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01 / 05
The Six Laws of Zero That Will Shape Our Future

Blog Post | Science & Technology

The Six Laws of Zero That Will Shape Our Future

Technological advancements are reshaping countless aspects of the decades to come.

“There are decades where nothing happens; and, there are weeks where decades happen,” observed Vladimir Lenin. The recent weeks grappling with the Covid-19 pandemic certainly fall into the weeks-where-decades-happen category. What’s more, the trillions of dollars being spent on pandemic-fighting strategies might well make or break the decades to come, as I recently wrote.

Take telehealth, the adoption of which has seemingly been on the horizon for decades and suddenly, within a few weeks after Covid-19, achieved near universal embrace. McKinsey estimates that providers are seeing 50 to 175 times more patients via telehealth now than before Covid-19. What’s more, 57% of providers view telehealth more favorably than before and 64% report that they are more comfortable using it. These punctuated changes in perception, preference and practice could vault the telehealth market from $3 billion pre-Covid to $250 billion and, in the process, force the rewiring of the entire healthcare delivery system, according to McKinsey.

The technological drivers enabling telehealth are reshaping every other aspect of the decades to come, too. I previously introduced these drivers as six Laws of Zero that underpin a planning approach that Paul Carroll and I call the Future Perfect. In this article, I lay out the six laws in more detail.

The basic idea is that six key drivers of humanity’s progress—computing, communications, information, energy, water and transportation—are headed toward zero cost. That means we can plan on being able to throw as much of these resources as we need to smartly address any problem. Success in doing so would bring us closer to the Future Perfect. Alternatively, like gluttons at an all-you-can-eat buffet, we could binge in ways that exacerbate societal issues such as health, equity, civility, privacy and human rights.

Our Future Perfect approach, which builds on an approach developed by Alan Kay for inventing the future, projects the Laws of Zero into the future to imagine how vast resources could address important needs in key pillars of society, such as electricity, food, manufacturing, transportation, shelter, climate, education and healthcare. We’ve chosen 2050 as a marker because 30 years is far enough in the future that one isn’t immediately trapped by incremental thinking. Instead, we can explore how exponential resource improvements might radically alter the range of possible approaches. The question becomes “Wouldn’t it be ridiculous if we didn’t have this?”

The 30-year visioning is intended as a mind-stretching exercise, not precise forecasting. This is where creativity and romance lives, albeit underpinned by the deep science of the Laws of Zero rather than pure fantasy. We use a technique we call “future histories” to develop powerful narratives of compelling futures. We then pull backwards to today and chart possible paths for turning the 30-year visions into something more concrete. As Alan Kay says, “the best way to predict the future is to invent it.”

Now, let’s explore the drivers and understand what zero cost really does, to lay the foundation for designing those remarkably different and (hopefully) better futures.

Computing

That computing has followed the Law of Zero comes as no surprise to anyone familiar with Moore’s Law, the observation by Intel co-founder Gordon Moore in 1965 that computing was doubling in power and halving in cost every 2 years. Ray Kurzweil has even observed that Moore’s Law describes not just integrated circuits but more than a century of computing, as shown below.

One consequence is that the smartphone in your pocket has over 100,000 times more processing power and one million times more memory than the computer that guided Apollo 11 to the moon and back—at a percentage of cost that effectively rounds to zero. While computing power obviously isn’t free, as anyone buying a smartphone knows, it looks almost free from any historical distance.

Now consider computing in 2050. If Moore’s Law remains a guide, computing power would double about 20 times in the next 30 years. Cost would be cut in half 20 times. In other words, we can look forward to computing power more than one million times faster than today with a per unit cost of today’s divided by million.

Even if Moore’s Law slows and engineers’ progress in cramming more circuits onto a silicon chip finally diminishes, innovations in computing architecture, algorithms and (perhaps) quantum computing are emerging to pick up the slack—and perhaps even quicken the pace. Rodney Brooks, former director of MIT’s Computer Science and Artificial Intelligence Lab, argues that the end of Moore’s Law, as we traditionally knew it, will unleash “a new golden era” of  computing.

