While christening a new UCLA technology and research center in January, Gov. Gavin Newsom let loose with some fairly typical rhetoric about California's leading-edge role in tech development: "California is the epicenter of global innovation—from the creation of the internet to the dominance of artificial intelligence, humanity's future happens here first."

Yet for the so-called epicenter of innovation, our state certainly doesn't give innovators a lot of room to experiment with new ideas. California lawmakers and regulators are so intent on limiting and controlling any promising new development that we've instead become the poster child for Ronald Reagan's famous quotation: "If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it."

Maybe Newsom and the Democratic Legislature haven't noticed, but California has been facing a tech exodus, as many prominent firms leave for states that give them more elbow room to create the next wave of promising innovations. Given the state's dependence on capital gains revenue, it's one reason we're now facing a $45-billion or more budget deficit.

On the good news front, Crunchbase reports that the San Francisco Bay Area may be experiencing a tech resurgence based around artificial intelligence systems, with the region receiving "more than 50 percent of all global venture funding for AI-related startups." But will the state kill that boom before it takes off? Based on the latest actions of the legislature, the answer is "probably."

The Senate Appropriations Committee recently gave the go-ahead to Senate Bill 915, which would "prioritize local control in the decision to deploy autonomous vehicle services." In addition to gaining all the many state approvals, robo-taxi firms would also have to deal with exploding local regulations.

The legislation has been amended to apply to the 15 largest cities and it would forbid localities from banning self-driving cars, but that doesn't ameliorate my concern. This technology is rolling out mainly in big cities anyway. It's easy to kill a technology without outright banning it by, say, forcing these companies to face dramatically different driving rules in every different city where they go.

Like all cutting-edge innovations, self-driving cars strike many of us as an ominous and dangerous development. But most new cars already have various self-driving features (lane assist, adaptive cruise control, blind-spot monitoring). And computers are almost certainly better drivers than people. Nearly 43,000 Americans die in car crashes each year, almost all of them at the hands of human drivers. Widespread A.V. use could save thousands of lives, per research from RAND.

AVs offer fabulous benefits for disabled people, the elderly, and others who cannot or choose not to drive. Yet federal, state, and local officials are worried about a few minor and inevitable problems that have popped up as this technology experiences growing pains—e.g., minor accidents and concerns about traffic violations (as if ordinary drivers don't also sometimes violate traffic laws).

One advocate for S.B. 915 expressed concern about robo-taxis getting stuck at a tricky turn—as if that's a good excuse to add a pointless mish-mash of local regulations to the mix. Ironically, AV development is one area where state regulators have taken an admirably low-key approach. In March, the California Public Utilities Commission gave Waymo, the Alphabet company's driverless-car division, the ability to expand operations in the Bay Area and Los Angeles region and even drive on freeways up to 65 mph. But even when the state takes a sensible approach, the locals want to step in to gum up the works.

And SB 915 isn't the only example of the California Legislature's kneejerk hostility to innovation. Many states are trying to regulate artificial intelligence technology, but California's Senate Bill 1047, which passed out of the Senate and has moved to the Assembly, is easily the most far-reaching example. The bill would create a new state regulatory division to regulate A.I. We all know how effective the state's bureaucrats are at handling complex matters—as well as the impact of lawsuit-promoting statutes.

Basically, the measure forces A.I. developers to mitigate every conceivable harm from their technology by engaging "in speculative fiction about imagined threats of machines run amok, computer models spun out of control, and other nightmare scenarios for which there is no basis in reality," opined an opposition letter from the pro-tech Chamber of Progress. The group rightly fears that the measure undermines California's leading-edge role in the tech sector.

Last week, I wrote about the legislature's effort to limit A.I. technology in a simple, real-world application—self-checkout lanes. Under the guise of helping stores battle retail theft, Senate Bill 1446 is a union concoction designed to limit the use of this technology to protect union grocery jobs.

