Arnold Kling  

De-Materialization

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Diamandis and Kotler... The Latest Literature...

From Diamandis and Kotler's Abundance:


Twenty years ago, most well-off US citizens owned a camera, a video camera, a CD player, a stereo, a video game console, a cell phone, a watch, an alarm clock, a set of encyclopedias, a world atlas, a Thomas Guide, and a whole bunch of other assets that easily add up to more than $10,000. All of which come standard on today's smart phones...that's how quickly $10,000 worth of expenses can vanish.


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The author at Three Sources in a related article titled Disinflationary writes:
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COMMENTS (26 to date)
E. Barandiaran writes:

Arnold, this M. Ridley on Abundance

http://online.wsj.com/article/SB10001424052970204909104577237220008056712.html

Mark Plus writes:

If only we could dematerialize our transportation, housing, food and health care, then we would have it made.

I suppose in medicine you can dematerialize the diagnostic process to some extent, for example through medical apps for tablets and smart phones, which could eventually converge onto something like Qualcomm's vision of the "Medical Tricorder" $10 million X Prize.

But if you need surgery, that still requires a lot of expensive material and human capital to do.

Alex Godofsky writes:

In 1992 most of them had cell phones? Color me skeptical.

jb writes:

It would be more accurate to say 'phone' than cell phone. And perhaps even as accurate to say 'wireless home phone', since those were all the rage back then.

AMW writes:

Circa 2002 I got a free emulator of the NES console, which was popular from the 1980's to the early 1990's. I also got about 500 free games. It took up minimal space on my hard drive, whereas the physical assets would have required their own room (or closet at least). Moreover, I paid nothing, while back in the 80's that collection of games would have cost at least $25,000.

Glen Smith writes:

Well, your cell phone should be the last thing you give up. Try not to give up your laptop. These along with some basic businesses service at times that you can probably get at a FedEx would make the costs of work really go down. Also, the laptop may be able to bring your entertainment costs to near 0 (as long as all you do is watch stuff and read). Find a large public building (probably a church) that has showers, lockers (especially if they are big enough to keep about a weeks worth of nice clothes) and a food kitchen (really good if they also give out basic hygiene stuff) and that'd make a lot of your other costs approach 0. Now, you probably still need enough money to get a cheap haircut once a month or so and the business services. Only big problem is if you have dependents and transportation costs are hard to eliminate although maybe you can walk or hitch hike when you can and in cities there are often other cheap means of getting transportation.

Milen Radev writes:
Alex Godofsky writes: In 1992 most of them had cell phones? Color me skeptical.

OK, then I'll add the TV-set to the above list. Recently noticed that ours hasn't been switched on for months! Laptop and smart-phone have replaced it almost entirely...

Bob Montgomery writes:

I'm also skeptical, though for different reasons - first of all, that's kind of an apples to oranges comparison. Most of the 1992 items are much more durable than your average smart phone. I was 15 in 1992, and we were a middle class family. We owned most of those things.
We had a 20-year-old set of encyclopedias.
My dad bought a new watch (or, more often, was given one) every 5-10 years.
We had a decent new stereo, they bought it probably in the late 80s or early 90s. My parents still have it and still use it.
We had a Nintendo, we eventually got a Genesis. Those were the only video game consoles we owned.
My parents have had precisely two alarm clocks in my life - a cheap one they got in the early 80s, and then, when a little wealthier, a nice Bose one that played CDs that they got in the early 90s.
My folks owned a reasonably nice 35 mm camera; they'd had it since before I can remember. They didn't buy another camera until digital cameras became common, in the last 90s.
They did own a small succession of video cameras and VCRs - probably buying a new one every 3-5 years.

The point is, they might have had $10,000 worth of stuff, but they bought it over a period of 20 years.

Now, they get a new smart phone each every 1-2 years (at $200+ apiece), so I don't think the amount spent is very different, especially if you consider the cost of the data plans for the phones.

