And What If Tangible Goods Become More Abundant?
from the a-thought-experiment dept
Over the years, I’ve written plenty about the economics of infinite vs. scarce goods. Too often (and I do this on occasion as well) people default into thinking of “tangible” goods as being the scarce ones, and digital goods or information goods as being the infinite ones. But the definitions can certainly expand beyond that — and there’s also the possibility that material, tangible goods could one day lose much of their scarcity. Economist Arnold Kling, riffing on a post by Will Wilkinson about why energy isn’t really scarce points out that, if energy isn’t scarce, matter isn’t scarce either.
In theory, as you solve “the energy problem” and figure out how to create energy cheaply, then you can make any material you want as it’s needed cheaply as well. Then you’re in a bit of the Star Trek replicator universe where even tangible products become much more abundant. We’re still a ways off from that point, but it’s worth thinking about as a thought experiment (especially as 3D printer technology improves rapidly). Indeed, Chris Anderson is also thinking along these lines, noting that technology is likely to solve both of the big “shortage” problems we’re facing these days: energy and food — if only government regulations would let them.
For those who think that copyright holders should try to artificially maintain scarcity, this may be a scary situation. After all, then the same “problem” facing copyright holders, will also face makers of tangible goods. But the truth is even if you switch tangible goods from scarce to abundant, it doesn’t mean that you run out of scarcities to sell. Music is more abundant thanks to digital technologies, and there are still plenty of scarcities to sell for the music industry. There are always scarcities — it’s just that they’re no longer tangible goods. Instead, business models will start to revolve around those non-tangible scarcities as well, such as time, attention and reputation. But these changes could create a rather radical shift in how economies function. So, even if it’s pretty far out, it’s worth considering the possibilities already.
Filed Under: abundance, scarcity, tangible goods, thought experiment
Comments on “And What If Tangible Goods Become More Abundant?”
Creating ideas, providing service, and employment counseling are the new economy.
Re: Re:
Indeed, it’ll someday all be various forms of service that drive the economy.
If we keep the current legal and economic framework, then it will be legislated just like I.P. At least they will try to at first. Corporations will claim intellectual property over everything, so if I replicate your car for myself, I will be in for copyright or patent infringement.
In your Star Trek example, society seems to have evolved away from capitalism, probably because it doesn’t make sense without scarcities (obligatory OMG Commies!!!). Maybe something similar would happen if/when scarcity on energy and tangible goods disappears.
Dot com mentality
People during the dot-com era were absolutely sure that oil prices and other tangible commodities will decrease to zero. Were they right?
Government regulations have subsidized white-elephant alternative energy projects. If the government did not play a role, then alternative energy will be worse off than now.
We could ponder about fantasy worlds on other planets where prep kids can goof off with infinite free energy and music, but the real world has unsolved problems.
Yep . . .
“If we keep the current legal and economic framework, then it will be legislated just like I.P. At least they will try to at first. Corporations will claim intellectual property over everything, so if I replicate your car for myself, I will be in for copyright or patent infringement.”
Sounds about right to me, if there is no “real” scarcity, they will cling to creating “artificial” scarcity . . . as a matter of fact, the future is now. This is exactly what the RIAA does?
In a another way this is what Microsoft does with the XBOXLive service. They simply GIMP the 360 device so that it can not make a peer to peer connection for multiplayer gaming, without authenticating through them. Once you are authenticated they can just check to see if you have paid the fee before allowing the connection.
The user has already purchased a device that has everything it needs for peer to peer multiplayer gaming. The user is already paying for seperate access to the public internet. All Microsoft is doing in the transaction is ceasing to prevent it.
spare us, pleeeeeeze !!!
Oh, that thing again…..
Maybe your should write a Ph.D. thesis on this crap to get it out of your little head, Mikey ?
For now I just have an anecdote for you:
***********************************************************
A lecturer is giving lecture in some remote kolkhoz to a crowd of local retards…
“This is a skull of Karl Marx when he was 10
And this is a skull of Karl Marx when he was 20…”
A question from the audience:
“Excuse me, sir, but how can one person have 2 skulls ???”
Where are you coming from, young fella ?
From academia, sir
The get the f*** out of here, go back to your f****** academia, this is a lecture for kolkhoz workers !!!