Communications

The first message that inventor Samuel Morse sent on his experimental telegraph line between Baltimore and Washington DC in 1844 was, “What hath God wrought?” Some form of that astonishment has been expressed time and again as communications have moved from the telegraph to the telephone to the ubiquitous, digital communications of today. Communications is becoming ever richer, too, as having bandwidth to burn means that video (and, in time, augmented and virtual reality) can be part of every connection.

Reach will keep expanding, too. Riding on the computing Law of Zero, communications will expand into every corner of the globe, as tens of billions of devices and trillions of sensors are incorporated into a tapestry of communication. In other words, we aren’t just talking about humans connecting with each other.

Now, history suggests that expectations about communication should be tempered. The telegraph, for instance, was predicted in 1858 to bring world peace:

It is impossible that old prejudices and hostilities should longer exist, while such an instrument has been created for an exchange of thought between all the nations of the earth.

But, the telegraph turned out to be a critical instrument of war as well. The Union armies relied on some 6.5 million messages during the Civil War, and the telegraph provided the North key tactical, operational and strategic advantages over the Confederacy.

The Internet created similar delusions. We’d all understand each other better and communicate freely, so rainbows and unicorns…. Clearly, no one had imagined Twitter in those early days. No one realized how much Facebook, etc. could increase tribalism and exacerbate divides.

Still, whatever winds up flowing through the pipes in our future – whether butterflies or raw sewage – the pipes will be almost infinitely wide, and the cost will be a flat, low rate. Draw the graph of cost vs. performance from today’s perspective, and that cost in 2050 will be so low that let’s call it zero.

Information

In the late 1990s, during the Internet’s coming out party, it started to become clear just how much information could be collected on people’s online behavior. But Nicholas Negroponte, the founder of the MIT Media Lab, defiantly told us that, while his credit card company or someone else might know that he went to see a certain movie, “They won’t know whether I liked it!”

No longer. Just a few buildings away from Negroponte’s old office at MIT, researchers can monitor motion, heartrate, breathing and even emotions for people simply by how they reflect ambient radio waves, such as Wi-Fi. So, sensors in a movie theater can already get a good read on how Negroponte and the rest of an audience felt about a film. Mix in a little genomics, biology, financial data, social preference data, census data, etc., and, whoa, we’re naked, whether we want to be or not.

Furthermore, if you think social media is revealing now, wait until you see what’s coming. Already, a startup called Banjo has become a sort of network of networks and is monitoring massive amounts of private and public social feeds around the world. It divides the globe into 7 trillion sectors and monitors in real time what is happening in each of those small areas.

It doesn’t take much imagination to conjure up the dystopian possibilities; but, the ability to monitor everything and everywhere has plenty of potential benefits, too.

In a simulation described by the Attorney General of Utah, Banjo was able to solve a child abduction case in minutes. The same case eluded a multi-agency task force that applied hundreds of person-hours using traditional methods. A real-life example: by matching a social media post about the sound of gunfire with closed-circuit video camera showing gunfire, Banjo was the first to detect the 2017 shooting at the Mandalay Bay resort in Las Vegas.

How much will all that information cost? A good indicator is the sequencing cost per genome, which is falling at an exponential rate even faster than Moore’s Law.

Still, we are far from taking full advantage of the Laws of Zero in information. Just consider the sad state of Covid-19 testing, where wait times of up to two weeks are rendering test results “useless” for guiding public health strategies, quarantines and contact tracing. Instead, imagine building a world where every bit of such information is available when you need it to enable and manage a Future Perfect.

Energy

A joke in the world of energy imagines Alexander Graham Bell and Thomas Edison coming back to life today. Bell would be amazed by wireless communications, by the small size of phones, by texting and all the other apps. What would he even do with an iPhone? Facetime? Fortnite? TikTok? Where would he start? By contrast, Edison would look at the electric grid and say, “Yeah, that’s about where I left things.”

Fortunately, big change is finally afoot.

When Bell Labs developed the first solar photovoltaic panel in 1954, the cost was $1,000 per watt produced. That means it cost $75,000 to power a single reading lamp – maybe a little pricey. By 2018, solar was down to 40 cents a watt. A drop in price by a factor of 2,500 over six decades isn’t Moore’s law, but it’s certainly headed toward that magic number: zero.

