No Such Thing As An Opinion!

July 23, 2011

Dear Bill Ford, executive chairman of Ford Motor Company: I have the solution for global gridlock!

Before I present my solution for global gridlock, let me provide some context.

On June 26, CNN published commentary by Bill Ford, executive chairman of Ford Motor Company.  The title of the article is: "Why the world faces a massive traffic jam".

Here are some of Ford's comments: 

1) Ford states:

"While breakthroughs like improved battery technology will likely provide a solution to the CO2 challenge, another issue -- 'Global Gridlock' -- is quietly taking its place."

Yes, I agree that gridlock is a huge problem in many places around the world, and I do think it's a problem that is certainly worth solving.  Now let's get into the more interesting, and less obvious, stuff!

2) Ford continues:

"Global gridlock can be defined by numbers. The world's population is growing and is becoming more affluent."

a) The world's population is "becoming more affluent"?  Really?

Why is it that very intelligent people seem to commonly believe that the world increases its wealth over time?

Isn't that illogical?  In fact, an article of mine, as well as the ideas I present in its comment section, clearly spell out my belief that it's generally impossible for the world to increase its wealth over time, at least in the manner that people envisage!  Here's a quote of mine:

"How could we have more now than in caveman days? Where did the materials to create the concrete and wood come from? Out of thin air? No, they simply came from assets that were in a different form, in the earth, or from trees, etc. The only way in which assets would increase over time in a natural way is from environmental triggers, such as rain resulting in more trees growing than would otherwise, allowing for more wood and homes to be built; things like that."

My point is simply this:  One increases their wealth by taking wealth from another.  Unfortunate, but true!

The overall wealth of people on earth cannot be increased, except in very limited ways, such as through greater rainfall resulting in greater growth of trees

I will make one clarification.  An increase in the world's population, as well as new technology and greater productivity, lead to populations being able to access progressively greater amounts of natural resources.

However, the result isn't that the world then becomes wealthier.  After all, those resources were always part of the earth, they just hadn't been accessed yet!

But even though the earth has always had those resources, it is true that the population itself temporarily becomes wealthier as it accesses resources it was previously unable or unwilling to access.

But if you want to acknowledge this point, you must acknowledge this:  The argument ignores the resources that are being consumed!

In other words, if you want to conclude that people become wealthier as they access earth's previously unaccessed resources, they'd you'd need to conclude that those same people lose wealth as they consume earth's already accessed resources!

So, using that definition, the people cannot become wealthier unless they access new resources in amounts greater than they consume current resources.

Is this the case?  I don't know, but it's certainly not obvious that it would be the case, at least by a significant margin!

Still, this is what it all comes down to:  Regardless of what new resources are accessed, the earth itself does not become wealthier, because the earth itself has a limited amount of resources.  And since earth's resources are what humans access, I will stick with my original definition, my claim that the world generally cannot become wealthier over time.

I feel so confident that I'm correct that I won't even qualify my belief as being only "likely".

Here's an example of a transfer of wealth.  Car purchases by the Chinese have risen rapidly.  They've become more affluent, at the expense of the US, because China exports much more than it imports, while the US imports much more than it exports.

So, with all of this in mind, there's no reason to believe that there will be an overall worldwide increase in affluence, nor a resulting sustained increase in car purchases.  Right?

Well, you may counter with the following assumption (which I do presume to be true): The total number of combined cars purchased in China and the US today are greater than were purchased twenty years ago.

Fine.  But that's doesn't mean my theory about wealth is incorrect.  I can explain, and the explanation is consistent with my belief that the world generally doesn't become wealthier over time.  But before I provide my explanation, let me continue on with my commentary.

b) This leads me to Ford's other comment, his claim that the world's population is growing.  I have no doubt his claim is correct.

But why did Ford make that claim?  He seems to be implying that growth in population would lead to growth in the production of cars.  Right?

Is that logical?

Well, I've already shown that the amount of wealth in the world is generally fixed (apart from growth of things like trees).

So, if the amount of wealth in the world is fixed, why would Ford suggest that an increase in the population would increase the production of cars?

In fact, the opposite would occur, everything else being equal!  More people would be competing for the same sized pie, and hence the average person's share would be less than previous!

And of course, if the average person is less wealthy, then (everything else being equal) there's no reason to believe that the production of cars would increase!

Now, I'm not trying to put words in Ford's mouth.  If he doesn't believe in the first place that the world's wealth remains static, then I suppose he would consider it irrelevant of me to point out that a growth in population would lead to the average person having less wealth!  I'm simply expanding on Ford's comments, using the insight I previously provided.

But the point I make is still interesting to declare: Would an increase in population lead to greater production of cars?

No, it wouldn't.

Will there be an increase in production of cars?

Given my commentary, you might be surprised to see me state that I do expect there to be an increase in car production.  Confused?  Don't be.  I will explain.

I expect production of cars to increase, but not for the (incorrect) reasons Ford states!

