Transit Exchange

Usually, when someone spams your comments, you delete it. But I got an interesting spam comment the other day which is a potentially good idea. There is a company called Texxi which is arguing there is a market in which people post where they are going to enable dynamic ride-matching/taxi services, which they call a Transit Exchange.

The message in full

The answer, David, is a Demand Responsive Transit Exchange which borrows heavily from the I.T. network transit exchange (that, incidentally, also allows for largescale peer-peer bandwidth sharing and trading, killing centralised monopolies and NSA snoopers in one go –, finance, aeronautics and biology.

RoadSpaceTime is virtualised into a tradable commodity and made available to people via mobile devices (XML, SMPP, SMS, Smartphone App, Web Page or Email) to connect to a futures exchange and “database of transit intentions” which store itineraries and price searches.

A credit contagion solver working through the social network graph applies genetic algorithms to suggest “solutions” to customers in realtime. In 2013, this is now laughably trivial, but even 5 years ago, the cost of the computing power would have required millions in VC money.

Take a look at:

“The Market Opportunity for Dynamic Ridesharing” |
Or download (26Mb pdf) The Market Opportunity –

“Transport – A New Beginning” |
Or download (21.70Mb pdf) –

“The underpinnings of the Transit Exchange” |
Or download (19.53Mb pdf) –

Certainly they are not the only ones in this space, and the idea has been around for a quite long time (Mel Webber noted the idea of Dynamic Ridesharing decades ago) but they filed for a patent as early as 2006. They propose to be the market maker here, rather than relying on peer-to-peer matching. They thus would guarantee the seller and the buyer that they will be fulfilled at a given price (and get a vig).

They say:

By combining Futures Exchanges + Mobile + Social + Big Data + Genetic Algorithms any vehicle with spare capacity becomes your private vehicle for just when you need it.

Whatever your needs, Texxi can make any participating local vehicle fleet able to offer an easy and tailored transport solution for you
Patent Pending (July 2006)

They also have a really weird video

The website is worth visiting if you are interested in possible future scenarios for The New Mobility.

Trust as a positive externality

A Political Economy of Access: Infrastructure, Networks, Cities, and Institutions by David M. Levinson and David A. King
A Political Economy of Access: Infrastructure, Networks, Cities, and Institutions by David M. Levinson and David A. King

NB: I am not a macroeconomist (IANAM)

A few years ago, Francis Fukuyama put out a book called Trust, a summary of some arguments are presented at: Social Capital and Civil Society – Prepared for delivery at the IMF Conference on Second Generation Reforms

He argued that social capital was a positive externality that produces trust, and civil society only succeeds if people have trust in the words of others, i.e. they believe others will do what they say, and of course that only emerges if people do if fact do what they say.

The recent economic meltdown in the world economy has resulted apparently in banks being unwilling to lend to other banks for fear they won’t be paid back. That fear arises because, in fact, some banks now defunct, did not pay back loans. They lack trust. One (or in this case a few) bad players shattered the system of trust that had a positive externality in encouraging lending.

The economy only works because of beliefs that a small piece of paper (a dollar bill) will be redeemable by complete strangers for something far more valuable than a piece of paper. Through this belief, we can replace barter with a money economy, we can lend money we don’t have (a la banks) and create wealth by investing in wealth-creating instruments now rather than waiting until sufficient resources are acquired.

It is hard to say how many years advanced economically we are because of borrowing, but one imagines it is probably decades. If the ability to borrow collapses, not only can we not grow faster, we will grow slower as old debts still need to be repaid out of current income leaving little available out of current fund for investment.

Positive externalities operate in two ways, as virtuous circles (more of ‘a’ begets more of ‘b’ which begets more of ‘a’) or in reverse as a vicious circle (less of ‘a’ begets less of ‘b’ which begets less of ‘a’). Changing direction requires an external shock (a collapse of trust for instance, or a major infusion of trust through a government intervention).

The classic examples of virtuous and vicious circles in transportation and public transport ridership and service, which grew as virtuous circle from the 1880s until the 1920s, and where after the past 60 years of vicious circle operation, most of the US has very little service and ridership left (despite 30 years of very expensive investments). In the US, transport is “pay as you go” at the federal level, which may very well be a source of for our under-investment, as there is an unwillingness to capitalize now our benefits from investments due to the positive gains they will provide in the future. If we don’t want the entire economy to follow the path of public transport in the US, something must be done.

As suggested above, the collapse of trust is warranted if the players are not trust-worthy. Even if there is an external insertion of funding, if the behaviors of the players reveal their true preferred actions, and these are not regulated in a transparent way, the system cannot necessarily be restarted without new rules to establish trust. As Ronald Reagan was fond of saying “Trust but Verify” (doveryai, no proveryai”).

The same I am sure will hold true of bankers, who not only seemingly distrust each other, but also should distrust the previous failed systems of verification (bond rating agencies) that were insufficient in providing advance warning of emerging problems.

Verification only works with transparency, where the actions of players are observable by all. This occurs on open regulated markets, rather than over-the-counter trades.