Taking Transportation Innovation off Auto-Pilot

Policy analysts and entrepreneurs discuss transportation innovation and the policies stifling progress in Austin.

The Charles Koch Institute, along with the Lincoln Initiative, brought together policy analysts and Texas-based entrepreneurs on October 13 to discuss the current state of transportation policy, its impact in Austin, and the future of innovation.

The night opened with a conversation between Caroline Joiner, executive director of TechNet in Texas and the Southeast, and Joel Trammell, the founder and CEO of Khorus and chairman emeritus of the Austin Technology Council. Their conversation centered on the fallout from Austin’s fight over regulating ride-sharing apps and how it has affected entrepreneurs. One crucial lesson learned by entrepreneurs, said Trammell, was awareness of regulatory issues and the barriers created by special interests and politicians.

On a more cautionary note, Trammell warned about the chilling effect regulations could have on future transportation innovations: “Austin rejected Uber and Lyft, and therefore may not be open to other technologies that are coming down the road, and obviously driverless cars are coming down the road.”

“Most regulators unintentionally hamper innovation in the name of safety” #TransportTech #CKILincoln @CKinstitute pic.twitter.com/XCgOAC0UME

— Lincoln Initiative (@JoinLincoln) October 14, 2016

Joiner wrapped up the conversation by asking what steps were needed to bridge the gap between policymakers and the technology sector. Trammell suggested finding areas where collaboration can occur: “There have to be things that both sides agree on, that we can work together on. … We’ve got to look for things in the technology area where we can help the city.”

The program then shifted to a panel discussion moderated by Evan Baehr, founder and president of Able Lending, who asked the panelists why they care about the challenge of innovating in regulated industries.

For David Heard, founder of Tech Bloc, innovating in regulated industries is necessary to spread technological advancements to all areas of the country. With his work through Tech Bloc, he has tried to increase representation for the technology industry in San Antonio.

Jared Meyer, policy fellow at the Manhattan Institute, talked about how consumers have significant regulatory power through the rise of peer-to-peer connectivity. “A few decades ago consumers didn’t have much power,” he said. “But now we are able to control information and control the narrative and hold companies accountable.”

“A few decades ago, consumers didn’t have that much power… Now we can control the narrative.” #TransportTech
— Charles Koch Inst. (@CKinstitute) October 14, 2016

The panelists also discussed transportation regulations beyond ride-hailing apps. Nick Kennedy, founder and CEO of the private flight-sharing service RISE, and Eli Dourado, research fellow at the Mercatus Center, delved into the complexities of aviation regulation. Kennedy explained how regulations led to consolidation in the aviation industry and how lobbyists have limited aviation disruption. Dourado shared similar sentiments concerning supersonic flight, a technology that was successful in the 1960s but was banned in the ’70s, excluding trans-oceanic flights, by the Federal Aviation Association.

Baehr then asked the panelists what products with the potential to improve consumer’s lives they would like to see if regulation didn’t exist. Mayer and Kennedy both agreed that health care could significantly benefit from disruption, citing the expense of health care plans, the length of clinical trials, and the potential for individualized medicine.

Dourado reiterated his interest in supersonic flight, a technology that already exists, and the need to bring back the “over land” market. “We’ve stagnated on transport speeds,” he said. “We’re not traveling any faster than we were in the 1960s and ’70s. You think about the effect on people’s lives. Transportation is about 17 percent of household expenditures … the second biggest bucket of household expenditures after housing.”

As the discussion wrapped up, the panelists concluded by identifying the major roadblocks to transportation innovation. Mayer discussed threats to the growth of independent contracting brought about by services like ride-hailing apps: “The idea that we need to go back in time to when it was all good is what permeates a lot of government agencies.”

Many of these regulations started in the name of consumer protection, with the Department of Labor wanting to ensure workers receive the benefits they’re entitled to and the FAA making sure travelers are safe. Kennedy suggested entrepreneurs put the burden on themselves with self-regulation: “The idea that we are proactively taking into account safety and consumer protection in our own companies” might head off potential policy confrontations.

With its unique potential to impact both the economy and culture, technological innovation remains a crucial component of a free society. As developments continue, more issues regarding the role of policy and regulations in balancing safety and regulation are likely to arise.