Heat disposal limit
Even if energy and matter were to become too cheap to meter and everyone could have their own multi megawatt personal power source to satisfy all their wildest dreams, you still have the problem of heat disposal.
Eventually you will run into a physical limit of how much heat the earth can dispose of and you can not make more of that. So you may not get charged for the energy you use, but you may get charged for the entropy you generate.
Who said anything about heat from the new awesome power source?
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I believe that it is called a violation of the law of thermodynamic and you cannot violate the law of thermodynamic.
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That is in a closed system and the earth is definitely not a closed system.
What is a scarce commodity?
something you want but are restricted from having.
It doesn’t matter how the restriction occurs – if there’s a restriction there’s scarcity. That’s how business works, you either find something that is scarce (gold, oil) and sell it, or you create something that is unique (music, art, a movie, a new car etc.) and you restrict access to it (by charging a fee). If people want what you’ve restricted access to they’ll pay the fee.
It seems that creating restrictions is a perfectly honourable business model. That’s why there are fences around amusement parks, ticket takers at the movies, and tolls gates on toll roads.
Why are copyright restrictions any different. There are plenty of free roads, but if you want to drive on this road, that will be 99 cents a song, thank you.
Re: What is a scarce commodity?
Creating restrictions is a terrible business model – and one that is doomed to failure. Especially in an environment like Mike describes above (infinity available tangibles).
There are fences around amusement parks because there is a finite number of people that they can hold per day. There are ticket takers at movies because there is a finite number of seats in the theater. There are toll gates on roads for many reasons, but one is because there is finite number of people that can enjoyably access it per day.
What if everyone could create their very own WHATEVERTHEHELLTHEYWANTFORFREE? What if you could have literally anything you wanted on a whim? Mike’s point is that even when/if science progresses to that point there will still be scarcities. There will always be a market for intelligent people that can accomplish tasks, even if ideas and tangible goods are infinitely available.
Re: Re: What is a scarce commodity?
wow..Jim’s pretty funny. not very bright, but funny.
so you really think there are fences around amusement parks because there’s a finite number of people they can hold? I guess you think they are not for profit organizations?
I get the point Jim. People spend money on experiences and feelings – if decisions were all about being sensible, ferrari would never sell a car. If you can get a ferrari anywhere…you’re right, there will still be scarcities (which is why the amusement park will still have fences) because you can’t buy a feeling…except for some really good psychotropic drugs…but I digress.
Re: Re: Re: What is a scarce commodity?
so you really think there are fences around amusement parks because there’s a finite number of people they can hold? I guess you think they are not for profit organizations?
The point is that the fence isn’t what creates the scarcity. There are only so many people who can ride the rides, with or without fences. There are only so many people who can watch the movie at once. And so on. The scarcity is NATURAL, the fence is what ensures the company can charge for the scarcity. It’s just like selling physical stuff. The stuff, say T-shirts, is naturally scarce. So the store has walls and other security features to ensure they can successfully charge for that scarcity, rather than having people just walk off with the stuff without paying. But the walls aren’t what creates the scarcity.
Re: Re: What is a scarce commodity?
creating restrictions is a terrible business model?
Jim, It’s the only business model – a price is a restriction. Either you have enough money or you don’t… Unless you are giving away your products and services for free, there are always restrictions, and I guarantee you that free is a terrible business model.
Re: Re: Re: What is a scarce commodity?
Jim, It’s the only business model – a price is a restriction. Either you have enough money or you don’t…
See my post above for more detail, but the price doesn’t create the scarcity, the price is a result of the scarcity.
Unless you are giving away your products and services for free, there are always restrictions, and I guarantee you that free is a terrible business model.
Charging free for infinite goods is a good business model. Charging more than marginal cost of production in a competitive market is a bad business model. Not having anything scarce to sell is a bad business model. Charging nothing for scarce goods is a bad business model (excepting things like free samples). Common theme around here.
Re: Re: Re: What is a scarce commodity?
Indeed. When you are a “knowledge worker”, you are selling on restriction also: the restrictions exist in the ability of someone to learn what you did, have the abilities to learn or be interested in, have the time to learn (or learn in addition), and finally ultimate in “unfairness”, being born in an arbitrary time that makes the knowledge valuable.
