Self-Driving Cars are Inevitable
Self-driving cars will take over the world of long-distance delivery, and it makes sense once you consider, of all things, automatic flour mills and McDonald’s. These 3 products all seem unrelated, but they all adhere to a simple principle: high volume, low labor costs. Automatic flour mills and McDonald’s became unstoppable for their respective industries. Self-driving cars, or really self-driving 18-wheeler trucks, will likely become unstoppable too.
The Mill Man
In 1785, Oliver Evans changed flour milling forever. Back in his day, flour was milled by hand. To get flour, a farmer would grow wheat on their own farm, take the wheat to the town mill, and local millers would grind the wheat into flour. Being a miller was a very common job, which is why the last name Miller is still so common today.
From his home near Wilmington, Delaware, Oliver Evans toiled away and invented an automatic mill, one that could work without a human operator. Within a few decades, Evans improved his design, so that the automatic flour mill could produce more grain than a normal mill. The new technology spread rapidly throughout the United States. Today, an industrial bread factory may be outfitted with hundreds of steel, clangy, mechanical contraptions, but you will no longer find a human flour miller.
There are two big reasons the automatic flour mill took off in popularity:
- It increased the volume of flour produced, due to Evans’s engineering feats.
- It decreased labor costs, because an automatic flour mill doesn’t need a human operator. You don’t need to hire millers, just someone to make sure the mill doesn’t break. The new mill had higher upfront costs due to new high-tech parts, but it easily saved the owner money in the long run.
There were other factors that helped: Oliver Evans was a well-connected man, and the recently-finished Erie Canal made it easier to move goods across the country. But the two most important factors are high volume and low labor costs.
Because of low labor costs, owners could lower prices while still making a profit. But since they could also make a high volume of flour, the owners could make a higher total profit while still keeping the prices low. Owners were happy because of the raised profit, and customers were happy because of the lowered prices. The automatic flour mill quickly spread, reaching into every corner of 1800’s America.
The Speedee System
You cannot drive through America today without seeing clusters of fast food outlets at every mile, every offramp filled with Burger Kings, Taco Bells, and KFC’s. This is not an accident; since the 1950s, fast food in America centered around getting drivers to stop off the highway, get their food, and leave as quickly as possible.
Fast food is fast. So what food do you serve to people who need to get it quickly and leave? Making a filet mignon at the first McDonald’s would’ve been a terrible idea. The fast food industry gravitated towards foods that were both quick and easy to make: hamburgers, hot dogs, fried chicken.
Since it was quick to make, you could make a lot of hamburgers in an hour. Since it was easy to make, you didn’t need to hire a chef; you could hire anyone from a high school, and importantly, you can pay them less. High volume (from quick food). Low labor cost (from lower pay). The result? Fast food is a global industry worth 570 billion dollars, larger than the entire GDP of Sweden.
The fast food model was perfected by McDonald’s, who took fast food to its zenith. The two McDonald brothers cut their entire menu down to a handful of items, making the menu even easier for cooks to follow. Richard “Dick” McDonald invented the Speedee System, where the McDonald’s kitchen was mechanized like a factory. Each task of a hamburger was broken down and assigned to one person. One person placed the pickles, one person cooked the patties, and so on, all with the help of machines. McDonald’s served speedy food with the Speedee System, and speedy food means an even higher volume. Fast food already had low labor cost and high volume, but McDonald’s produced even lower labor costs and even higher volume. Again, this led to higher profits for the McDonald brothers, and even lower costs for customers: the price of a McDonald’s hamburger in the early 1950s was 15 cents (about $1.46 in 2021).
There’s an economic principle at play. Suppose that you have a good that people already want (like flour, or restaurant food). If you can create that good so that both of these are true:
- The labor cost is lower
- The volume is higher
Then your version of the product will eventually spread like wildfire.
Lower labor cost + Higher Volume → Lower prices + More profits → Massively Popular Product
With this principle in mind, it becomes clear that self-driving cars will take over the long-distance delivery industry, given enough time. There is a “good” that people already want: they need a way to deliver large amounts of something from point A to point B. This mostly means industrial delivery, but also includes things like moving vans, delivery trucks, and mail trucks.
Self-driving cars are not that reliable right now, but the technology will improve over time. Is the labor cost lower? Yes, because as the technology improves over the next few decades, there will no longer be a human driver who needs to be paid, or a human “overseer” to make sure the AI doesn’t crash.
Is the volume higher? I would say so, and this is probably easiest to see in the case of long-distance deliveries. In a truck delivery from Atlanta to Los Angeles, a human driver would need to sleep each night, even if only for a few hours. A self-driving car never has to sleep. That handful of hours means that over time, self-driving cars will be able to make more deliveries than human drivers. It’s not a huge increase in volume, but it’s still an increase.
The advent of self-driving cars is one of the last steps to automating the purchase of simple goods. If I want to buy something like a loaf of bread, these are all the steps that need to be carried out:
- Wheat needs to be grown
- The wheat needs to be milled into flour
- The flour needs to be baked into bread
- The bread needs to be delivered to a store
- I need to purchase the bread from the store
Within the last few centuries, almost all of these steps have become automated. Most of us don’t need to grow our own wheat, because farms with tractors and machines can feed millions of mouths (farmers exist, of course, so this step isn’t 100% automated). We no longer need to mill flour by hand, thanks to Oliver Evans’s invention. Companies like Flowers Foods (the company that makes Wonder Bread) can bake millions of bread loaves in factories with industrial mixers and rectangular molds. In stark contrast, the factory’s bread is still delivered to grocery stores across the nation by a real, human drive. But soon, that may be gone too.
Understandably, many people are anxious about a future where self-driving cars are everywhere. And it is true that new technologies are often double-edged swords. The automatic flour mill was revolutionary, but put many millers out of work. Fast food is popular, but it makes us fat and unhealthy. Perhaps it’s too early to tell whether self-driving cars will be good for us, but we should at least recognize them for what they are: inevitable.