What would a Hyperloop Economy look like?

Of all the ideas Elon Musk has ever promoted, his hyperloop high-speed transportation system could be the most disruptive technology of all. If it was ever built and worked as Mr. Musk advertises, two huge ifs, the hyperloop would completely transform our economy.

The hyperloop is basically a giant pneumatic tube that would move people and freight across the countryside at extremely high-speeds – around 800 miles per hour. The idea is to create the world’s fastest ground transportation system, and that would be the most disruptive change to transportation in a century, since the introduction of the mass-market automobile just before World War I.

The best way to think of the hyperloop is a superfast public transportation that is similar to the New York Subway or light rail. Like the Subway, it would be fast, convenient, cheap, and fairly easy to access. The difference is that instead of taking you from Manhattan to Queens in 20-30 minutes, the hyperloop would take you from Manhattan to Washington D.C. or Scranton, Penn. in about 20 minutes.

The hyperloop would also be fairly cheap. A trip on it would cost around $20, or about the cost of a bus ticket, yet it would be faster and more convenient than airliners or a car.

Like the automobile and the train before it, such a system would change our society and economy beyond recognition. Some of the changes that the hyperloop could make to our economy include:

• Drive most airlines out of business. Nobody would bother to fly if the hyperloop was available for travel between most destinations inside the U.S. and Canada. It would be cheaper, faster, and more convenient, even for transcontinental travel. Air travel could be restricted to transoceanic flights and hobbyists or rich people. Discount airlines, such as Southwest (NYSE: LUV) and Jet Blue Airways (NASDAQ: JBLU), would be the first to go. Nobody is going to drive or take a train out to the airport for the privilege of spending hours on a cramped plane when you can simply walk or take the bus over to a station, and get on the hyperloop, and make the same trip in a similar or faster time frame.

 

• Create a big problem of abandoned airports, similar to that of abandoned train stations a generation or so ago, or empty malls today. Most airports would end up being abandoned because the business would disappear. A few large regional airports might remain for intercontinental travel, but most airports would eventually shut down. Airports in large urban areas could simply be redeveloped, while ones in many smaller cities would simply be abandoned. Many citizens will start demanding that airports be shut down or moved far out in the countryside in order to avoid noise.

• Drive down the cost of housing by making it possible to commute over long distances. A person would be able to live in upstate New York or northern Pennsylvania where housing is fairly cheap and work in New York City for example. They might actually have a shorter commute than a co-worker who lives in Brooklyn or Long Island. That, of course, will put pressure on housing costs in New Jersey and New York itself. When people realize that they can buy a full-sized house on a large lot in Rochester for half the price they’d pay for a row house in Queens and enjoy a faster commute, New York’s housing market will collapse. The same thing could happen in other states, such as Colorado, where houses sell for $100,000 in Pueblo and $300,000 in Denver, and California, where a person would be able to live in Bakersfield and work in Los Angeles.

 

 

• One result of a hyperloop would be a sort of economic boom in areas with lots of cheap housing that is in fairly close proximity to expensive urban areas. Another would be a fall in housing prices in areas where there are currently shortages that lead to high priced housing.

 

• Drastically distort the tax situation in parts of the United States. What happens when people who work in Denver, where there is a state income tax, realize they can live in Wyoming, where there is no state income tax? Or when people that work in Los Angeles start commuting to Las Vegas, where there is no state income tax?

 

 

• Greatly reduce driving and car ownership. One of the big incentives for owning a car is cheap and relatively convenient long distance travel. Many people would simply ditch the car if they could get to whatever recreational activity they enjoy in 30 minutes. Nobody would be driving on Interstate 70 between Denver and the ski areas or I-15 between Los Angeles and Las Vegas if a hyperloop were available. This would increase the demand for ride-sharing services like Uber and short term rental services such as Avis-Budget Group’s (NASDAQ: CAR) Zipcar.

 

• The railroads would do just fine as they convert their track into hyperloop rights of way. Thirty years from now, one might board the Union Pacific (NYSE: UNP) hyperloop in San Francisco for trip to Chicago or New York.

 

• Reduce the cost of many goods by greatly reducing transportation costs.

 

• Decimate the long haul trucking industry by providing a cheaper and more efficient means of shipping goods. At some point in the future, semi-tractors could become as obsolete and as rare as steam locomotives. Instead, trucks would simply haul freight to the hyperloop in containers where they would be whisked around the country. Movies about trucking would be seen as nostalgia.

 

• Greatly reduce the demand for oil and air pollution because the hyperloop would run on electricity. Musk claims solar panels could power it.

The bottom line is that Hyperloop America would be a very different place with a very different economy and different habits. A Los Angeles resident might go to Las Vegas for dinner and a show or a little gambling and be in back time to watch the Tonight Show. An Atlanta family could go to Disneyworld for the afternoon and be home in time for dinner. A class of children in Cincinnati could take a field trip to the Smithsonian in Washington D.C. and be home by the end of the school day. The FedEx man might pick up a package in Chicago at 9 a.m., and the package could be delivered to an office in New York at 2 p.m.

Those kinds of changes would transform our lives profoundly. The hyperloop could be the ultimate disruptive technology and change our society beyond recognition. If the hyperloop works, America could be a place of empty freeways, abandoned airports, and vast junkyards full of cars, semi-tractors, and airliners waiting for the scrapheap. Elon Musk might be one day be remembered like Henry Ford, James Watt, and Thomas Edison, a man who transformed the world beyond recognition with his technology.