Here's the reason I expect worldwide car production to increase:

Simply put, the transfer of wealth around the world results in a different car buying dynamic.  Before I define that dynamic, it might be easier to see an example:

Let's say the average American family has enough wealth to buy 3 cars if they wish, but they choose to buy only 2 cars, and use the rest of their wealth on vacations and other things.

Let's say the average Chinese family has enough wealth to buy 0.5 cars if they wish, and they choose to use their entire wealth to buy 0.5 cars.

At this point, the total combined average number of cars purchased by Chinese and American families is 2.5.

Now, let's envision that, due to the American trade deficit, wealth equivalent to 1 car's value eventually transfers from each American family to each Chinese family.

The average American family now has only enough wealth to buy 2 cars, while the average Chinese family now has enough wealth to buy 1.5 cars.

Given that the average American family would likely still need 2 cars to get to work everyday, you can expect the average American family would still buy 2 cars.  And you can expect that the average Chinese family will now buy 1.5 cars, since their greater wealth will allow it, and since most Chinese families likely desire or will by then require a second car (for work).

At this point, the total combined average number of cars purchased by Chinese and American families is 3.5.  It's increased from 2.5 to 3.5!

There are some minor logical errors in my argument (errors that are difficult to correct without making my argument difficult to understand), but they are presentation specific errors only.  The premise is still sound.

I will now define that premise, the reason that the transfer of wealth around the world results in a different car buying dynamic even as overall world wealth remains the same:

The increase in car production worldwide will occur as a result of wealth being transferred from 1) those who are not using the excess wealth to buy cars to 2) those who will use the wealth to buy cars.  Hence, there will be more cars produced worldwide!

3) Ford continues:

"There are approximately 6.8 billion people in the world today. Within our lifetime, that number will approach 9 billion. Today, there are about 800 million vehicles on the road worldwide, but by midcentury that number could grow to between 2 and 4 billion."

In light of the claims I made (points 1 and 2) about overall wealth generally not changing and about an expected increase in car production, is the above statement by Ford plausible?

Well, I don't have enough information to say!  There are many factors involved, it's quite complicated.  If you combined Ford's population claim with my logic, the average person's wealth would shrink to 77.3% of what it is now (6.8 divided by, say, 8.8).

In terms of whether the production of cars would increase while individual wealth shrinks to 77.3%, I expect that the loss in individual wealth would be more than offset by the transfer of excess wealth to locations where the wealth would be used to purchase cars.

But would the production increase result in a jump from there being 800 million cars outstanding to 2-4 billion?  I don't know.  And honestly, I'm not that interested in figuring it out right now!  I simply thought that it might be interesting to address the quote in point 3.

By showing that Ford's assumptions may be incorrect, and by providing my logic, I've provided the crucial framework, and perhaps the motivation, for someone who may want to crunch the numbers to estimate how many cars will be on the road!

4) Ford continues:

"If we continue to follow the personal mobility model that is now in place, the world's roads are going to become too crowded."

"There's no single answer to this new threat to our mobility, and it isn't going to be solved by one person or group."

There's "no single answer"?

I disagree.  I actually have a solution!  Actually, I believe it really boils down to two solutions!

But before I disclose them, I'll first let Ford expand on his point a bit more:

"We need to develop better mass transit systems and strive to find new forms of individual mobility. Cars will continue to evolve, but they will need to work in harmony with other cars, city infrastructure and other forms of transportation.

We need smart cars and smart infrastructure that communicate with each other while using real-time data to maximize their efficiency. We also need to tie in innovative and unique solutions that in their own way address global gridlock. Some of these solutions already are already being developed.

Masdar City is a carbon-neutral city in Abu Dhabi, being built from the ground up, where no internal combustion vehicles will be used within the city limits. People will get around on foot or bike above ground or with driverless pods beneath the city. 

In Manhattan, 34th Street traffic will be managed better through dedicated bus lanes, private automobile restrictions, and optimally timed traffic lights. In cities across the United States, smart parking is already being enabled by phone applications that can alert drivers to parking spots -- and even reserve them in advance."

Many of Ford's suggestions make sense.  But if there are better solutions, do Fords suggestions matter much?  Are his suggestions the best, most efficient and most productive ways to solve gridlock?

I don't think so.

And this leads me to the solutions I have for gridlock:

5) First, let's understand the problem.

The cause of gridlock is simple:  There are too many cars being driven on particular roads at the same time.

Given that gridlock often appears to occur only at certain times, namely rush hour, it's fair to assume that the bulk of gridlock is related to people commuting to and from work.

So, instead of using Ford's solutions (solutions which involve more efficiently routing people through the path from home to work), wouldn't the ideal solutions be ones that focuses on 1) reducing the number of people that travel at all to work, or 2) reducing the distance people travel from home to work?

Those are my two solutions!

Think about it.

a) If you reduce the number of people that travel at all to work, those people are taken off the road completely (at least in regard to commuting to work!)

b) If you reduce the distance people travel from home to work, then it frees up space on the portion of the road that they previously, but no longer, travel!