Wind power is also on an aggressive move toward zero – prices are down nearly 50% just in the past year. Contracts were recently signed for wind power in Brazil at 1.75 cents per kilowatt hour, about one-fourth of the average of 6.8 cents per kwh worldwide for coal, considered to be the cheapest of the conventional energy sources.

The key holdup for renewable energy has been batteries. There has to be some way to store solar and wind energy for when you need it, which means the need for lots and lots of battery capacity. Fortunately, batteries are progressing on three key fronts: battery life, power and cost. CATL, the world’s top producer, recently announced a car battery that can operate for 1.2 million miles, which is 8 times more than most car batteries on the market today. And, as the figure below by BloombergNEF shows, battery prices have plunged 87% in the past 10 years. Even Gordon Moore would be pleased.

So, we have at least three cost curves that look like they’re headed toward zero: solar, wind and batteries. That’s plenty, but others are worth mentioning as well, including nuclear fissionnuclear fusiongeothermal and radical improvements in efficiency. Together, they create a Law of Zero for energy that will create unfathomable benefits. Energy drives every living thing, and unlimited energy will drive unlimited opportunities.

Edison wouldn’t know what hit him.

Water

Water is the new oil. A quarter of humanity faces looming water crises. Demand is growing with population, urbanization and wealth, taxing traditional fresh water supplies while also polluting them. But there’s hope: Limitless energy could allow for the almost magical availability of water.

By 2050, anyone near a body of saltwater could benefit from water technology breakthroughs. Desalination has always been possible but prohibitively expensive because of the energy costs, whether done by filtering out the salt through osmosis or by evaporating the water and leaving the salt behind. But cheap energy makes desalination more plausible, hopefully in time for the many cities around the world that are getting desperate for water.

Water won’t be pulled right out of thin air in great quantities any time soon, but that technology is also under development. One group won a $1.5 million X Prize by developing a generator that can be used in any climate and can extract at least 2,000 liters of water a day from the air at a cost of less than two cents a liter, using entirely renewable energy.

Cody Friesen, founder of Zero Mass Water, a startup backed by Bill Gates’ Breakthrough Energy VenturesBlackRock and other high profile investors, says decentralized production of water will lead to benefits akin to those that come from having abundant electricity while off the grid. He says 1% to 2% of the world’s carbon footprint comes from mass-purifying today’s water; that carbon dioxide goes away when water is drawn from the air and purified at your doorstep by the sorts of solar-powered Source Hydropanels that his company produces.

Like many potentially world-changing future solutions, Friesen’s approach doesn’t make economic sense today. But his early research, products and field experiments, such as his work with the Australian Renewable Energy Agency (ARENA), helps to develop the solution for when the approach, riding on the Law of Zero for energy, becomes viable on a massive scale by 2050, if not sooner.

Where there is abundant water, along with the energy that comes from that Law of Zero, there can be food. The basics of life will be available everywhere, even to the far corners of the Earth.

Transportation

Although the enthusiasm for autonomous vehicles has taken a hit over the past couple of years – they are a really hard problem — some early successes and the multitude of startups and brilliant scientists tackling the issues make us confident that 2050 will include an unlimited number of fully autonomous vehicles.

The implications are mind-boggling. Basically, terrestrial transportation heads toward zero marginal cost. Remember, electricity is heading towards zero cost, and all these cars and trucks will be powered by batteries, so fuel is no longer an expense. In addition, the cost of driving, in terms of the time you devote to it, will disappear once we reach full autonomy. With time no longer a factor, distance won’t be, either. Even if you have to travel a couple of hundred miles, or spend two or three hours in a vehicle, you take your world into the vehicle with you and can act just as you would sitting on your couch at home. So, much of the expense associated with fuel, time and distance go away.

Now, a lot of metal will need to be shaped and maintained even in an autonomous future, so transportation won’t be free. But it will be so much less expensive than it is today that we can be profligate in throwing transportation resources at anything we want to design for the Future Perfect. So, think in terms of a world where fuel is free and, thus, infinite, and where many considerations of time and distance no longer matter.

