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March 20, 2013

A Call to Innovation, the Answer is Right Under our Noses...

100 years ago, Henry Ford revolutionized the world with the creation of the assembly line, and the ability to mass produce automobiles for the middle class in America.  This undoubtedly changed the landscape of our economy as people could travel further, faster, and have more free time to dedicate themselves to other productive activities.  Today, the next round of innovation and transformation is here, it's right under our noses, and we are doing nothing to lead to its fruition.

The average American spends over 100 hours per year commuting.  If you apply that to the current workforce size of the country, that's more than 135 billion hours.  Those hours represent lost productivity.  Sure, we've seen some hope in things like hands free calling, which allow us to have conversations while driving, but what about answering emails, making presentations, or even reading the newspaper?

What if there was a way for us to commute to work, yet be able to productively and safely work on other things?  Of all the companies, Google appears to have a solution.

It's called driverless cars.  These cars operate automatically without the need of a driver.  If you think this is new and revolutionary, Google won a prize for the technology in 2005, meaning the technology is at least 8 years old.  They've also logged over 300,000 miles accident free and much of that mileage occurred in San Francisco, which is not the most driver friendly city in the US. 

The cost of these cars currently runs at about $150,000, and this is in high end models like the Prius and Lexus RS.  One could easily assume a $125,000 valuation on a compact or economy car.  I know this sounds pricey, but just imagine those costs if the cars become mass produced.  The assembly line reduced the price of an automobile by a third.  If we apply that to driverless car model, we could easily see these vehicles retailing at the $82,500 and $99,000 price points respectively.  That's within the ballpark of the American consumer provided innovation in the technology keeps the price down compared to the traditional vehicle over time.

So what can Americans do with 135 billion hours?  Whatever the answer to that is, it likely will contribute to economic growth more than sitting in a car and doing nothing.  It would also be noteworthy to mention that the increased technology and computing power that occurred in the 1990s had to play a role in the economic boom (although the weight of that role is debatable). 

Keep in mind, I am advocating this technology solely from a private, free-market point of view.  Let's not turn this into a government subsidized program like the Chevy Volt.  I should mention that this technology presents a corporate value to it as well (can you image the transportation of goods via this method?)  Driverless cars open a door to a whole new world.  Before you weigh in, take a look at this video.

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