So, yes, California has been the epicenter of global innovation, but it's apparently not going to continue being so for long. Let's hope Newsom heeds his own words and gets out the veto pen.

This column was first published in The Orange County Register.

The post California's Regulations Might Steer Self-Driving Innovations to Other States appeared first on Reason.com.

American federalism is struggling. Federal rules are an overwhelming presence in every state government, and some states, due to their size or other leverage, can impose their own policies on much or all of the country. The problem has been made clearer by an under-the-radar plan to phase out diesel locomotives in California. If the federal government provides the state with a helping hand, it would bring nationwide repercussions for a vital, overlooked industry.

Various industry and advocacy groups are lining up against California's costly measure, calling on the U.S. Environmental Protection Agency (EPA) to deny a waiver needed to fully implement it. In the past month, more than 30 leading conservative organizations and individuals, hundreds of state and local chambers of commerce, and the U.S. agricultural sector have pleaded with the EPA to help stop this piece of extremism from escaping one coastal state.

Railroads may not be something most Americans, whose attention is on their own cars and roads, think about often. But rail is the most basic infrastructure of interstate commerce, accounting for around 40 percent of long-distance ton-miles. It's also fairly clean, accounting for less than 1 percent of total U.S. emissions. Private companies, like Union Pacific in the West or CSX in the East, pay for their infrastructure and equipment. These facts haven't stopped the regulatory power grab.

Most importantly, the California Air Resources Board (CARB) regulation would have all freight trains operate in zero-emission configuration by 2035. At the end of the decade, the state is mandating the retirement of diesel locomotives 23 years or older, despite typically useful lives of over 40 years. Starting in 2030, new passenger locomotives must operate with zero emissions, with new engines for long-haul freight trains following by 2035. It limits locomotive idling and increases reporting requirements.

Given the interstate nature of railway operations, California needs the EPA to grant a waiver. If the agency agrees, the policy will inevitably affect the entire continental United States.

The kicker is that no technology exists today to enable railroads to comply with California's diktat, rendering the whole exercise fanciful at best.

The Wall Street Journal's editorial board explained last November that while Wabtec Corp. has introduced a pioneering advance in rail technology with the launch of the world's first battery-powered locomotive, the dream of a freight train fully powered by batteries remains elusive. The challenges of substituting diesel with batteries—primarily due to batteries' substantial weight and volume—make it an impractical solution for long-haul trains. Additionally, the risk of battery overheating and potential explosions, which can emit harmful gases, is a significant safety concern. As the editorial noted, "Even if the technology for zero-emission locomotives eventually arrives, railroads will have to test them over many years to guarantee their safety."

The cost-benefit analysis is woefully unfavorable to the forced displacement of diesel locomotives. To "help" the transition, beginning in 2026, CARB will force all railroads operating in California to deposit dollars into an escrow account managed by the state and frozen for the explicit pursuit of the green agenda. For large railroads, this figure will be a staggering $1.6 billion per year, whereas some smaller railroads will pay up to $5 million.

Many of these smaller companies have signaled that they will simply go out of business. For the large railroads, the requirement will lock up about 20 percent of annual spending, money typically used for maintenance and safety improvements.

Transportation is the largest source of U.S. emissions, yet railroads' contribution amounts to not much more than a rounding error. The industry cites its efficiency improvements over time, allowing railroads today to move a ton of freight more than 500 miles on a single gallon of diesel. Its expensive machines, which last between 30 to 50 years and are retrofitted throughout their life cycles, are about 75 percent more efficient than long-haul trucks that carry a comparative amount of freight.

As Patricia Patnode of the Competitive Enterprise Institute, which signed the aforementioned letter to the EPA, recently remarked, "Rather than abolish diesel trains, CARB should stand in awe of these marvels of energy-efficient transportation."

President Joe Biden talks a lot about trains, but his actions since taking office have consistently punished the private companies we should value far more than state-supported Amtrak. In this case, EPA Administrator Michael Regan and the White House need not think too hard. They should wait for reality to catch up before imposing on the rest of us one state's demands and ambitions.