Yes, lots of people and businesses will have to adapt. Most notable are the 4.5 million professional drivers in the U.S., but they’re just the start—and it won’t all be on the negative side of the ledger. Autonomous vehicles will also change emergency rooms (which currently treat some 2.5 million people each year after auto accidents and, based on current estimates, might treat only 10% as many once AVs become ubiquitous). We know that the vast majority of the roughly 40,000 people who die on U.S. roads every year will miss that appointment with death (Yay!) and keep living productive lives.

We also know that health, wealth, education, economic mobility and more will all improve, because access to transportation currently constrains so many people, and those limitations go away.

Not all the Laws of Zero will kick in right away. The ubiquity of water, in particular, will take time to play out, partly because getting to zero cost for energy will also take a bit. For all these Laws of Zero, supporting technologies need to continue to mature and be helped along by some as-yet-to-be-invented (but inevitable) scientific breakthroughs.

But the core question is fascinating and important: How will these Laws of Zero let us design and build as grand a world as possible for our children and their kids by 2050?

What can removing today’s actual and cognitive restraints let us realistically project for them in terms of electricity, food, manufacturing, transportation, shelter, climate, education, healthcare and—dare we say it?—the political and social environment that will define the equity, civility, privacy and human rights in the world in which they live? How much can we increase the odds of success if we more clearly envision the Future Perfect enabled by the Laws of Zero, and begin now to focus both inspiration and perspiration towards inventing it?

The short answer is: A lot, if we step up to the challenge. By doing so, we can make next few decades ones where centuries happen.

This originally appeared in Forbes.

Blog Post | Cost of Material Goods

The Growing Abundance of Finished Goods: 1971-2024

1971 did not mark the beginning of an overall decline in US standards of living.

Summary: Productivity, competition, and innovation have dramatically reduced the “time price” of consumer goods in the United States since 1971. The time required for a blue-collar worker to afford 75 finished goods has fallen dramatically, increasing the personal abundance available to these workers. This trend highlights the power of markets to enhance prosperity far beyond population growth, underscoring the importance of preserving economic freedom.


The website “WTF Happened in 1971?” highlights a collection of economic charts that purport to show a marked divergence in various economic, social, and financial metrics starting around 1971. The main argument presented on the website is that 1971 was a pivotal year in US economic history, primarily due to US President Richard Nixon’s decision to end the Bretton Woods system by detaching the US dollar from the gold standard. This shift allowed for fiat currency and government-controlled monetary policies, which the site argues led to inflation, income inequality, wage stagnation, and an increased cost of living.

Several economists showed that the actual picture of the post-1971 US economy is considerably less dystopian. In their 2022 book The Myth of American Inequality: How Government Biases Policy Debate, Phil Gramm, Robert Ekelund and John Early calculated that properly measured US income distribution (i.e., one that takes into account taxes and social welfare transfers) is less unequal than was the case all the way back to the late 1940s. Similarly, Scott Winship found that the “pay of the median worker . . . has risen much more slowly since the early 1970s” but noted that “the pay of American workers has tracked productivity trends.” Put differently, American workers continue to be paid what they are worth.

What about the cost of living? Mark J. Perry’s well-known “Chart of the Century” differentiates between budget items that grew more and less affordable over the last quarter of a century. When adjusted for wage growth—prices and wages can increase at the same time—Americans must work more hours to pay for hospital services, college tuition and fees, college textbooks, childcare and nursery school, and medical care services. Conversely, they must work fewer hours to afford housing (yes, you read that correctly), food and beverages, new cars, household furnishings, clothing, cellphone services, computer software, and toys.

Whether the rising cost of education and health care, for example, is due to government-created market distortions or the Baumol Effect (i.e., the phenomenon in which wages in labor-intensive industries with low productivity growth, such as health care or education, rise due to competition for workers with industries that experience high productivity growth, leading to increased costs in the former without corresponding efficiency gains), is subject of much debate. That said, it is good to remind ourselves of productivity gains that can be achieved in markets exposed to domestic and international competition and automatization.

