Think Economically


Maximum understanding, minimum average total cost.

Will everything be free in the future? Robots, information, value, and the long view of relative prices.

I don’t think everything will be free–more likely relative prices of raw goods and manufactured goods are just likely to swing drastically. If you take the long view of human history, increasingly the value of a good is defined by the information in it, and we have gotten much better at separating, recording and transmitting that information. If you think about it, mathematics and engineering are about inventing the language to describe the information contained in a good, interchangeable parts and mass production increase the signal-to-noise ratio, information goods like books, music, movies, research, software–these *are*their information–and then the development of an information infrastructure as well as cheaper and more widely distributed mechanized production methods mean that the information slowly becomes the only missing part.

Another way to think about it is that we have steadily shortened the distance between knowing how to make something and having it made. Little by little, the having it made part is becoming trivial relative to the knowing how to make something. Because information is non-rival–my having information implies nothing about your ability to have it–private goods become less private.

The crazy thing is that information is simultaneously becoming harder to control, which starts to turn highly designed goods into some weird quasi-public good. It’s good that something like iTunes has proven that people will pay for music, because otherwise it would start to look like people wouldn’t have to pay for anything eventually. But the existence of the outside option of bootlegging the plans for any and every object one might desire provides a lot of bargaining power to consumers and turns voting with your dollars into a much more visceral concept–you can steal a movie you don’t like very much while contributing more than the market value for a YouTube video clip by an upstart screenwriter you hope to see go on to do more and better things. This will likely, eventually, extend to physical goods.

This doesn’t make everything free–it just shifts relative prices. Things made get relatively cheaper. Raw materials get relatively more expensive. I haven’t done a full analysis, but it looks like overall it increases returns to people who create value while decreases the opportunities to create value–fewer people will get more of the pie. These people are also increasingly those who generate value. This probably will lead to increased income inequality combined with decreased political will for redistribution.

In addition, the things that will get relatively more expensive are raw goods–things you can’t copy, beg, borrow, or steal: water, clean air, wood, brick, stone, steel, rare minerals, plastic, oil. Food.

It becomes a little bleak when you put it together: a larger underclass will have less money to spend and the things that they won’t be able to buy will be the raw materials of Earth.

The political implications of this are less than good. I’m just spinning fairy-tales at this point, but the divide between haves and have-nots is likely to get larger. The people who will suffer the most–emotionally, psychologically, spiritually–are the people who are already suffering the most: people who slid into a middle class for the brief moment one existed based solely on a transitory structural change in manufacturing, only to be replaced and watch the world move on around them, their children worse off then them, and their children’s children only more so. That tends not to breed contentment.


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March 2012
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