Wednesday, October 27, 2010

An Answer...

Facebook "Questions" is an interesting new feature of the social networking site that for the most part, I think is pretty filled with silly issues like "What's your favorite movie" and other nonsense. But today, a question came up in my filter that I felt was really interesting and worth seriously answering.

The question was this:

What would be the social and political impact of the development of cheap, near limitless power generation with little to no pollution?
And this was my response:

I've seen a number of answers here that deal with the physics of this question, and a number of silly answers reflecting people's world-views on the societal impact, but coming from an economics perspective, virtually unlimited energy would be one of the single greatest advancements for human prosperity ever developed.

A few people have discussed the possibility of such power being withheld by a small group of people... This is an extremely unlikely prospect for a number of reasons. First, because governments are the only group capable of keeping people out by force and they are the least likely group to successfully develop such a technology. Secondly because fears of business collusion (absent government protections) are largely unfounded in reality. Let's say that 5 companies are capable of producing virtually unlimited energy at almost no cost and they each agree to price their energy higher than what most people can afford.

They are still subject to competitive pressures of older forms of energy (so any pricing that is higher than conventional energy is already going to be a loss for these companies), and more importantly - if any single one of those businesses decides to break away from the agreed-upon pricing scheme, their lower price will out-compete their competitors for the same service... So those issues are really not significant.

The BENEFITS, however, are unimaginably good.

Not to state the obvious here, but energy is the means of generating work, and machinated work means that the potential for production of goods will become virtually unlimited as well. Contrary to what most people seem to believe, and even an issue confused by many mainstream economists, real wealth constitutes the goods and services that benefit people's lives. The world suffers in general from an amazing lack of material goods... Most people do not have enough food, clothing, houses, transportation, or any of the other basic stuff that they need to survive and thrive.

The limited availability (and thus higher price) of energy in most of the world is the root contributor to the lack of material goods available to most people.

But it goes so far beyond providing for the basic needs of people. Just consider one of those needs: Transportation. If everyone in the world had access to adequate transportation, opportunities for those people to work and create businesses for themselves would be exponentially improved. Instead of being stuck with the school or opportunities within walking distance they would be free to go where the best opportunities for themselves and their families were. Trade would balloon, production of goods beyond the essentials could be the focus of people's lives instead of barely scraping by just to have a home or food.

One comment was that if no one had to work to produce basic goods like energy, why would they keep working?

Because we're human beings! In America, the vast majority of people do not have to worry about staying fed or having a house to live in, or a car to drive. Yet we haven't just stopped working. Instead, we have been able to innovate new ideas and spend our time on other inventions. It's not like we're even close to a point in human development where everyone has everything they need, much less everything they might want. Cheap, or even free energy will mean that far more of people's money will be freed up to use on other things... Less on food and shelter means more on education, on entertainment, on innovation. You name it.

This is a goal we should all strive to achieve.

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