In our 2022 book Superabundance: The Story of Population Growth, Innovation, and Human Flourishing on an Infinitely Bountiful Planet, Gale L. Pooley and I looked at the time prices (i.e., the number of hours and minutes of work an American blue-collar worker has to work to buy something) of a variety of foods, fuels, minerals, and metals. One table (p. 172) is devoted to time prices of 35 finished goods between 1979 and 2019, the average time price of which fell by 72.3 percent. That means that the same length of labor that bought an American blue-collar worker one unit in the basket of 35 finished goods in 1979 got him or her 3.61 units in 2019. The worker’s personal finished goods abundance rose by 261 percent.

Recently, we undertook a similar exercise to ascertain the effect of the recent bout of inflation on the time prices of 75 finished goods between 1971 and 2024. The 1971 data (i.e., nominal prices of 75 finished goods) came from the 1971 Sears catalog. The 2024 data (i.e., nominal prices of similar 75 finished goods) came from Walmart, Macy’s, JCPenney, Kohl’s, Home Depot and Amazon. We divided the 1971 nominal prices of 75 finished goods by $4.26, which was the hourly compensation rate of the average American blue-collar worker in 1971. We divided the 2024 nominal prices of 75 finished goods by $37.15, which was the approximate average hourly compensation rate of the US blue-collar worker in 2024.

We found that the average time price of menswear, childrenswear, womenswear, furniture, appliances, electronics, sporting goods, and power tools and garden equipment fell 80.7 percent. That means that the same length of labor that bought a US blue-collar worker one unit in the basket of 75 finished goods in 1971 bought that worker 5.19 units in 2024. The worker’s personal abundance of 75 finished goods rose by 419 percent. The compound annual growth rate in personal abundance of finished goods came to 3.16 percent, indicating a doubling of personal abundance every 22.31 years. Given that personal abundance rose by 419 percent, while the US population rose only by 62 percent between 1971 and 2024, we can say that abundance rose at a superabundant rate (i.e., faster than population).

Mostly deregulated markets, where production is subject to competition and automatization, can result in substantial reduction in time price and consequent increase in abundance. Let us keep that in mind as the debate over the appropriate level of restrictions on the freedom of the market rages around the world—from the far-flung New Zealand to our own United States.

U.S. Finished Goods: U.S. Blue-Collar Worker Perspective (1971-2024)

Change in Time Price of U.S. Finished Goods: U.S. Blue-Collar Perspective (1971-2024)

Change in Personal Resource Abundance Multiplier of U.S. Finished Goods: U.S. Blue-Collar Perspective (1971-2024)

ESS News | Cost of Technology

Solid-State Batteries Enter Pilot Production

“The push to commercialize solid-state batteries (SSBs) is underway with industries from automotive to storage betting on the technology. But while the hype around full solid-state batteries has somewhat subsided, with the technology taking longer than expected to take off, semi-solid-state batteries, which use a hybrid design of solid and liquid electrolyte, have been making steady progress toward commercialization.

TrendForce’s latest findings reveal that major manufacturers across the globe – such as Toyota, Nissan, and Samsung SDI – have already begun pilot production of all-solid-state batteries. It is estimated that production volumes could have GWh levels by 2027 as these companies race to scale up production.”

From ESS News.

Blog Post | Cost of Living

We’re All Billionaires Now (Thanks to New Knowledge)

We may not have a billion dollars in the bank, but we enjoy the benefits of many billions of dollars invested on our behalf.

Summary: Modern society enjoys immense wealth through access to products created with high fixed costs but low marginal costs, thanks to mass markets. By leveraging technology and innovation, products from smartphones to streaming music and affordable medicine provide people with benefits once unimaginable. This abundance illustrates capitalism’s ability to generate shared prosperity, contrary to the views of critics who focus solely on the relative distribution of wealth.


Sen. Bernie Sanders (I-VT) has tweeted “There should be no billionaires.” Compared to 100 years ago, the United States is a country where everyone is a billionaire. We may not have a billion dollars in the bank, but we enjoy the benefits of many billions of dollars invested on our behalf in the products and services we use every day. Let me explain.

