Here’s Why Elon Musk Holds the Secret to Productivity Gains

Here’s Why Elon Musk Holds the Secret to Productivity Gains


To those Americans who envy China’s grandiose multi-trillion-dollar Silk Road ambitions, console yourselves: we have Elon Musk. China may have a bigger checkbook, the U.S. may be sinking under red tape and political inertia, but we still have innovators who dazzle us by leaping ahead. Musk is one of those, and thank heavens he’s one of ours.

Most recently, Elon Musk imagined a humungous new machine that can dig tunnels underground really, really fast. Specifically, he wants his new colossus to bore through the ground five to ten times more speedily than conventional tunneling equipment.  With this monstrous (not so) boring device he aims to get LA’s famously jammed-up traffic moving again. Specifically, he plans to dig tunnels underneath the city in which sleds will whisk cars from Westwood to LAX in five minutes, at speeds of 125 miles per hour. It sounds nutty, but then so did the Tesla early on, not to mention SpaceX’ reusable rockets and Musk’s ambitions for interplanetary colonization. To allow others to share his vision, he has produced a video (complete with a warning: may produce nausea or seizures) showing the sleds rocketing through a tunnel.

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Here’s why we should all pay attention to this latest from the tech guru: our economy has been stuck in slo-mo for years, partly because of sluggish to nil productivity gains. This is especially true in the public sector. The private sector, faced with competition from low-labor-cost countries and pressure from shareholders, has adapted by upgrading and automating manufacturing facilities and systems; the public sector, not so much. Here’s the bad news: spending by the government – federal, state and local – continues to eat up more and more of our GDP. That’s not good for our productivity or our economy.

Musk could begin to change that. Others could jump aboard.

Imagine the world in which roads are repaved at lightning speed or where air traffic control is guided by the very best GPS systems, instead of the 40-year-old radar apparatus still in use today. Think what the best minds and the best technologies could do with our elementary schools; how much faster could kids learn to read if provided with online classes taught by the very best instructors, instead of those who survive the low bars set by the teacher's unions?   

It boggles the mind that the best way to lay new cables underground is to tear up pavement using jackhammers invented in the 1850s and then to smooth surfaces using steamrollers not much different from those once pulled by horses. But that’s what we see about us every day.

Many years ago when I worked on Wall Street, a company showed off an amazing highly automated re-paver that ripped up asphalt and laid a new coat in one sweep. It never gained traction, reportedly because construction unions convinced municipal governments not to buy it.

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The 30th year anniversary edition of Asphalt Contractor quotes one industry expert saying, “In a lot of ways, pavers 30 years ago weren’t all that different from what they are today.” The magazine notes that some improvements in controls and other features have filtered in, as contractors responded to “federal agencies [that] have gravitated toward performance-based contracts for paving work”; road-builders had to upgrade, knowing that “well-trained employees using advanced machinery gives them an edge that allows them to bid competitively and maximize awards.”  What’s the lesson here? Every industry can become more efficient and productive, but someone needs to demand progress.

That someone can be a group of taxpayers or those in charge of our public spending. Unfortunately, it is an uphill battle, with each summit protected by vested interests. Under President Obama, oversight of federal contractors focused on compliance with labor laws; the White House issued an executive order demanding that those awarding contracts look at past labor violations, putting a considerable burden on applicants to provide (and keep updated) historical data on complaints. Another law demanded contractors hire disabled workers and veterans, a worthy goal that was estimated to cost $473 per work location per year. An industry association, Associated General Contractors of America, estimated the real cost at $14, 056, and predicted that the new rules would eliminate most small businesses from competing for the work.

Under President Trump, federal contractors are being pressed to “Buy American,” another popular goal, but one that again will also require substantial compliance costs. No president, it seems, is ready to make productivity or efficiency the highest requirement, and that’s a shame. We’re talking about nearly half a trillion dollars of taxpayer-financed spending every year; it is significant, and most assuredly lowers our overall competitiveness.

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Nowhere is the lack of progressive thinking more damaging than in education. The New York Times recently ran a lengthy piece about Google’s success in introducing its products to America’s classrooms. The author of the piece focuses on how Google may be serving its own interests, with little or no mention of how access to personal computers and programs might elevate our education outcomes. There’s a reason that thousands of teachers have jumped at the chance to provide their students with Google’s products; most want the best for the nation’s kids.

There’s also a reason that Mitch Daniels, Perdue head and past governor of Indiana, ruffled faculty feathers recently when the university announced it would acquire Kaplan University, a for-profit online learning company. Daniels memorably became one of the country’s most popular governors when he transformed the state’s department of motor vehicles from a mess of bureaucratic dysfunctionality to a user-friendly agency attentive to the “customer” experience. The former governor is a pragmatist; the purchase of Kaplan is another effort to give the people what they want, efficiently. As Daniels explained, “Millions of potential students are unserved by the current higher education system.” He aims to fix that, in part through offering online courses and degrees.

Elon Musk showed off a pet snail recently, named Gary, whom he claims moves 14 times faster than today’s tunneling machines. That’s why he’s inventing an upgrade, essential to his vision for conquering the traffic snarls that he calls "One of the most soul-destroying things.” Who knows if this is the answer? What is clear: Musk is at least asking the right question. Our political leaders should do the same. We cannot update our infrastructure with government spending; we do not have a checkbook as large as China’s. We must become smarter, more innovative and more demanding of those investing our taxpayer dollars.