COPYRIGHT 2024 CREATORS.COM

The post How California's Ban on Diesel Locomotives Could Have Major National Repercussions appeared first on Reason.com.

President Joe Biden says, "I know how to make government work!"

You'd think he'd know. He's worked in government for 51 years.

But the truth is, no one can make government work.

Biden hasn't.

Look at the chaos at the border, our military's botched withdrawal from Afghanistan, the rising cost of living, our unsustainable record-high debt.

In my new video, economist Ed Stringham argues that no government can ever work well, because "even the best person can't implement change….The massive bureaucracy gets bigger and slower."

I learned that as a consumer reporter watching bureaucrats regulate business. Their rules usually made life worse for consumers.

Yet politicians want government to do more!

Remember the unveiling of Obamacare's website? Millions tried to sign up. The first day, only six got it to work.

Vice President Joe Biden made excuses: "Neither [Obama] and I are technology geeks."

Stringham points out, "If they can't design a basic simple website, how are they going to manage half the economy?"

While bureaucrats struggled with the Obamacare site, the private sector successfully created Uber and Lyft, platforms like iCloud, apps like Waze, smartwatches, etc.

The private sector creates things that work because it has to. If businesses don't serve customers well, they go out of business.

But government is a monopoly. It never goes out of business. With no competition, there's less pressure to improve.

Often good people join government. Some work as hard as workers in the private sector.

But not for long. Because the bureaucracy's incentives kill initiative.

If a government worker works hard, he might get a small raise. But he sits near others who earn the same pay and, thanks to archaic civil service rules, are unlikely to get fired even if they're late, lazy, or stupid.

Over time, that's demoralizing. Eventually government workers conclude, "Why try?"

In the private sector, workers must strive to make things better. If they don't, competitors will, and you might lose your job.

Governments never go out of business.

"Companies can only stay in business if they always keep their customer happy," Stringham points out. "Competition pushes us to be better. Government has no competition."

I push back.

"Politicians say, 'Voters can vote us out.'"

"With a free market," Stringham replies, "the consumer votes every single day with the dollar. Under politics, we have to wait four years."

It's another reason why, over time, government never works as well as the private sector.

Year after year, the Pentagon fails audits.

If a private company repeatedly does that, they get shut down. But government never gets shut down.

A Pentagon spokeswoman makes excuses: "We're working on improving our process. We certainly are learning each time."

They don't learn much. They still fail audits.

"It's like we're living in Groundhog Day," Stringham jokes.

When COVID-19 hit, politicians handed out almost $2 trillion in "rescue" funds. The Government Accountability Office says more than $100 billion were stolen.

"One woman bought a Bentley," laughs Stringham. "A father and son bought a luxury home."

At least Biden noticed the fraud. He announced, "We're going to make you pay back what you stole!

No. They will not. Biden's Fraud Enforcement Task Force has recovered only 1 percent of what was stolen.

Even without fraud, government makes money vanish. I've reported on my town's $2 million toilet in a park. When I confronted the parks commissioner, he said, "$2 million was a bargain! Today it would cost $3 million."

That's government work.

More recently, Biden proudly announced that government would create "500,000 [electric vehicle] charging stations."

After two years, they've built seven. Not 7,000. Just seven.

Over the same time, greedy, profit-seeking Amazon built 17,000.

"Privatize!" says Stringham. "Whenever we think something's important, question whether government should do it."

In Britain, government-owned Jaguar lost money year after year. Only when Britain sold the company to private investors did Jaguar start turning a profit selling cars people actually like.

When Sweden sold Absolut Vodka, the company increased its profits sixfold.

It's ridiculous for Biden to say, "I know how to make government work."

No one does.

Next week, this column takes on Donald Trump's promise: "We'll drain the Washington swamp!"

COPYRIGHT 2024 BY JFS PRODUCTIONS INC.

