We’re Better Off Now; We’ll Be Much Better Off Soon

By | December 3, 2013

oldtvVirginia Postrel has written an intriguing piece at Bloomberg that some dill-weed of an editor gave a really unfortunate, and misleading, headline. Her piece suggests that quality of life, in this instance measured by something as seemingly trivial as entertainment options, is increasing even as other standard economic markers of well-being stay flat or dip

What she is describing is the emergence of the post-scarcity economy. A couple of decades ago we saw the first wave of abundance; it came in the form of fairly simple information: chat rooms and html web pages. That’s all still with us, though more highly structured and broadly distributed through smart phones and social media apps. Meanwhile, the digital revolution has transformed the delivery of not just TV shows and movies, but music and books as well.

Everybody has access to a lot more information than they used to. Ray Kurzweil points out that today an African kid with a smart phone has access to more information than was available to the President of the United States 20 years ago. The fact that I have thousands of instant movies to choose from on Netflix and Amazon is a quality-of-life improvement for me. The fact that that kid can access Khan academy and tens of thousands of other learning resources that didn’t use to exist is a much bigger deal.

The next wave of abundance is the production of physical goods, which will also be completely transformed by digital technology. In fact, this is already happening, which is why that kid has a smart phone to begin with, and why so many of us have such high-quality TVs and other access devices. But that’s just the beginning.

There is currently a lot of interest in 3D printing, but the 3D printing technology available to us today is very rudimentary. It isn’t even analogous to the chat rooms and static web pages of 20 years ago. The 3D printers we have now are more like the old text-based bulletin board systems that people used to access via analog modem connection. What’s coming is the ability to produce just about anything you might want or need with a few clicks of the mouse, or more likely a simple verbal command. Amazon wants to fill the skies with delivery drones, and that may happen — for a while. But eventually we will no more need little helicopters bringing stuff to our homes than we currently need railroad tracks leading up to our front door. We will be able to download and print out local copies of just about anything.

And this may well all occur while the workforce continues to dwindle and wages continue to flatline or even slide. Nobody wants wages to go down, but if costs fall even more sharply, our relative economic health can remain the same or even improve. This is why everybody has a better TV even though wages have been flat for some time. The potentially bigger problem is all of those people being out of work. Even if costs go down, having a roof over your head, an internet connection, electricity, and feedstock to put into your 3D printer are all going to have some price associated with them. On the other hand, while the workforce is the smallest it’s been in 30 years, quality of life has over that time improved distinctly by many measures.  The smart money says it’s going to continue to improve. Substantially.

(TV photo by Zaphod.)

  • Paul_in_NJ

    Well, that’s the real quandary, isn’t it: What will we do when we don’t need all these people to produce? Let’s hope someone figures out how to invent a replicator, real soon.

  • steve_adams21

    Oh look more 3D printer BS. Yes, things will continue to get better and will be much better in the future. But 3D printers making everything is hyped BS. For example, brass will be a good solution for certain applications and machining will be way more cost effective for most uses then 3d printed brass whenever that may even be possible.

    I love how writers who never passed an intro to physics or engineering class are so smart they can predict the future of manufacturing. Just spending a little time thinking about how products are made and they know the future of an industry even though they have never made anything in their life! Right.

    • JDanaH

      Agreed. 3D printing is way cool, and I am excited to see the progress in the field. But the notion that this technology will end up making every physical thing we need is preposterous.

    • PhilBowermaster

      Above I refer to “what’s coming” as going well beyond current 3D printing capability. I don’t go into details here, but do provide a link to a much longer piece I wrote about atomically precise manufacturing.

      • David Gobel

        Reminds me of what the scribes likely had to say about Gutenberg’s newfangled press. “Why – it’s just a ripoff of a wine press! How could that EVER amount to anything?!”

  • Ken Mitchell

    ” This is why everybody has a better TV even though wages have been flat for some time.”

    The reason for this is that everybody is so much deeper in debt; nobody _owns_ any of that stuff, it’s on loan from the credit card companies. Of course, with 5 trillion dollars in inflationary money creation in the last 5 years, it’s natural to run up the debt now and hope to pay it back in depreciated dollars later, but I’ll bet it won’t work out as well as people are hoping.

    • Steve Connors

      I dunno. I own my own home free and clear. I have a net worth (excluding home) of almost $200,000 and I have absolutely NO DEBT. No, I didn’t win the lottery. I didn’t get an inheritance. I just made the choice to save, live below my means, and save at east 10% of my earnings. It’s not a secret… save/invest/live frugally.

