by THE FUTURE: PUBLIC, PUBLIC TRANSPORT
Over the last few weeks during our meetings, Laker Asset Management has had some extensive conversations on the state of automobile manufacturing. Following CA Governor Newsom’s September 23rd announcement of a 2035 target for an end to gas car sales, we have been once again Thinking Green. The domestic research group has been exploring the emerging independent electric car market, as well as the progressive renewable initiatives among domestic gas guzzlers like Ford and General Motors. As of today, we are attempting to map electric car production among major players as parts travel from lithium producers in Australia to battery developers in Korea, and back to the United States where the physical automobiles are then assembled and sold.
Being a self-identified “car-guy”, as much I would like to picture an environmentally-conscious future that still values private automobile ownership, it is hard to not think about our growing population and the complications of urban growth. Despite our country having plenty of room to continue filling in the midwest and greater west, global macroeconomic demand is going to require our major population centers on the coasts to continue expanding to maintain their ports. Although the US population has been growing rather incrementally, for the United States to maintain superpower global status, our economic output needs to be able to serve not just our country, but the rapidly growing population centers across the pacific. Los Angeles, New York City, Houston and Seattle, as big as they are, have to keep growing. While “smaller” port cities like Miami, San Diego and Oakland can fill in some of the gaps, there is enough infrastructure among the largest American cities to the point where we will never back down in signing off more blank checks for future projects that build off of the pre-existing foundations. From a historical, geopolitical perspective, the cities exist where they are for a reason, and the ports will have to remain in use in accordance with our national geography for the country to remain stable.
The United States is continuing to grow, as is the global population. As part of our Thinking Green research, we identified that the millennial and gen-z generational demographics tend to have a strong sense of environmental responsibility, and tend to choose renewable sources when available, even if it costs them a little bit more out of pocket. The two generations in their spending habits in fact model a more collectivist ideology by virtue of these self-inflicted taxes when purchasing goods and services that are objectively better for the larger community. According to the Nielsen Sustainability Imperative, 3 in 4 members of the combined age group are willing to pay more for products deemed sustainable in their production processes. While millennials are just beginning to break the mold in public offices across the country and take some of the political market share from their parents, it is not before long that our university demographic is making the decisions in society. To this, I raise the question, “What if there is a solution that is better for the environment and costs less?”
Our answer is public transportation. There have been plenty of innovations over the last two centuries leading us to believe it could take over, but efficient urban transport has never been needed more than in 2020. In fact, there are already statistics suggesting an unfolding cultural shift. Vehicle miles traveled per capita in the United States has stagnated across the board, and even declined in states with large metropolitan centers such as New York and California. Millennials are also making 8% fewer trips per week on average than their older counterparts, and fewer teenagers are getting their licenses than ever before. COVID-19 and our national pandemic infrastructure for remote work would suggest a disbursement of the population, but so far, Americans are hesitant to leave the cities. There have been plenty of efforts in the past that have tried to make it work in the United States, but what steps need to be taken for mass transit to succeed?
Across the world, mass transit has exploded. “Worldwide, mass transit carried 53 billion passengers in 2017—an increase of roughly 9 billion passengers since 2012, with most of that growth occurring in Asia, and the Middle East-North Africa region.” While much of the countries with public transport explosions rank much higher in population density than the United States, we can look to Australia for an example nation with a similar density to ours.
One of the biggest changes is how the country approaches the economics of it all. In the United States, public transport is operated at the city, county, or state level, but in Europe and Australia, it has been contracted. As the nation that prides itself on free market capitalism, it is interesting that we have locked in mass transit as exclusively public. A competitive environment in which the reigns on transit are given to Google, Microsoft or Tesla, transportation would be less political and more organic. As we move towards grand metro areas with self-driving vehicles, biometric scanning and utilization of cryptocurrency, it only seems right for the nation to have its hands in our transport troubles. Shifting into a more sustainable future that is not only safer for individuals, but also for the environment, I firmly believe public transport will effectively phase out cars, electric or otherwise, across America’s major population centers.