paid to sell an idea, using their credentials as economists to fool the public. Either that, or they’ve locked into blind ideology instead of real-world facts.
Sadly, if there’s one thing I’ve learned over the past 25 years, it’s that truly bad ideas designed to fleece the public, especially under the guise of somehow improving their lives, usually move forward and then become reality. Any bets against this one doing so, too?
Note from Ed: In case you wondered, these professors of economics work at the University of Maryland and Cornell.
© Ed Wallace 2017
Ed Wallace is a recipient of the Gerald R. Loeb Award for business journalism, bestowed by the Anderson School of Business at UCLA, and hosts the top-rated talk show, Wheels, 8:00 to 1:00 Saturdays on 570 KLIF AM. Email: email@example.com