t’s always funny to hear economists and pundits obsess on television shows about what the Federal Reserve will do next. Implicit in their excitement is that the economy’s ability to grow is a consequence of Fed expertise with interest rates. Back to reality, the Fed cannot increase the supply of tangible resources that businesses seek when they borrow money, it can’t increase the human capital that is the source of all economic progress, and it also can’t increase time.
Thoughts of time’s finite nature came up while reading a recent New York Times piece on “The High-Wire Act to Build the World’s First Flying Taxi.” Such a machine would potentially increase the productivity of individuals by virtue of increasing the amount of time they can dedicate to productive work.
About this, Manhattan Institute senior fellow Mark Mills has made the point that as humans, there are limits to the productive work hours we’ll be able to expend over a lifetime. As a result, Mills properly cheers rising automation, robots, AI, and all other things related to extra “hands” entering the marketplace. He’s wise on the matter. The more that human exertion can be automated, the more that humans can specialize their work output. And the more we humans are specialized in what we do, the more we can productively utilize our unique gifts.
Flying taxis will plainly enable more robust output. Think about it. The island of Manhattan is arguably populated by some of the most enterprising individuals on earth, but whether billionaire or newly minted working stiff, getting around the island is nightmarish thanks to traffic. Arguably the typical worker willing to utilize New York’s subway system can get around more quickly than the chauffeured billionaire, though presumably some of Manhattan’s richest of the rich utilize helicopters.
Which brings us to flying taxis. The Times’ Adam Satariano reports that at least twenty companies are in the market to produce these transportation machines. Satariano cites a Morgan Stanley study which says flying taxis will drive an $850 billion market by 2040, which means the obscure luxury that is taxi transport will soon enough be made available to the masses. Such is the genius of capitalism. Wealth earned in such a system is a consequence of the mass production of former luxuries.
Assuming a market as large as the one Morgan Stanley projects, one can guess that many more than twenty companies will enter what has the potential to be a highly lucrative space; one that will expand the productive use of time for it substantially limiting time wasted getting from point A to point B. Here’s hoping flying taxis, or something much more advanced than a flying taxi, soon enough become the norm. How very exciting, and life enhancing if so. Transportation advances like this can’t arrive soon enough.
That flying taxis aren’t yet viable is a reminder of the crucial role investment plays when it comes to progress. This truth exposes much of modern left-wing orthodoxy as anti-progress.
Consider excitement on the left about a “wealth tax.” Bernie Sanders, Elizabeth Warren, the New York Times, and other pillars of the left proudly support cutting billionaires down to size, but such policy logically runs counter to transportation advance.
As Morgan Stanley analyst Adam Jonas put it to Satariano, the path toward accessible flying taxis “is going to be a test of staying power – an ability to lose money, an ability to ride out failure.” Translated, of the companies today pursuing this innovative mode of transport, most will lose copious sums of money before failing.
Lefties like to say the superrich have “more money than they know what to do with.” They unwittingly explain why wealth taxes suffocate advance. The richest of the rich have money they can lose on the ideas of tomorrow that, while promising, have high odds of failure. Flying taxis won’t be immediate, there will be endlessly expensive experimentation with them, so the more that the rich have “more money than they know what to do with,” the more that intrepid investment will find flying taxis, along with all sorts of other presently unimaginable services. A wealth tax will shrink the amount of “crazy” wealth aggressively pulling the future into the present, all so politicians can fail in flamboyant fashion when it comes to improving the lives of others.
One of the flying taxi companies of some prominence is Lilium. According to Satariano Lilium has 300 employees, a very expensive “research and development budget,” and is “years away from making money.” Funny, one of Hillary Clinton’s issues when she ran for president was that we in the U.S. practice too much “quarterly capitalism.” Clinton’s laughable point was that investors are so greedy and now focused that U.S. companies can’t develop the ideas of the future. It seems Clinton never listened during visits to Silicon Valley where over 9 out of 10 start-ups die, plus she was plainly never made aware of flying tax concept. Investors are backing all sorts of companies that, assuming they ever make money, are years away from it. Contrary to what Clinton presumes, investors in American ingenuity are among some of the most patient individuals on earth.
All of which leads to government spending. In considering it, think again about what Jonas said regarding the eventual success of the flying taxi industry: this “is going to be a test of staying power – an ability to lose money, an ability to ride out failure.” Many on the left reject the notion that high tax rates exist as a barrier to entrepreneurial innovation, and they may have a point. It’s hard to imagine Steve Jobs sat up nights thinking about tax rates, and it’s hard to imagine Jeff Bezos and Mark Zuckerberg do now. Fair enough, it’s arguable they would feverishly innovate regardless of individual tax rates. But as the Jonas quote makes plain, the big barrier to huge transport leaps will be availability of capital. Tax rates may not deter Bezos, Zuckerberg, and the enterprising of tomorrow, but limited capital will.
Stating the obvious, there are no entrepreneurs without capital. No economic school can get around this truth, yet government spending consumes what’s precious. The left view spending cuts as austerity, many supply siders on the right do too, but it’s not said enough that government spending itself is austerity when it’s remembered that advancement is always and everywhere a consequence of investment.
Looking ahead, the dreamers of today are presently working tirelessly to make our abundant present seem primitive relative to the future. The future will arrive more quickly the sooner the talented are matched with capital. Readers should remember this the next time politicians promise to create good times by fleecing the rich. They’re lying, and worse, they’re robbing you of a much better tomorrow.