  • Dan King
  • David Govett

    Tens of thousands of people are alive around the world because of safer cars, flu shots, smoke detectors, etc. Plus there have been no world wars. Once nanotech, robotics, and artificial intelligence merge, we won’t get something for nothing, we’ll get everything for next to nothing. We are becoming Eloi.

    • Nick

      Skynet is coming….

  • Jocon307

    This is a better piece than Postrel wrote, but we are still going to need food, water and shelter. If we don’t have those things all the free info in the world won’t help us.

    I think Utopia is still a long way off.

    • robin hood in reverse

      Tipping points are rare and we are on the cusp of one. Things can go either way.

      Second place is the first place loser but a peek is worth ten free market estimators. Reverse auction bid results can be turned into a low bid equation with a variance that looks something like this:

      Low Bid = (95% – 1% times the number of bidders) times the average bid

      Companies play free market basketball on a diving board because a company can’t maximize their profits if the company hits more often than the dummy. A 5% drop in price is usually enough to jump to 15% higher overall hit rate. Government is a slam dunking monopoly that has proven to be 20% more expense than the free market. Socialism, Fascism, Marxism, Statism, etc. is four scarcity leaps backwards and corresponds with Carman’s and Kenneth’s findings.

      A Harvard Professor and previous President of IMF wrote a book called “This Time is Different” . Carman Reinhart and Kenneth Rogoff studied fiscal crisis in 65 countries over 500 years. 1% GDP reduction in taxes increases private sector 3% in GDP. 1% GDP increase in Government Spending deceases private sector 1.2% GDP with a -0.2% change in GDP. Obviously a great deal of government debt can put a country at significant interest rate risk.

      If we go from a 38% tax rate to 20% tax rate with a balanced budget the private sector will grow from $11 Trillion to over $16 Trillion. Tax revenue won’t decrease 48%. Tax revenue will only decrease 24%. Half of Washington won’t have to go on a permanent vacation, only one out of four. Employment will increase 25% so displaced bureaucrats will have lots of new opportunities to contribute to society.

      If we get down to a balanced 10%, $20 Trillion – more than a 60% increase in jobs if half of Washington goes on a permanent vacation, each dollar earned buys ($0.90/$0.62) 45% more, and hard America becomes a soft warm place.

      John Nash’s beautiful mind recognized the importance of interactions in which the results of one person’s choices depend not only on his own behavior but also on the choices of another person. There is a related game called Ultimatum. You and your partner split $10. Less than $3 deals disgust and anger. The dealer has a pulpit.

      The Laffer effect is no joke. Charles Adams, an international tax attorney and historian, wrote books on taxes. Once tax rates rise above the disgust and anger point, the expected extra tax revenue never shows up. A flat tax system is part of Constitution. Everyone has to pay taxes to keep as many people’s tax rate below the disgust and anger tax rate or make sure an overwhelming majority is disgusted with high taxes.

      Carman, Kenneth, John, and yours truly believes dealers can routinely get an $8 to $10 deal by getting his or her partner work for a $3 to $5 deal. With each $3 to $5 of earned success the partner becomes a dealer that turns the $3 to $5 deal into $6 to $8 of earned success. Turning $10 into $13 is a win-win systemic solution that creates good people, great outcomes, and durable trust but when it rains, rainmakers show up and turn everything to dirt.

      There will always be zero-sum losers who just accept less than $3 deals and think the key to success is being an abusive dealer. A $7-$3 deal isn’t better than a $6-$4 deal because $7-$3 deals turn into $6-$2, $5-$1, and $4-two bit deals. Rainmakers turn everything to dirt because they feel entitled to $7up and someone else has to pay for the diet $7up.

      Obama and company’s overall 30% to 40% tax and spend policies have systemically increased the public sector by 25% and eliminated 10 million private sector jobs. For the first 150 years of our existence, we were 10% tax and spend country. Present day Switzerland, Russia, and much of Eastern Europe are 15% tax and spend countries.

      I can’t taste the difference between Wilson and Barack vegetable oil. The Federal Reserve was created on Jekyll Island and Obama is the Prince of Hyde Park. A famous Central Banker said something like “If I control the money supply, I care not for your laws”. If debt is money that can only be paid off with more money …. someone ends up owning everything and everybody.

      Our founding fathers promoted the species (Gold and Silver) because a stable money supply is key to creating an innovative middle class and responsive Government. When things are set up right, the wealth disparity between rich and poor is only four fold and a society’s standard of living doubles every decade but there is a great deal of guess work involved. Government being around 45% of GDP appears to be the little or no innovation setpoint.

