Tacocopter Takeaway Drone: Regulation Fail, Theory Fail

 Tyler Cowen, and Ryan Avent at Free Exchange write on how difficult it would be for an entrepreneur to get up the idea of a drone takeaway delivery device: the tacocopter. And it wouldn’t be the technology that would stop it, it would be the regulatory, legal, liability, insurance, brand protection and other social and political issues that got in the way.

Key point:

Consider the tacocopter. The tacocopter is a not-quite-real-not-quite-a-joke business idea that became a brief internet sensation back in March. The concept is stunningly simple: order tacos on your iPhone and a quadracopter drone will deliver them to your doorstep. As you can read here, the plan would face technical and (especially) regulatory hurdles if implemented today. Yet the potential, for this or similar experiments, is obvious. Cheap, agile drone technology is available now. Building apps is trivially easy. Mapping and location technology and data are getting better all the time. If not drone copters, perhaps 3D printers or autonomous vehicles. It’s a short leap from the ridiculous to the transformative. And the ideas needed to transfer these technologies to everyday life are increasingly the domain of entrepreneurs rather than academics. One doesn’t need 20 years of study to spot profit opportunities.

…growth proceeds at the fastest pace that legal and social institutions can tolerate.

As Cowen puts it:

our regulatory system has gotten so large and complex that its main effects are now unintended. In short, the product of the regulatory system is a result of human action but not of human design.

Societal evolution is the binding restriction on innovation, not technology. This recognises that real innovation comes from allowing people to change stuff and do things differently, not from academic discovery in isolation. Academic discovery may be harder and more ‘corporate’ now, but it isn’t necessarily the key to getting general innovations up and running in specific, real world applications. More on this in Launching the Innovation Renaissance  and Cowen’s The Great Stagnation.

Two issues emerge here. One is the absence of a real understanding of the impact of our regulations, liabilities, legal restrictions and conventional cultural wisdom on our capacity to innovate and prosper. Too often what understanding we do have is coloured by special pleading or interest group catastrophism.

The other is that models of economic growth don’t take social and cultural evolution seriously, and where they go close they use grossly inadequate variables because that is the only data that is available.

For example, endogenous growth macro-models take human capital and innovation seriously. They use technological progress and human capital variables that focus on patent numbers, PhDs in technical fields, high-school graduation rates and so on.

But even models that are serious about innovation pick on concrete, non-cultural things that they can measure easily because, well, they can measure them easily. This leads macroeconomists to often miss what really matters.

There are inadequate measures out there on ease-of-business and cultural variables that affect economic decisionmaking, but they have had nowhere near the attention of the nice, easy-to-quantify stuff. Give them a couple of decades of fashionability and we may get somewhere.

But that won’t happen. There is a real cultural problem in macroeconomics in that it eschews the soft, hard-to-quantify stuff even when they are clearly dominant variables in macroeconomic behaviour, short and long term. And at the level of macro variables and their microfoundations (note to non-economists: it is controversial whether macro variables have microfoundations).

The failures of macro over the last 2 decades have at least stimulated a discussion. I suspect, however, that by the time macroeconomists have got their shit together and climbed the ladder of describing economic behaviour adequately, they’ll find that marketers, psychologists and sociologists will have spent years sitting at the top waiting for them.

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