July 2019

A Look at Industrial Policy for Drones and eVTOL in China

by on July 26, 2019 · 0 comments

By Brent Skorup and Will Gu

The Chinese aviation regulator (CAAC) set out guidelines in January 2019 for drone airworthiness standards. CAAC also released proposed plans in May 2019 for the 30-year development of the unmanned civilian aircraft industry. These proposed plans, while broad and general, highlight unmanned civilian aircraft—like drones and eVTOL—as one of future pillars of the Chinese economy, alongside areas like artificial intelligence and 5G. These pillars are the industries in which the Chinese government wants China to surpass Western countries’ capabilities in the “fourth industrial revolution.” The documents are available online and we’ve translated the documents. Below is a summary of highlights from that translation. 

Industrial Plans for Unmanned Civil Aviation 

Unlike the deliberative, industry-led development in most other countries, China is taking a more top-down approach in the May 2019 plans for unmanned civil aviation. The approach in the document roughly translates as “social + industrial management,” which CAAC lays out in five-year industrial plans. Both the January and May documents outline government action from building domestic supply chains to building drone infrastructure to implementing safety protocols to training personnel.  

Some key dates from the January guidelines: 

  • Develop drone air worthiness standards by the end of 2019 
  • Create eVTOL requirements by the end of 2019 

Some key dates from the 5-year plans released in May: 

  • Allocate segregated, low-altitude airspace by 2025 
  • Develop widespread commercial urban air mobility by 2035 
  • Develop world-class unmanned aerospace manufacturing by 2035 

As a first step, CAAC is pressing ahead on national airworthiness standards because international standards have been slow to develop. A Chinese government database records over 280,000 registered drones for surveillance, agriculture, and delivery uses. There’s seems to be a real-time drone UTM system in place, but we’ve found little information about its capabilities. (Balancing competition, interoperability, and dynamic improvements in UTM will be a difficult task for aviation regulators worldwide.) According to the Chinese Ministry of Industry and Information Technology, drone operators are allocated spectrum at 800 MHz, 1.4 GHz, and 2.4 GHz. 

JD.com, the largest retailer in China, has been doing trial deliveries since 2016. Another drone company, SF Express, received the first commercial drone delivery license in 2018, a year before the first US drones were approved for commercial delivery. SF Express drones can carry up to 30 kg (about 66 lbs).  

The eVTOL industry in China appears far ahead of the US. EHang has been flying tourists in a 2-passenger autonomous eVTOL for a few months, and an unconfirmed report says the company sold 18 of their eVTOL aircraft this month. In the US, eVTOL operators like Uber likely won’t fly passengers in trial flights until 2023, at the earliest. 

National airworthiness standards are needed, in part the Chinese regulators say, because of unsettling news of drones interfering with airports’ operations. However, the more pressing reason for developing standards is for Chinese industry to take the global lead in commercial unmanned aircraft. China aims to establish international norms and standards—a goal mentioned several times in both documents—similar to how China led the way attending global standards-body meetings and developing protocols in the 5G race. 

The Path Ahead 

One likely obstacle to autonomous urban air mobility and drone cargo development in China is the Chinese military. Most progress in these areas have to be coordinated with the military because of airspace use. According to 2017 Reuters reporting, local media estimate that the military controls about 80% of Chinese airspace. Chinese civil airspace is already somewhat crowded and integrating eVTOLs and other large drones will be a delicate process. 

What stands out from these documents how China perceives itself as lagging in traditional commercial aviation compared to the United States and Europe. That perception seems to serve as a motivation to leapfrog the West and lead the globe in developing commercial drone, eVTOL, and urban air mobility standards and services. The Chinese government has ambitious plans and is moving quickly. In many ways they appear to be leading early but—like 5G—this race is a marathon, not a sprint. 

SHARE: 0 comments

50 Years of Video Games & Moral Panics

by on July 18, 2019 · 0 comments

This essay originally appeared on The Bridge under the title “Confessions of a Vidiot” on July 16, 2019.

_________________

I have a confession: I’m 50 years old and still completely in love with video games.

Image result for Time magazine video games coverI feel silly saying that, even though I really shouldn’t. Video games are now fully intertwined with the fabric of modern life and, by this point, there have been a couple of generations of adults who, like me, have played them actively over the past few decades. Somehow, despite the seemingly endless moral panics about video games, we came out alright. But that likely will not stop some critics from finding new things to panic over.

As a child of the 1970s, I straddled the divide between the old and new worlds of gaming. I was (and remain) obsessed with board and card games, which my family played avidly. But then Atari’s home version of “Pong” landed in 1976. The console had rudimentary graphics and controls, and just one game to play, but it was a revelation. After my uncle bought Pong for my cousins, our families and neighbors would gather round his tiny 20-inch television to watch two electronic paddles and a little dot move around the screen.