      With some modifications, Bitcoins can indirectly tax on transaction size (good), proactively tariff (good), turn the down and out into limited central banks (good) and tax on population density (good) and be like an invading army. Bitcoins, that don’t vary in quantity could be the beginning of a wonderful bottom up Milton Friedman world that leaves the elites on top without any change.

      The 10% public sector corresponds to a bottom 20% to top 20% ideal distribution is around $3.50,$4.50,$6.25,$8.25, and $11.25.

      We went off the gold standard 40 years ago. Over that period the average overall tax rate was about 30%. Over the last 40 years relative wealth distribution went from ($2.75,$4.00,$5.25,$7.00,$9.25) to ($1.25,$2.00,$2.75,$3.50, & $18.50). 30% to 40% Obama has taken us to ($1.00,$1.75,$2.50, $3.25, and $16.75). If the dollar is no longer the world currency, ($0.75,$1.31,$1.87,$2.41,$12.19). The above mentioned Bitcoin arrangement would lessen the wealth disparity.

      With some modifications, Bitcoins can indirectly tax on transaction size. After the transaction gets above $700,000 or so the taxes get much higher.

      Bitcoins could proactively tariff. If a 40% nation trades with a 10% nation, the relative tax is 25%. 80% of the tax proceeds go to the 10% and 20% of the proceeds go to the 40% nation thus creating better and better governance.

      Without government or coin clipping distortion, free markets naturally consolidate wealth in larger and larger metropolitan areas around about 0.7% compounding interest. Second place is the first place loser but a peek is worth ten estimators. A 5% to 10% tax difference between low and high population density areas is enough to leap past the first place loser. Over time all the metropolitan or region areas will become about the same size and thus less of a threat to the ruling elite.

      The 10% poor are 3 to seven times better over than the 40% poor. Bitcoins could also turn the down and out into limited individual bottom up central bankers.

      The elite Architects of the bitcoin ponzi scheme can be compensated for creating good governance. If they create a 10% world they get to make $22.50. If we the people create a 40% world, the elite get $16.50.

  • https://www.facebook.com/ritchietheriveter Ritchie The Riveter

    Home 3D printing is to our time, what the flying car was to the 1950′s … a dream where the devil is in the details, when it comes to mass-market application. And I say this as a user of the technology for prototyping.

    But there is a way to prevent the workforce from dwindling … and it is simpler than people may think: People will find a way to thrive, IF they are not discouraged from exercising their initiative to do so … they will continue to innovate and find even better ways to meet their own, and others’ needs.

    The problem is, for a century, they have been discouraged from exercising their initiative, and instead encouraged to wait upon “experts” and “leaders” to solve their problems FOR them, being told that they CAN’T get ahead without “expert guidance” and “leadership” from a Cult of the Credentialed and Connected Omniscient in academia, business, organized labor, and particularly government.

    This is the fundamental problem in the nation … almost every other dysfunction, from unemployment to health care to the national debt, is a symptom of it.


    • teapartydoc

      Yeah. Deregulate EVERYTHING.

    • PhilBowermaster

      It’s not really about 3D printing so much as it is about the digitization of the production of goods. 3D printing is an embryonic technology. I wrote more about the subject here: http://www.fee.org/the_freeman/detail/the-reluctant-visionary

      • MrJest

        Yes; it’s still very primitive. Ultimately what will happen is something closer to the “Diamond Age” style of nanotech – we’ll all have a device in our backyards about the size of a washing machine, that we’ll toss our garbage into. In a year, it will spit out a Mercedes (or whatever).

        This IS coming, and faster than most realize. Like, within our lifetime.

  • SDN

    “The potentially bigger problem is all of those people being out of work.”

    They won’t be out of work; they will simply be left with two things of value to trade: their votes in “free elections” and their bodies in riots to convince the few remaining producers to give up more of their production.

    • bobbymike34

      Can you 3D print ‘brown shirts’?

  • MumuBobby

    I think this is important relative to inequality. Leisure time has never been more equal……in that the poor one hundred years ago had none, or very little. Today the only thing Bill Gates can have entertainment wise that I can’t have is certain live experiences – performances ‘for one’. Though once holigram TVs come out I can have that, virtually, too.

    The only problem to solve for is power as billions are added to the world’s middle class. This is where the next revolution needs to happen.

  • Nick

    Not if the environuts ruin it by driving up energy prices…