Fixed costs and marginal costs. In economics, we consider the cost to create a new product and then the cost to manufacture each additional unit. Many products have high fixed costs but low per unit costs when manufactured at scale. This per unit cost is also called marginal cost. The marginal costs on some products can reach zero.

More people mean we are all richer. We can enjoy products with such high fixed costs and low marginal costs because there are so many of us. Creators of these high fixed costs products can recoup these costs from millions, if not billions, of customers. The Scottish economist Adam Smith understood that in 1776. If you want to get rich, have lots of potential customers. Large markets also allow people to develop their skills and specialize in such things as drug and software development. The bigger the population and the more we specialize, the more variety and lower costs we enjoy in the marketplace.

Here are five examples:

Movie billionaires. The top 10 highest-grossing films cost a total of $2.8 billion to create. You can now stream those movies at home on your $250, 55-inch large-screen high-definition TV along with 1,900 other movies for around $9.99 a month on Disney+. Unskilled workers earn around $17.17 an hour today, so it takes around 14.5 hours to buy the TV and 35 minutes of work each month to enjoy this multibillion-dollar benefit.

iPhone billionaires. It’s estimated that Apple spent $150 million over three years to develop the first iPhone, which was released in 2007. It sold for $499. How could it be sold so cheap if it cost so much? According to CNBC, Apple has sold over 2.3 billion iPhones and has over 1.5 billion active users. That’s how.

In 2009, Apple spent $1.33 billion on research and development. This year, it will have risen to $32 billion. The company has spent $208 billion on developing new products over the past 16 years. About half of Apple’s revenue comes from iPhone sales. Assuming half of its research and development investment has gone into the iPhone, we are enjoying a product that costs over $100 billion for about $30 a month, or around an hour and 45 minutes of work for a typical unskilled worker.

Note: In 2009, Amazon spent $1.24 billion on research and development, similar to Apple. This year, it expects to spend over $85 billion. In the past 16 years, Amazon has spent $485 billion.

Medicine billionaires. The cost to develop a new drug is estimated to range from less than $1 billion to more than $2 billion. The U.S. Congressional Budget Office notes, “Those estimates include the costs of both laboratory research and clinical trials of successful new drugs as well as expenditures on drugs that do not make it past the laboratory-development stage, that enter clinical trials but fail in those trials or are withdrawn by the drugmaker for business reasons, or that are not approved by the FDA.” Once a drug is approved, the marginal cost can be very low, maybe under a dollar.

If it costs $1 billion to develop a new drug, but each new unit of the pill only costs a dollar, how much should you charge the customer for it? The answer depends on the size of the market. If the market is 1,000 people, your costs will be $1 billion plus $1,000. You would have to sell each pill for $1 million plus $1 to break even. If your market was a million people, the breakeven price would drop to $1,001. If your market was a billion potential customers, the price per pill drops to $2.00. This is why new drugs are typically developed for widespread medical conditions. The fixed costs must be spread across a sufficiently extensive market. This is amazing when you think about it. You get a pill that required $1 billion to develop for $2.00 if a billion other people have the same medical problem.

Book billionaires. The Harry Ransom Center estimates that before the invention of the printing press, the total number of books in Europe was around 30,000. The United Nations Educational, Scientific and Cultural Organization estimates there are roughly 158,464,880 unique books in the world as of 2023.

When Gutenberg innovated printing in 1440, an average book cost around 135 days of labor, ranging from 15 days for a short book to 256 days for a major work. If workers put in eight hours a day, they’d have to work 1,080 hours to afford an average book. Today, blue-collar compensation (wages and benefits) is around $37 an hour. If there had been no printing innovation, it would cost about $40,000 to buy a book today.

Google has become the new Gutenberg. It has a library of more than 10 million free books available for users to read and download. Assuming the average book is around 250 pages and a half inch thick, you would need a bookshelf around 80 miles long to hold this library.

Before Gutenberg and his press, Google and the internet, Amazon and its digital tablet, and the manufacture of computer memory chips, it would have cost $400 billion to have a library of 10 million volumes. It would have taken 5.4 million people working full time for a year to create this library in 1439.

