Sunday, August 17, 2008

Fallacies when thinking about the economics of future technology

Future technologies seem so impactful and fabulous that it is easy to jump to incorrect conclusions about what things would be like with their advent.

Fallacy #1: Molecular assemblers will have a worldwide overnight rollout
The conventional assumption is that once humans are able to make one molecular assembler, it will be able to self-replicate, and therefore within twenty-four hours everyone worldwide will have one. It is far more likely that a molecular assembler would follow the usual s-curve adoption pattern of any other newtech; early versions are expensive and clunky with minimal functionality, continued improvement iterations make the newtech more relevant and usable.

The first molecular assemblers may be like a next generation 3d printer, printing the T-shirt a friend sent as an email attachment. Only early adopters will have the utility (read: money and interest) to purchase the first molecular assemblers. Also, the first molecular assemblers will not be able to self-replicate as the intricate molecular manufacturing processes will need to be conducted at special facilities.

Finally, the full newtech ecosystem needs to be considered, while carbon and other basic elements could be obtained easily from dirt piles delivered to suburban driveways, industrial utility solutions are need for the 50% of the urbanized world. Cartridge supply for specialty elements (think Gillette) will be required. Matter decompiling will need to be a feature of the molecular assembler or there will need to be some other means of recycling. More here, here and here.

Fallacy #2: Don’t develop newtech if it’s not cheap enough for universal access
This is the view that we should not develop any beneficial newtech unless it can be immediately accessible worldwide at a low price. “Folks, lets not make the Eniac since not everyone can have one.” However noble this view may be, it again ignores the historical precedent of technology development, rollout and penetration. A fundamental property of technology is that it may be expensive at the outset but then price drops, functionality improvements and re-purposing to new markets occur over time. For example, those currently paying $100,000 a year for life extension treatments are hopefully helping to rationalize, standardize and develop a broader market for these services.

Work can still be done on open-source and universal accessibility models, and diligence applied to clearing public goods to non-IP protected regimes (e.g.; the human genome), but with the understanding that traditional technology development models (cost drops over time) will continue to drive progress.

In fact, there can be benefits in not adopting newtech immediately; costs are higher, unintended consequences are unknown, early adopters can work out the kinks (e.g; the first generation iPhone cost $600, the second generation iPhone 3G with expanded functionality emerged a year later at $199) and older technology generations like landline telephony can be skipped. World-is-flat cycle time speed-ups and new business models (e.g.; OneWorldHealth as a non-profit pharmaceutical company directed at developing world disease) illustrate market efficiency in applying traditional technology development in today’s world.

The article with all nine fallacies is available here

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