Steve writes:

I'm a non-native speaker. And I really don't get the term "amrat phone". I even tried to google it- no match! What does that mean? Or is that a odd "misspelling" of smart phone?

btw: I agree with jb

JayT writes:

"In 1992 most of them had cell phones? Color me skeptical."

He does say most "well off" people had cell phones. In 1992 there were ~256 million people and ~11 million cell phones. So a little more then 4% of the population had them. If you figure "well off" means top 10%, that would make sense.

KenF writes:

What is the expense of an alarm clock? I bought one around 1992 for probably $15 and it lasted me 15 years. Video game consoles are much more popular now than they were in 1992. People spend WAY MORE on GPS systems for their cars than anyone every spent on Thomas Guides. You still need a stereo system, that hasn't changed at all.

Andy writes:

I don't think any of these expenses have "vanished":

- a camera: People still buy tons of cameras. If anything it's more popular to get expensive cameras (SLRs) than it ever was before.
- a video camera: Similar to cameras.
- a CD player: Although my phone plays music I also have 3 other MP3 players, for various reasons. Each one is only like $30.
- a stereo: A phone doesn't replace this.
- a video game console: A phone doesn't replace this
- a watch: Many people still use watches, is the number really significantly lower?
- an alarm clock: Same as watches.
- a set of encyclopedias: This is probably the only one that makes sense. Thanks to Wikipedia.
- a world atlas, a Thomas Guide: As noted above, people spend lots of money on GPS-enabled devices.

George J. Georganas writes:

amrat phone = smart phone

Bob writes:

Mark Plus,

It's theoretically possible to dematerialize our transportation by a significant degree. Reorganize cities so that things are closer together. A large fraction of land area is taken up by streets and parking lots. If we didn't have cars and used underground people movers or some such thing instead we could move things closer together and provide the same economic benefit (getting where I need to go) with less material goods.

John Cooper writes:

Bob Montgomery writes:

"Most of the 1992 items are much more durable than your average smart phone."
Good point. I've never owned a smart phone, but I still have the stereo system I bought in 1971 (including a Revox reel-to-reel tape recorder), the World Book Encyclopedias I bought in 1972, the digital alarm clock I bought in 1979, a hand-me-down CRT TV set, and several shelves of VHS video tapes.
Beth Donovan writes:

A cell phone is useless if the government turns off the Internet and cell(as the FCC is considering) in a national emergency.

I don't have a cell phone because they don't work in our rural area. I manage quite well without one. We have a lot of books in our library as well as the 20 volume set of the Oxford English Dictionary.

We have a corded home phone that will work even if the power goes out for days. We also have the cordless phones that 'were the rage' back in the 90s.

Obviously, we have computers, but they end up being replaced every three years or so because something always breaks.

So, even though some people may be able to get all kinds of stuff from their cellphones, I would bet many of us do not.

Slocum writes:

"If only we could dematerialize our transportation, housing, food"

To some extent, we already have. All that stuff you used to have required a lot of space to contain it (For exmaple, I'm sitting in a study lined with bookshelves right now -- but if I could exchange them all for digital copies, I'd do it in a heartbeat).

And some travel has been dematerialized -- via telecommuting and teleconferencing (I have not yet met some of the people I work with on a daily basis, since they're on the other side of the country -- others are on the other side of the world, and I will probably never meet them in person).

Jacknut writes:

I can't see how the phones save $10,000. In my case, we have 2 iPhones and spend about $100 per month for voice and data. So that's $400 for the phones and $2400 for the plans over a two year plan. If we look over 5 years, that's $6400 cost.

As other commenter pointed out, the items in the quote are acquired one at a time, and many of them require only infrequent updates (if ever).

So all of a sudden, those $10,000 in expenses don't vanish, but merely get shifted. In effect, they've gone from fixed costs to variable costs.

What has vanished is the need for the space to store all of the equipment, books, etc. I used to need a dedicated space for my desktop PC. Now I just take my laptop or tablet whereever I want to.