Every kid in the world immediately began lobbying their parents for a Pong game of their own, but then a year later something even more magical hit the market: Atari’s 2600 gaming platform. It was followed by Mattel’s “Intellivision” and Coleco’s “ColecoVision.” The platform wars had begun, and home video games had gone mainstream.

My grandmother, who lived with us at the time, started calling my brother and me “vidiots,” which was short for “video game idiots.” My grandmother raised me and was an absolute treasure to my existence, but when it came to video games (as well as rock music), the generational tensions between us were omnipresent. She was constantly haranguing my brother and me about how we were never going to amount to much in life if we didn’t get away from those damn video games!

I used to ask her why she never gave us as much grief about playing board or card games. She thought those were mostly fine. There was just something about the electronic or more interactive nature of video games that set her and the older generation off.

And, of course, there was the violence. There is no doubt that video games contained violent themes and images that were new to the gaming experience. In the analog gaming era, violent action was left mostly to the imagination. With electronic games, it was right there for us to see in all its (very bloody) glory. Continue reading →

SHARE: 0 comments

Did You Need Another Reason to Hate Lobbyists & Cronyism?

by on July 15, 2019 · 0 comments

My latest AIER column examines the impact increased lobbying and regulatory accumulation have on entrepreneurialism and innovation more generally. Unsurprisingly, it’s not a healthy relationship. A growing body of economic evidence concludes that increases in the former lead to much less of the latter.

This is a topic that my Mercatus Center colleagues and I have done a lot of work on through the years. But what got me thinking about the topic again was a new NBER working paper by economists Germán Gutiérrez and Thomas Philippon entitled, “The Failure of Free Entry.” Their new study finds that “regulations and lobbying explain rather well the decline in the allocation of entry” that we have seen in recent years.

Many economists have documented how business dynamism–new firm creation, entry, churn, etc–appears to have slowed in the US. Explanations for why vary but Gutiérrez and Philippon show that, “regulations have a negative impact on small firms, especially in industries with high lobbying expenditures.” Their results also document how regulations, “have a first order impact on incumbent profits and suggest that the regulatory capture may have increased in recent years.”

In other words, lobbying and cronyism breed a culture of rent-seeking, over-regulation, and rule accumulation that directly limit new startup activity and innovation more generally. This is a recipe for economic stagnation if left unchecked. Continue reading →

SHARE: 0 comments

There are good reasons to be skeptical that automation will unravel the labor market

by on July 8, 2019 · 0 comments

When it comes to the threat of automation, I agree with Ryan Khurana: “From self-driving car crashes to failed workplace algorithms, many AI tools fail to perform simple tasks humans excel at, let alone far surpass us in every way.” Like myself, he is skeptical that automation will unravel the labor market, pointing out that “[The] conflation of what AI ‘may one day do’ with the much more mundane ‘what software can do today’ creates a powerful narrative around automation that accepts no refutation.”

Khurana marshals a number of examples to make this point:

Google needs to use human callers to impersonate its Duplex system on up to a quarter of calls, and Uber needs crowd-sourced labor to ensure its automated identification system remains fast, but admitting this makes them look less automated…

London-based investment firm MMC Ventures found that out of the 2,830 startups they identified as being “AI-focused” in Europe, 40% used no machine learning tools, whatsoever.

I’ve been collecting examples of the AI hype machine as well. Here are some of my favorites. Continue reading →

SHARE: 0 comments

Black Mirror Episodes from Medieval Times

by on July 2, 2019 · 0 comments

CollegeHumor has created this amazing video, “Black Mirror Episodes from Medieval Times,” which is a fun parody of the relentless dystopianism of the Netflix show “Black Mirror.” If you haven’t watched Black Mirror, I encourage you to do so. It’s both great fun and ridiculously bleak and over-the-top in how it depicts modern or future technology destroying all that is good on God’s green earth.

The CollegeHumor team picks up on that and rewinds the clock about a 1,000 years to imagine how Black Mirror might have played out on a stage during the medieval period. The actors do quick skits showing how books become sentient, plows dig holes to Hell and unleash the devil, crossbows destroy the dexterity of archers, and labor-saving yokes divert people from godly pursuits. As one of the audience members says after watching all the episodes, “technology will truly be the ruin of us all!” That’s generally the message of not only Black Mirror, but the vast majority of modern science fiction writing about technology (and also a huge chunk of popular non-fiction writing, too.)

Continue reading →

SHARE: 0 comments