Robot Cars: The Case for Laissez-Faire

From Alex Tabarrok of Marginal Revolution.

"Very few people imagined that self-driving cars would advance so quickly or be deployed so rapidly. As a result, robot cars are largely unregulated. There is no government testing regime or pre-certification for robot cars, for example. Indeed, most states don’t even require a human driver because no one imagined that there was an alternative. Many people, however, are beginning to question laissez-faire in light of the first fatality involving a partially-autonomous car that occurred in May and became public last week. That would be a mistake. The normal system of laissez-faire is working well for robot cars.

Laissez-faire for new technologies is the norm. In the automotive world, for example, new technologies have been deployed on cars for over a hundred years without pre-certification including seatbelts, air bags, crumple zones, abs braking systems, adaptive cruise control and lane departure and collision warning systems. Some of these technologies are now regulated but regulation came after these technologies were developed and became common. Airbags began to be deployed in the 1970s, for example when they were not as safe as they are today but airbags improved over time and by the 1990s were fairly common. It was only in 1998, long after they were an option and the design had stabilized, that the Federal government required airbags in all new cars.

Lane departure and collision warning systems, among other technologies, remain largely unregulated by the Federal government today. All technologies, however, are regulated by the ordinary rules of tort (part of the laissez-faire system). The tort system is imperfect but it works tolerably well especially when it focuses on contract and disclosure. Market regulation also occurs through the insurance companies. Will insurance companies given a discount for self-driving cars? Will they charge more? Forbid the use of self-driving cars? Let the system evolve an answer.

Had burdensome regulations been imposed on airbags in the 1970s the technology would have been delayed and the net result could well have been more injury and death. We have ignored important tradeoffs in drug regulation to our detriment. Let’s avoid these errors in the regulation of other technologies.

The fatality in May was a tragedy but so were the approximately 35,000 other traffic fatalities that occurred last year without a robot at the wheel. At present, these technologies appear to be increasing safety but even more importantly what I have called the glide path of the technology looks very good. Investment is flowing into this field and we don’t want to forestall improvements by raising costs now or imposing technological “fixes” which could well be obsolete in a few years.

Laissez-faire is working well for robot cars. Let’s avoid over-regulation today so that in a dozen years we can argue about whether all cars should be required to be robot cars."