Why is it that you often read about potential solutions that involve things like widening roads and smart technologies, but you rarely hear about point b)?

You sometimes read about point a), working from home, but that usually seems to be a result of companies offering incentives to employees, not a result of public, governmental planning!

Feasibility of my gridlock solution

I'm not going to do an exhaustive analysis here.  I just want to find out:  Are my two solutions feasible and worthwhile?  Let me expand on this!

Solution One: Increasing the number of people who work from home

I'm sure there are many employers who are unaware of research showing that workers are often more productive when working from home.

I'm sure there are many employers who don't realize the following: When employees end commuting and thereby save on gas, they prevent that wealth from being transferred to foreign oil exporters!  The money saved can instead be spent within America, and even on items and services sold by the very employer allowing employees to work from home!

I have no doubt that countless office jobs, along with many customer service and call center jobs, could be executed just as well, if not better, from home.

Wouldn't it be worthwhile for the government to provide tax breaks, or other incentives, to get companies to allow employees to work from home?

And wouldn't such government spending perhaps provide a much greater bang for the buck than spending on widening roads and smart technologies?

Regardless of which types of spending provide the better bang for the buck, what good is it to widen roads if they will eventually clog up again?  Isn't that simply kicking the can down the road?

In contrast, letting an employee work from home is a situation that can occur indefinitely!

Solution Two: Reducing the distance people travel from home to work

a) At first glance, it might seem like it would be difficult to achieve this reduction in great numbers.  But gradually, it could easily be done!

In terms of how it could be done, consider that it might be easier to get companies to relocate closer to employees, rather then get employees to relocate closer to companies.  This is true for a few reasons.  Companies have more resources, and companies could be given relocation incentives by the government.

Why would companies want to relocate?

For starters, in return for cash and other government incentives!  Also, remember that the money employees save on gas will be plowed back into the domestic economy.  And the more employers that enact the relocation policy, the more likely each employer will sell more goods and services, since there will be more spending money available within the domestic economy!

Now, employers may initially be hesitant to relocate, worrying they'd lose current employees who can't commute to the new location; worried they'd lose market share to competitors who don't relocate.

In order to get around this, the government would need to pass a law to ensure that all companies are on an equal playing field.  Here's an example of what the law might state:  By a certain deadline, a certain percentage of workers employed by companies must reside within a specific distance from work.

b) The government could easily provide incentives to home builders to get them to build homes close to newly built suburban offices (in connection with point d, below). 

c) The government could provide incentives to get long term employees, especially those who expect to stay with the company for pension-related reasons, to relocate closer to work.  However, I think this is one of the least efficient methods, so I won't discuss it further.

d) Think about this:  Is gridlock a problem because the world doesn't have enough land? Of course not.  There's plenty of land.  The problem is that too many people reside on and travel throughout relatively small areas.

The government needs to provide incentives to businesses to open more offices in suburban areas, so that people in the suburbs don't have to travel far to work!

This is perhaps one of the more promising solutions!

Envision this:

Instead of a company having a thirty story building located downtown, why can't they instead have three ten story buildings in suburbia?  Sure, it would take up three times as much land, but if it eventually turned out that society started running out of land, couldn't they simply build extra stories on top of the ten story buildings?

Outside of reducing gridlock, there's another possible advantage:  Once a company has replaced its taller downtown office building with several smaller suburban office buildings, it's possible (although I'm not positive about this) that the smaller buildings will be able to attract employees that are more successful than the original location was able to attract!

Why? Well, promising applicants who may have previously turned down a downtown job offer, fearing the commute, may now accept the suburban job, given the much shorter commute time!

Now, if companies were to pursue this strategy, it would result in there being unused space in many buildings.  Companies are not likely to want to pay property tax on partially filled, or totally empty, buildings!  As a result, government should reduce or eliminate property tax on those buildings.  After all, the government will instead be earning property tax on the newly built buildings!

e) Another easily implementable solution is this:  The government can regulate that companies can only hire workers that live nearby.  That way, they would avoid relocating businesses, relocating workers or building new, shorter buildings.

Is this ideal in every way? No, because it would prevent people from working for any company they want to!  But is the current situation, the gridlock, ideal?  Surely not.  In fact, gridlock might get to the point that the society starts to deteriorate seriously!


My analysis isn't complete.  It simply provides the basic framework for a solution to gridlock.  However, that basic framework itself is the most crucial aspect of solving the problem!

Perhaps my framework can become the new model for solving the gridlock problem!

When it comes to taxpayers paying for the government incentives, it's crucial to realize that the payments are worth it if the society becomes better off overall! It's all about costs versus benefits!

Importantly, the government incentives I propose wouldn't even necessarily require any increase in government budgets!  Funds could be simply diverted from current urban planning (like widening roads, expanding subways/bus routes and smart technologies) to my more efficient solutions!

I don't think Bill Ford's solutions are likely to be either the best solutions or sustainable ones.

But can we blame Bill Ford?  After all, other than myself, who else do you see coming up with great solutions?

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