Today, you can have this library for around $43. That’s $35 for the tablet and $8 for the 2 TB memory stick. Another valuable feature we enjoy today is being able to search for a word or phrase in any of these books.

Music billionaires. Thomas Edison developed the original phonograph record in 1877. Suddenly people did not have to be present at a live performance to hear music. In 1949, RCA Victor became the first label to roll out 45 RPM vinyl records, and by the 1950s, the price was around 65 cents each. Unskilled workers at the time were earning around 97 cents an hour. This put the time price of a song at 40 minutes.

Steve Jobs introduced the iTunes Store on April 28, 2003, and sold songs for 99 cents. By this time, unskilled wages had increased to $9.25 an hour. The time price of a song had dropped 84 percent to 6.42 minutes. Listeners in 2003 got six songs for the price of one in 1955.

Apple Music was launched on June 30, 2015. Today, a student can access 90 million songs for $5.99 a month. Soundcloud is another popular music streaming service with over 320 million songs priced at $4.99 a month, or 18 minutes of time for an unskilled worker.

In 1955, the time to earn the money for an unskilled worker to buy the Soundcloud catalog of 320 million songs on 45 RPM records would have taken 106,666,667 hours. At today’s rate of $17.17 an hour, it would have cost $1,831,466,666.

Capitalist billionaires. Under capitalism, the only way wealth can grow is if entrepreneurs create it in the form of new products and services. Becoming a billionaire is a by-product of how successful a person is at creating and producing. When someone creates a product based on knowledge, it is non-rivalrous. (Paul Romer won a Nobel prize economics in part for explaining this truth.) Non-rivalry means we can all use a product at the same time. It’s as if we all own the product. Knowledge products make us all billionaires.

Bernie Sanders’s does not seem to understand or appreciate these economic truths. He wants to expropriate capital from Elon Musk and other innovators and give the money to his fellow politicians and bureaucrats to enrich their friends and supporters. Once this capital is seized, however, entrepreneurs will be much less motivated to create more. Ask all the entrepreneurs who lived in the former Soviet Union, and those in China under Mao Zedong, how 100 percent taxation disincentivized them from creating and taking risks.

This article was published at Gale Winds on 11/7/2024.

Blog Post | Cost of Technology

Appliances Contribute to Human Progress—but Regulations Threaten Their Affordability

The environmentalist regulatory agenda is targeting life-saving home appliances.

Summary: Home appliances have drastically improved human life, from preventing heat-related deaths with air conditioning to making household tasks more efficient with washing machines and refrigerators. Initially luxury items, many appliances have become affordable and accessible to most households thanks to free-market innovation. However, regulations driven by environmentalist ideology now increasingly threaten the affordability and accessibility of these essential devices, particularly for the lower-income families who need them most.


Human Progress has devoted a considerable amount of attention to home appliances—and for good reason, given the tremendous difference they have made in our lives. Whether it is the heat-related deaths averted by air conditioning, the foodborne illness prevented by refrigeration, the improvements in indoor air quality enabled by gas or electric stoves, or the liberation of women worldwide facilitated by washing machines and other labor-saving devices, these appliances have improved the human condition considerably over the past century or so.

Of course, the benefits of home appliances accrue only to those who can afford them, and on that count, the trends have been very positive. Although many appliances started as luxury items within reach of no more than a wealthy few, they didn’t stay that way for long. For example, the first practical refrigerator was introduced in 1927 at a price that was prohibitive for most Americans, but by 1933, the price was already cut in half, and by 1944, market penetration had reached 85 percent of American households.

Other appliances have similarly spread to the majority of households, first in developed nations over the course of the 20th century and now in many developing ones. And the process continues with more recently introduced devices, such as personal computers and cellphones. Cato Institute adjunct scholar Gale Pooley has extensively documented the dramatic cost reductions for appliances over the past several decades. The reductions are especially striking when measured by the declining number of working hours at average wages needed to earn their purchase price. For example, the “time price” of a refrigerator dropped from 217.57 hours in 1956 to 16.44 hours in 2022, a 92.44 percent decline.

Home appliances are a free-market success story. Virtually every one of them was developed and introduced by the private sector. These same manufacturers also succeeded in bringing prices down over time, all while maintaining and often improving on quality.