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Luxury electric automaker Rivian made several big announcements this week related to its expanding product line. At the same time, though, the company announced that it would pause construction on a factory in Georgia that received some of the most generous taxpayer-funded incentives in state history.

On Thursday, Rivian unveiled three new vehicles that will be available in the coming years. The company already offers the R1T and R1S, a luxury truck and SUV, respectively, which start at $70,000–$75,000 and can cost $100,000 or more. CEO R.J. Scaringe announced the R2, a smaller and more modest SUV that would be available in 2026 with prices starting at $45,000, as well as the R3 and R3X crossovers, also expected to be less expensive than the R1 series.

As Reason has documented, Rivian went public in November 2021, promising luxury electric vehicles that would be both stylish and rugged. The following month, the company—which only had a single factory in Illinois—struck a deal to build its second factory in Georgia: Rivian would spend $5 billion on the factory, and in exchange, Georgia state and local governments authorized up to $1.5 billion in tax credits and incentives.

In the years since, however, the company has struggled. In May 2023, Bloomberg reported that the company had lost 93 percent of its share value, and its market cap reflected "almost no value beyond the company's cash hoard." In the fourth quarter of 2023, the company lost $43,372 on each vehicle sold, up from a $30,648 per-vehicle loss in the third quarter.

Branching out into the more affordable R2 and R3 models is key to Rivian's long-term survival, opening up its product line to appeal to more than just those who can pay over $75,000 for a luxury vehicle. And to do this, it had to make some adjustments.

"To enable R2 to be launched earlier and with a considerable reduction in the capital required for its launch, Rivian plans to start production of R2 in its existing Normal, Illinois manufacturing facility," the company announced. It is also pausing construction in Georgia: "Rivian's Georgia plant remains an extremely important part of its strategy to scale production of R2 and R3. The timing for resuming construction is expected to be later to focus its teams on the capital-efficient launch of R2 in Normal, Illinois."

The move is expected to save the company $2.25 billion "as compared to the original forecast of launching the first line of R2 production at Rivian's Georgia site."

In October, the company announced that the Georgia site was "95 percent graded" and "nearly ready for construction to begin." Notably, under the incentive agreement, Georgia officials paid over $32 million for "clearing and grading" the site.

One year ago, almost to the day, Scaringe reaffirmed the company's dedication to the Georgia project, telling The Atlanta Journal-Constitution, "We're committed to this state and this project," adding that "the future of our company in terms of scaling and growing really relies on the future of this project. There's not another option. We're not planning an alternative. This must work."

The electric vehicle market, while growing, is in flux, due to softening consumer demand and persistently high interest rates. Just last month, Apple—the first company in history to ever record a $3 trillion valuation—canceled its decade-long quest to develop an electric car. General Motors and Ford have also rolled back pledged investments in electric vehicles.

In that sense, Rivian's pivot would be perfectly reasonable—companies must be free to adapt to changing circumstances in a way that benefits both their customers and their shareholders. But as with any central planning scheme, state economic incentives don't tend to allow for those sorts of dynamic pivots. In this case, Georgia officials mortgaged a large amount of taxpayer money on a plan that foresaw the company continuing on a path that no longer seems financially feasible.

The post Rivian Pauses Construction at Factory That Costs Georgia Taxpayers $1.5 Billion appeared first on Reason.com.

New tires for automobiles could become more expensive and less safe under legislation proposed by Washington state lawmakers. The proposed bill would give the state Department of Commerce the power to ban the sale of tires it deems bad for the environment. The bill targets heavier and more durable tires, which sponsors say have greater rolling resistance, making them less energy efficient. But critics say the bill would effectively ban cheaper tires and make those that are sold less safe. "The easiest way to reduce rolling resistance is to reduce tread depth which will, in turn, reduce wet traction performance," said Tracey Norberg of the U.S. Tire Manufacturer's Association. "It'll reduce tire life, and it'll increase scrap tire generation."

The post Brickbat: So Tired appeared first on Reason.com.