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This tweet from Joe Weisenthal:

Reminds me of a thought I had the other day.

I had this thought when driving from DC to northern Florida, which Mrs. Rooted and I do in a single day when we visit the in-laws, partially because it means we can bring this guy:

i'm sunning

But also because it’s cheaper. And when you’re chugging along 95’s least-compelling stretch for hours on end you think a lot, especially about cars, and especially about how much longer we have to wait until our promised jetpacks arrive. A good amount of attention has been focused on the long-term consequences of self-driving cars for intra-metropolitan transportation, but less has been focused on inter-metropolitan travel. But this is at least equally fertile ground for a major shake-up.

Speed limits are fairly high along southern 95, mostly 65 or 70 mph. It gets even higher out west where things are flat and straight, and there’s a patch of Texas where you can legally go 85 mph. But that’s still pretty slow – less than a fifth the speed of an airplane. But self-driving cars will likely be able to (barring congestion or poor conditions) go much, much, faster. And that can make a huge difference.

When we drive to my in-laws, we drive 774 miles, mostly along I-95, which at an average speed of 70 mph plus just an hour for various breaks is still a 12-hour door-to-door journey. When we fly, the flight is only 2.5 hours to the nearest large airports (Orlando or Jacksonville – they’re much closer to Daytona but flights to that airport are fewer and often more expensive in our experience). But the trip, as Joe points out, is actually a lot longer. If we want to get to the airport with at least 45 minutes to spare before takeoff, we have to leave at least that long before the flight, and that’s if we’re leaving from the closest airport to our home (DCA). Once we land, it takes roughly half-an-hour before we’re in the car heading to our destination, and then it’s at least another hour before we arrive. Adding it all together, the trip is more like six hours, not two-and-a-half. And that’s assuming the plane leaves on time.

To go 774 miles in six hours you’d have to go 130 mph. That’s really fast. But in a world where cars are doing the driving along highways especially designed for that purpose, it’s totally plausible. And what that means is that once self-driving cars are universal they will demolish short-haul flights. So long as road capacity accommodates, flights under two hours in length will likely vanish, and flights under four hours will decline markedly. Shoot, at 200 mph, if no driver needed to be conscious you could leave DC at 8PM Eastern and sleep most of the way across the continent, arriving in San Francisco at 7AM Pacific. Even at 15 mpg and $5/gallon, that’s a < $1,000 trip, which if you’ve got more than two people in the car, is quite competitive; if you imagine that self-driving cars will be much more efficient than that, it’s a almost a no-brainer for personal travel.

This gets us back to the promise in the title of the post. If self-driving cars really do displace short- and even medium-haul domestic flights, a once-scarce resource becomes suddenly plentiful – airport capacity. Assuming energy scarcity is not a crippling obstacle (and if it is we have bigger problems), this should mean a much greater volume of international flights, especially flights across the ocean. If our cars can drive us from New York to New Orleans, then we have more planes, pilots, runways, and fuel to take us to New Delhi.

So Ashok and I sparred a bit on Twitter re: the meaning and effect of taxation and spending (and probably pestered the heck out of James Pethokoukis and Joe Weisenthal in the process). I’m not sure how to embed Twitter conversations (if anyone knows how, I’m all ears), but the long-and-short of it is that the actualities of taxes and spending are weirdly different from the optics.

The trick is to remember that every policy change is a change from some baseline. So, from whatever the baseline currently is, there is no fundamental or economic difference between:

1) Cutting taxes by X on some activity, and
2) Spending X subsidizing that activity

assuming that they are both funded identically (though identical tax hikes, spending cuts, or debt incursions).

Now, in practice, there will be differences. Scott Sumner’s thought experiment about the society that taxes 100% of GDP by taxing 100% of income then writing welfare checks equal to taxed income demonstrates that, since we would expect that society really would look different than the one that taxed nothing at all (if only because such a program would have some overhead). But those differences would be based in behavioral economics, not classical or neoclassical economics.

And the same in real-world examples. There would definitely be differences between these two alternative scenarios:

1) A 2% payroll tax cut (debt-funded).
2) A check mailed to every American for the exact same amount (debt-funded).

But those differences would be instutional, not economics (the check-cashing industry, for example, would obviously prefer the second policy to the first). But there’s no reaosn to think they would "crowd out" (or for that matter, "crowd in") different activities.

The real point is, as Matt Yglesias says, the tax share of GDP is a very poor to think about the “size of government.”

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