Jevons Paradox
When increased efficiency goes wrong...or Right
If you are like me, you have an absolute love-hate relationship with economics. It is a huge benefit to understand economics to know what is going on in the world and to understand a bit about how basic supply and demand interact.
But for all that economics get right, it gets a lot long. Largely, economics went a bit off the rails when it tried to transition from a soft science (like sociology) to a hard one (like math and physics). There is too many variables and inter-connectedness to ever draw hard and fast formulas that are always true. And then people won’t ever act with the 100% rationality needed to have a locked down formula.
Today we are going to cover an interesting component of economics that may be helpful as you think about the future.
There is a lot of doomerism around AI and future for employment and quality of life. And rightfully so, consider:
The economy needs 100 units of work.
A single person can do 1 unit of work and there are 100 people
Then the economy has full employment, 100 people, doing 1 unit of work and fulfilling all the available work in the economy.
Now a new piece of technology comes along so a person can do 2 units of work.
In the economic model that means 50 people doing 2 units of work and 50 people unemployed (or some combination of unemployment and underemployment).
But historically has that happened? Did the invention of any technology lead to a huge decrease in jobs?
Second related thought experiment - if you are in your 30s or older you will remember this, and if you are younger and don’t believe what I am about to tell you, talk to someone older. There was a time when you would have to go to Blockbuster video in order to scan your physical membership card to rent a physical video game cartridge.
Not only that, but since each blockbuster only had a couple physical copies of the game, there was a non-zero chance you would drive there and all the copies were out for rent.
Sure, in a last ditch effort you would plead with the lethargic 20-something year old stoner who worked there to go look at the recent returns, hoping that someone serendipitously brough back StarFox right before you came in and it wasn’t checked into the system or re-shelved yet.
If you were resourceful, you would go to your home telephone, and dial the number for Blockbuster to call on the phone and check to see if they had a physical copy (again, pleading for the lethargic 20-year old stoner to check the recently returned games as well). And if somehow that game was in stock, you’d have to pray you could talk the pothead to holding the game off to the side because you would need to hop in your car and drive 30 minutes to the store and worst case would be if someone rented the game before you got there. You can’t handle the roller coaster of emotion from that kind of disapointment.
(Of course, the only Blockbuster in the area that has StarFox and the Rumble-pack for rent is the one a few towns over. Now you need to look at the physical address from the phone book and take out a physical map from your glove box and find the street that Blockbuster is on, since you have never been to that store - I mean are you supposed to play Starfox without the tactile feedback of a shaking controller like its 1991? Hell naw).
There is a reason, calling Blockbuster with a landline phone is a meme nowadays. This was the actual experience we had to go through growing up with entire weekend days spent calling around trying to find a game.
But today, you can just download and stream all sorts of games directly from online. There are no physical copies anywhere. With the huge influx of supply of instant entertainment, everyone must be elated with the video game experience right?
HA.
What is this phenomena called?