If left to the same free-market processes that led to the development and democratization of these appliances, we would expect continued good news. Unfortunately, in the United States and other countries, many appliances are the target of a growing regulatory burden that threatens affordability as well as quality. Much of this is driven by an expansive climate change agenda that often supersedes the best interests of consumers, including regulations in the United States and other nations that could undercut and possibly negate the positive trends on appliances in the years ahead.

Air Conditioners

Many appliances are time-savers, but air conditioning is a lifesaver. According to one study, widespread air conditioning in the United States has averted an estimated 18,000 heat-related deaths annually. Beyond the health benefits, learning and economic productivity also improve substantially when classrooms and workplaces have air-conditioned relief from high temperatures. Yet air conditioning is often denigrated as an unnecessary extravagance that harms the planet through energy use and greenhouse gas emissions. As a result, air conditioning faces a growing list of regulations, the cumulative effect of which threatens to reverse its declining time price.

In particular, the chemicals used as refrigerants in these systems have been subjected to an ever-increasing regulatory gauntlet that has raised their cost. This includes hydrofluorocarbons (HFCs), the class of refrigerants most common in residential central air conditioners. HFCs have been branded as contributors to climate change and are now subject to stringent quotas agreed to at a 2016 United Nations meeting in Kigali, Rwanda. The United States and European Union also have domestic HFC restrictions that mirror the UN ones. These measures have raised the cost of repairing an existing air conditioner as well as the price of a new system.

The regulatory burden continues to grow, including a US Environmental Protection Agency requirement that all new residential air conditioners manufactured after January 1, 2025, use certain agency-approved climate-friendly refrigerants. Equipment makers predict price increases of another 10 percent or more. Installation costs are also likely to rise since the new refrigerants are classified as mildly flammable, which necessitates several precautions when handling them.

Concurrently, new energy efficiency requirements for air conditioners also add to up-front costs. For example, a US Department of Energy rule for central air conditioners that took effect in 2023 has raised prices by between $1,000 and $1,500. This unexpectedly steep increase will almost certainly exceed the value of any marginal energy savings over the life of most of these systems.

The cumulative effect of these measures is particularly burdensome for low-income homeowners and in some cases will make a central air conditioning system prohibitively expensive.

Refrigerators

Refrigerators are technologically similar to air conditioners and thus face many of the same regulatory pressures, including restrictions on the most commonly used refrigerants as well as energy use limits. Fortunately, refrigerators have come down in price so precipitously that the red tape is less likely to impact their near universality in developed-nation households. However, for a developing world where market penetration of residential refrigerators is still expanding, the regulatory burden could prove to be a real impediment.

In addition to environmental measures adding to the cost of new refrigerators, the international community is also targeting used ones. Secondhand refrigerators from wealthy nations are an affordable option for many of the world’s poorest people. For millions of households, a used refrigerator is the only real alternative to not having one at all. However, activists view this trade as an environmental scourge and are taking steps to end it.

Natural Gas-Using Appliances

Several appliances can be powered by natural gas or electricity, particularly heating systems, water heaters, and stoves. The gas versions of these appliances are frequently the most economical to purchase, and they are nearly always less expensive to operate given that natural gas is several times cheaper than electricity on a per unit energy basis. However, natural gas is a so-called fossil fuel and thus a target of climate policymakers who are using regulations to tilt the balance away from gas appliances and toward electric versions. A complete shift to electrification has been estimated to cost a typical American home over $15,000 up-front while raising utility bills by more than $1,000 per year.

The restrictions on gas heating systems are the most worrisome example, especially since extreme cold is even deadlier than extreme heat. Residential gas furnaces have been subjected to a US Department of Energy efficiency regulation that will effectively outlaw the most affordable versions of them. And many European nations have imposed various restrictions on gas heat in favor of electric heat pumps that are far costlier to purchase and install.

There are more examples of home appliances subject to increasing regulatory restrictions. Indeed, almost everything that plugs in or fires up around the home is a target, justified in whole or in part by the need to address climate change. The cumulative effect of these measures poses a real threat to the centurylong success story of increased appliance affordability.