A Truly Modern Miracle

I once visited England a few years ago for work.  I had very few days to myself so I crammed in as much of the country as I could see.  As I was staying in Farnborough, I made a trip to Salisbury to see Stonehenge.  Of course, it was amazing, mysterious and oddly beautiful.  Of the civilization who built it, very little remains. (Geoffrey of Monmouth said Stonehenge was built by Merlin, but I digress)  Still, we marvel at the builders, whoever they were, because they achieved something that was quite astounding and unique.

This brings up an interesting question; what of our civilization will be remembered?  What, against all odds, did we do that set us apart from the mundane?   This is a hard question to answer, because in the last two and half centuries or so, we have so much from which to choose.   The steam engine?  The large scale production of steel?   Space travel?  The skyscraper?  Antibiotics?  The flush toilet?   Indeed, we are fortunate to live in a time of such wonders, but there is one industry I would like to single out; Consumer Electronics and Appliances.

Consumer electronics as a market really began almost immediately after electricity began to be installed in the cities of America and Europe, but the industry as a whole really gathered steam, or rather, electrons, after World War 2.  Television became popular, as radio had and, eventually, personal computers and mobile phones.   With demand came innovation and with innovation came vast wealth.   What was once regarded as science fiction is now commonplace, even in developing economies.   In less time it took to build the great Pyramid of Giza, mobile phones spread across the Earth, simultaneously dropping in cost and increasing in quality.  Not because of some edict from a Pharaoh or a King or Emperor, but from plain demand from plain people.   Technological wizards and associated companies got rich, not from marauding neighbors, but from selling things people wanted, in effect making us all richer.    Appliances like the washing machine, the dish washer and microwave freed women in the same way the tractor and heavy machines freed men (and beasts of burden)  from agriculture.  Televisions, needless to say, went from clunky, heavy, fuzzy black and white tubes with 3 or 4 choices (anyone remember the DuMont Network?  Neither do I.) to color, high definition, flat screens with hundreds of channels in less than 70 years.

Mobile phones are even more amazing.  If our civilization produced nothing else of note, mobile phones would rank higher with future archaeologists as Stonehenge does with us.  A bold claim to be certain, but one I feel is completely justified.     Take a look at the following.

  Indeed, mobile phones have gotten so cheap and reliable, many people forgo having a land-line at home.     If this wasn't enough, the phones got better too with longer battery life, lighter, smaller design, better network coverage and, with the creation of smart phones, a whole set of tools is available in a person's pocket.  

All of these gadgets....

...now fit in one of these.

In addition to his collection of electronic gizmos, our fashionable 80's guy above wouldn't even be able to comprehend the thousands of apps, games and millions of websites one can access with smartphones.  Think about this for a moment.  For an affordable price, one can have access to more information than the entire library of congress...in their pocket.

The a key element which made this possible, along with demand driving it, were improvements to processor performance which we can see here.

Note the units on the left and that the scale is exponential, not linear.   Stunning.  Nothing else humans have made come remotely close to this level of  performance improvement. There is a broader discussion to be had about Moore's law and the limits of how fast conventional processors can be, but just looking at the chart above proves that our clever engineers have done pretty damn well so far.

Another example lies in storage.  Here is an ad from around 1983.  

That's right.  26 Megabytes for $4,995,  that works out to about $192 dollars per megabyte.   At the time of writing, I found a 2 Terabyte hard drive on the Best Buy website for $100 (.4768% of a penny per megabyte).   I admit, math is not my strong suit but lets try just for fun (please correct me if I am wrong in the comments below).   There are 1,048,576 megabytes in a terabyte, and thus 2,097,152 megabytes in a 2 terabyte hard drive.  At the early 80's cost-per-megabyte of $192, a 2Tb drive (if it had existed) would cost $402,653,184.    That's over 400 million dollars, in 1983's money, over $900 million today.    There is a 99.9975% decrease in price per megabyte in unadjusted dollars.   All this occurred in less than half a lifetime.   What other word besides miraculous could describe this phenomenon?  Since we are living in the middle of this revolution it is easy to disregard it and many of us even take it for granted because the advancement works so damned well.  

But how is this all possible?  We have already mentioned demand. But what of the supply?  What conditions exist that allow these breakthroughs?    I submit that the reason for this technological tsunami is due to the fact that the industry is one of the least regulated industries around.   For example, unlike drugs, there is no FDA for electronics.  For example, most appliances are tested and certified by Underwriter Laboratories, not Government.  In fact UL works so well, the Government contracts them to test things.   In other words, the Government takes a back seat and lets the professionals handle the industry.   To be certain, there are some restrictions; what kind of refrigerants can be used, how much water an appliance can draw and so on.  Some of these regulations are fairly sensible and many others are ridiculously absurd.   But, compared with almost any other industry, the regulations on these types of technology are relatively few. 

There are virtually no legal barriers to entry into engineering, and although most mechanical and electrical engineers attend some form of higher education, software engineering  requires no formal schooling and there is no license required to practice the craft.  This is in stark contrast to being a lawyer or a doctor or a cab driver or even a hair dresser, which require one or more forms of government sanction or license.  With consumer electronics and software; a person can just start working from day one, if he or she is so inclined and has the talent to match.   Some of the greatest architects of our modern age were in fact college dropouts; Bill Gates, Steve Jobs, Paul Allen and many others and as far as I know, not officially certified or licensed in anything pertaining to the field in which they made their fortunes. 

  More than certifying and testing organizations and the Government, the market sorts out the useless junk from the valuable assets very fast,  faster than legislators can legislate.

There are few subsidies for consumer electronics, and indeed, where the government has funded  research into certain projects for which there are limited (usually military) applications, private electronics developers will often take the technology and turn it into something profitable that would have otherwise had a net cost on the economy. 

Lastly, unlike cars and medicine, there are few trade barriers for consumer electronics.  In other words, it is a relatively (but no means absolutely) free market.  

All of these factors add up to one thing; advancement.  Prices go down, quality goes up.  Although we cannot expect the same kinds of improvement rates in all things as we have seen with processors or hard drives, owing to practical limitations,  but it is a certainty that markets work best and innovation is most evident, when they are left free of Government intrusion.  By way of comparison, when was the last time you witnessed any astounding innovation come from the Post Office?  Or AMTRAK?   But with consumer electronics, we expect a newer and better models competing all the time.   It is often said that the pharmaceuticals industry is "greedy" and that is why American Healthcare is so expensive, but are we really to expect that the people working in making drugs and developing therapies are any more greedy than the people at Sony or Apple or Samsung or Microsoft?  Yet Healthcare, despite (or because of) major involvement from Government, increases in costs far faster than inflation, like many industries in which the Government has sunk its claws.   Consider education as another example; information has literally never been cheaper or easier to get, yet college tuition rates are enormous, with public school performance has been flat for decades, all supported heavily by government.  

 But imagine freeing up the markets.   Imagine how many more ideas there would be with regards to high efficiency energy production if the markets guided research instead of a political appointee. Imagine how Healthcare could be transformed if it was approached as an engineering and bio-chemistry problem with market solutions instead of moral problem with a government solution. Imagine how much better schools would be if they were treated like consumer demand-driven companies rather than sacrosanct temples beyond reproach or critique.   This is not theory, this is demonstrable fact as evidenced by technological innovation.  The possibilities are endless, provided people are allowed the freedom to experiment and cooperate.

 Will politicians listen and free up the markets?  That would take a true miracle.