Beyond these obvious restrictions is the ultimate restriction that limits and prevents anything from becoming “free” or “non-scarce”: bounded rationality. Because valuation for pricing requires both communication and perception, our limits due to bounded rationality on both put an upper bound on the combination of value magnitude and value accuracy. The recent mortgage crisis is partly due to incorrectly automated valuation systems creating a bubble due to accuracy errors combined with greed. In a more considered, careful sales/buying process, you trade time for both magnitude and accuracy limits. This creates its own restriction, either due to catastrophic mistakes or due to time trades.
This is also a basic scaling limit for knowledge/service economies. Ever wonder why highly populated countries like India are relatively poor despite being the ideal service economy (lots of bodies to throw at problems)? This is part of it. “Knowledge economies” and “service economies” DO NOT SCALE compared to manufacturing economies. There’s a reason why Europe and the US “rose” as they did – this further confirmed by the historical example of Meiji Japan compared to other regional countries, as a control.
This is why the US is either likely doomed or certainly doomed economically – we’ve dismantled or pissed away our ability to do manufacturing in order to adopt an economic engine that is less capable and less efficient (like downsizing from a Porsche engine to a Yugo engine and expecting the same level, let alone rate, of prosperity). Our new “knowledge/service” economy scales as bounded linear and at best, through organizational techniques, as logarithmic while manufacturing scales by power law with almost no effect or as the case with semiconductor under Moore’s Law, exponential/logistic.
Anyone with manufacturing will 1) scale faster/cheaper (have higher growth and margins) than “knowledge/service” and 2) will have the advantage of “owning” technology because they will possess both the explicit book knowledge and more importantly the tacit knowledge require to use and create technology.
Re: What is a scarce commodity?
If you are in line at an amusement park without paying, you prevent someone else from taking that place. You are incrementally damaging the machine through wear, and not donating to its upkeep.
The same is true at a movie theater and on a road (increased traffic/wear).
When I download a song, what recognizable physical object am i incurring a cost to? the server?!? There is no actual damages caused by the digital downloading of music, unlike the shoplifting of a CD (loss of merchandise).
Tolls exist to pay for the means of transit. Fees exist to pay for running the park and the theater. If people are volunteering their roads, movies, and theaters for free, why should we stop them?
Voyage From Yesteryear
If this interests you then let me suggest a book by James P. Hogan titled “Voyage From Yesteryear”, in which a new colony raised (literally) away from earth develops a non-monetary economy. Unlimited energy in the form a fusion power, robotic farms and factories, and the like have eliminated the need for most people to work just to put food on the table, or even in order to “buy” the table.
Still, here and now, even relatively unlimited power and manufacturing doesn’t eliminate the scarcities of land, materials, and, as mentioned and above all, time. Your favorite author, musician, or director still only has a finite amount of time in which to write, sing, or direct.
Scarcity is why humanity exists in it’s current form. Imagine if all scare matter were abundant, and I mean everything, knowledge, resources, time, space all available with a thought. What would humanity look like? God? Heaven?
Mike, you still didn’t answer my question. You just wrote a blog that declared you are right without any evidence to back it up.
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Mike, you still didn’t answer my question.
Who are you? What was your question?
As explored in Cory Doctorow's various stories...
Cory Doctorow has written some wonderful short stories concerning a world where even tangible goods aren’t scarce, except when artificially restricted:
Printcrime
After the Siege
I’m sure he’s written more, I just can’t think of the others off the top of my head…
needing to sell something
If food and energy is abundant, what purpose would restricting someone’s access to scarce goods/services serve? The reason copyright exists is so that creators can make money to feed themselves (the whole maintaining their livelyhood argument). If feeding yourself is cheap because food is abundant, there’s no reason to copyright things so people can make money anymore.
Re: needing to sell something
> what purpose would restricting someone’s access to scarce goods/services serve?
Your missing the point, I think. When someone restricts access to a good/service they are creating *artificial* scarcity.
Goods and services that are genuinely scarce aren’t that way because of imposed restrictions, they are just naturally scarce.
For example, your time as a musician, architect, teacher or whatever is scarce. It’s scarce not because you make it scarce, it’s scarce simply because there are only 24 hours in a day and you can’t be in two places at once!
Re: needing to sell something
hookers and blow dude. get a life.