Fred writes:

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Buck Bradley writes:

A well-off American household still "needs" at least a stereo--emphasis on the scare quotes of course. Also a CD player is still "needed" for those unwilling to accept .mp3 low quality. Kudos to prior commenters for mentioning the wireless phone which the posting might have mentioned instead of cellphones, which were still pretty rare back in 1992. Of course the CD player can well be contained in your computer. Apropos of which, most households did not "need" or own a desktop or laptop in 1992 although that was certainly close at hand. So here comes a "new" must-have expense to offset some of the savings mentioned in the article. The main point of the article is well taken, but we must look at emerging new "needs" as well as superseded or merged old "needs" for an accurate assessment. The posting's caveat is even better taken. After all, I won't be able to eat an Ipad at any time in the foreseeable future and the way the economy is being steered, some of these new wonder devices had better be edible or the peasants are going to end up starving to death.....

Sol writes:

Jacknut: But if you're going to include the cost of phone service, you have to include it on both sides of the comparison. How much do you think monthly cell phone service cost in 1992?

More to the point, all you have to do is look at your smart phone as a data storage device to get it well beyond $10,000 in 1992 prices. My (several generations behind) Droid has 16 GB of solid state memory. Hard drive space cost $4 a MB in 1992. (Source: http://ns1758.ca/winch/winchest.html ) So that's $64,000 worth of storage right there, and that's not even counting the fact SD storage is radically faster than a 1992 hard drive.

steve l. writes:

the World Book Encyclopedias I bought in 1972

which I'm sure gives you relevant information about the two Germanies (including how to spell the plural), the winner of the 1988 presidential election, the latest in medical science....

Abelard Lindsey writes:

It would be nice to de-materialize cars, airplanes, yachts, and houses. Perhaps some advanced manufacturing technology based on 3-D printing can do that. Then, for bio-medicine, in-home microfluidics biotechnology equipment that can fabricate gene-therapies, stem-cell therapies, and anything else to keep you young and healthy forever.

These are the things I would like to see developed in order for me to accept Diamandis's concepts.

A. C. writes:

In eight years of use of your smartphone - including upgrades - which has all those things on it, you will have paid close to $10,000.00 for the voice and data services which bring you the internet (encyclopedia, world atlas, Thomas guide, MP3's instead of CD's, game software instead of game cartridges) and the other things, the camera, video camera, cell phone. So it actually comes out to about the same cost, only spread out a bit.

Mark Bahner writes:
It would be nice to de-materialize cars,...

Computer control of cars is going to greatly de-materialize cars. Imagine wanting to drive a fancy car someplace. You order a Lexus to arrive at your home. It drives you to the place you want to go. You get out, and it goes to pick up someone else.

Then the next day, you need a truck, and the truck comes.

This eliminates or greatly reduces the following:

1) Parking lots (no need to park, since the car drops you off at the door and goes to pick up someone else).

2) Road width. Roads could even be two strips of asphalt with grass in the middle, because the cars drive so accurately. And because cars could drive at unbelievable speeds separated by only a few feet, the number of lanes needed would be greatly reduced.

3) No stopping and starting, since cars could pass each other at 90 degrees at intersections at full speed.

4) Total number of cars and trucks. Because cars run 24 hours a day, one car could replace 5 or 10 cars.

Mark Bahner writes:

Matt Ridley wrote:

No matter how many prizes we offer, certain growing problems—such as caring for children and the elderly, or policing, or repairing freeways—won't experience much dematerialization or deflation.

That's pretty amazing, because this very evening I was jogging on a sidewalk near a busy road. I happened to see a lot of cracks in the road pavement, with one place a set of many cracks in a depression.

What I thought was that there really ought to be a vehicle that could drive at 10 or 20 mph and spray all those cracks with rubberized sealant, so that water doesn't get into them an cause them to expand.

All that's needed is something that can see far enough in advance move to where the crack is. Or maybe the solution would be to sense the crack by feeling.

Perhaps there could be one vehicle for locating the cracks, and one for sealing. But the key thing would be to do this very fast...10, 20, even 30 mph. That would probably greatly extend the road lifetime, while using very little material.

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