Category: Economics

Technology Was Democratized When Standardization of Parts Enabled Simplification of Manufacture and Maintenance

There’s a lot to like about Steward Brand. His Whole Earth Catalog was quirky unpretentious fun. His How Buildings Learn, has a wonderful chapter on the ramshackle, unnamed, disrespected building on the MIT campus where quirky innovators were given space to create. His essay on Xerox Parc explained how the technology being developed there could liberate individual creativity. When Steve Jobs at Stanford delivered what is widely believed to be the best commencement address in history, he ended by quoting Stewart Brand’s final message in the 1974 Whole Earth Catalog: “Stay hungry, stay foolish.”

In the review quoted below, highlights that the simplification of production enabled by standardization of parts promoted the democratization of technology maintenance (and we might add, helped to democratize innovation too). Major simplification goes against the Theory of the Adjacent Possible which claims that technology develops toward greater and greater complexity.

(p. C7) Read front to back, “Maintenance” tells a coherent story of civilizational progress. Prior to the Industrial Revolution, most machines were one-off creations, built by artisans to their own quirky specifications. But the technological age increasingly demanded standardization. Weapons led the way. If a cannonball jammed in an imprecisely bored barrel, the cannon might explode, killing its crew. On the other hand, if the parts of a flintlock rifle were interchangeable, a soldier could repair his weapon without the need for a gunsmith.

The manufacturing techniques that enabled this kind of precision gradually spread to other technologies. The same tools developed to bore cannon barrels were then used to improve steam engines. But standardization had its enemies, Mr. Brand notes, especially among gunsmiths and other artisans. During the French Revolution, the sansculottes rebelled against the new industrial techniques. “Craft was extolled; uniformity was deplored,” Mr. Brand writes. France’s technical progress was set back 50 years.

A century later, the early automobile industry faced a similar split. The original Rolls-Royce Silver Ghost, Mr. Brand writes, “was manufactured as a bespoke, unique vehicle, meticulously crafted by a dedicated team.” Henry Ford’s Model T, by contrast, was a crude but ingeniously simple machine. Ford made sure each part was manufactured to unvarying specifications, “perfect enough” that it could be installed by a moderately skilled worker on a moving assembly line. No fine-tuning needed.

Ford’s embrace of standardization allowed his Model T to be built quickly and inexpensively. But standardization had another, paradoxical effect: It allowed nonexperts to repair their own vehicles and other equipment. A farmer who owned a Model T didn’t need a forge or metal lathe to fix his engine; he could simply order a replacement part—or cannibalize one from a wrecked car in a junkyard.

The French revolutionaries feared industrialization would depersonalize society by marginalizing skilled artisans. Mr. Brand shows that, instead, standardization democratized access to technology. With a few tools and a little gumption, anyone could learn to maintain and repair the machinery of daily life.

For the full review see:

James B. Meigs. “Fixing the Future.” The Wall Street Journal (Sat., Dec. 6, 2025): C7.

(Note: the online version of the review has the date December 5, 2025, and has the title “‘Maintenance: Of Everything, Part One’: Making the Future.”)

The book under review is:

Brand, Stewart. Maintenance of Everything: Part One. South San Francisco, CA: Stripe Press, 2026.

An earlier Brand book that I praised in my opening comments is:

Brand, Stewart. How Buildings Learn: What Happens after They’re Built. New York: Viking Adult, 1994.

Minimum Wage Advocates Forget That When the Price of Labor Rises, the Quantity Demanded Falls

George Stigler and many others point out that no law in economics is as certain as the Law of Demand: if the price rises, the quantity demanded falls. That applies to goods and labor too. In principles classes I would illustrate the law in several ways, including applying it to the effects of increasing the minimum wage. Much of the empirical work on minimum wages has been done by David Neumark. In December 2025 he posted a revision of his co-authored paper “Minimum Wages and Race Disparities.” Below is the paper abstract:

We provide a comprehensive analysis of the effects of minimum wages on blacks, and on the relative impacts on blacks vs. whites. We study not only teenagers – the focus of much of the minimum wage-employment literature – but also broader low-skill groups. We find evidence that job loss effects from higher minimum wages are more evident for blacks – and more so for black men. In contrast, they are not very detectable for whites. Moreover, the effects of minimum wages are often large enough to generate adverse effects on earnings (and relative earnings) of blacks. Given strong residential segregation by race in the United States, the race difference in the effects of minimum wages implies that the adverse impacts fall on areas with a high black population share. We also find evidence that minimum wage effects are more adverse in black areas, regardless of individual race, which accentuates the concentration of the adverse effects of minimum wages in areas where blacks are a very high share of the population.

Neumark’s co-authored paper is:

Neumark, David, and Jyotsana Kala. “Minimum Wages and Race Disparities.” National Bureau of Economic Research Working Paper #33167, Dec. 2025.

We Do Not See the Benefits That Regulations Block

We owe to Henry Hazlitt the insight that we do not see what wonders would be, if the government was less active. We see the bridge that the government builds with our tax money. But we do not see the refrigerators, televisions and vacations that the taxpayers would have had if they had not been taxed to build the bridge. The same insight applies to government regulation.

The CEO of Oura, an increasingly popular ring that collects health data, has penned a brief op-ed, telling us a couple of features that Oura would now have if they were regulated less:

With a reformed regulatory structure, Oura customers could already be benefiting from a range of advanced features, including screening for high blood pressure. Hypertension is one of the most significant risk factors for heart disease and stroke, while high blood pressure in pregnancy can signal pre-eclampsia, a complication that endangers mother and baby. Another primed capability, sleep-apnea detection, would give users an early-warning tool for a condition that often goes undiagnosed and can lead to serious complications.

The CEO of Oura’s op-ed is:

Tom Hale. “With Less Regulation, Your Oura Ring Could Do More.” The Wall Street Journal (Sat., December 20, 2025): A11.

(Note: the online version of the op-ed has the date Dec. 19, 2025, and has the same title as the print version.)

Henry Hazlitt’s great little book, mentioned in my comments, is:

Hazlitt, Henry. Economics in One Lesson. Irvington-on-Hudson, NY: The Foundation for Economic Education, Inc., 1952.

New Hampshire Unbinds Electric Entrepreneurs

The energy sector of the economy is both heavily regulated and much in need of innovation and expansion. Unfortunately the heavy regulation often blocks the innovation and expansion. Travis Fisher and Glen Lyons describe New Hampshire’s solution–a new law that greatly reduces regulations for electricity suppliers who do not connect to the broad “public” grid. Unbinding energy entrepreneurs should bring more innovation and greater competition–more electricity at lower prices.

Fisher and Lyons’s commentary is:

Travis Fisher and Glen Lyons. “New Hampshire Sparks a Revolution in Electricity Supply.” The Wall Street Journal (Sat., Sept. 27, 2025): A11.

(Note: the online version of the commentary has the date September 26, 2025, and has the same title as the print version.)

Large Randomized Controlled Trial Finds Little Benefit in Free Money to Poor, Undermining Case for Universal Basic Income (UBI)

A variety of arguments have been made in support of a Universal Basic Income (UBI). I am most interested in the argument that says that technology will destroy the jobs of the worst off, and so for them to survive society would be justified in giving them a basic income. I do not believe that in a free society technological progress will on balance destroy the jobs of the worst off. If innovative entrepreneurs are free to innovate, especially in labor markets, they will find ways to employ the worst off.

Others have argued that giving a basic income to the worst off will make them better parents, measurable by better child outcomes in terms of language skills and better behavior and cognition. Several years ago these advocates setup a big, expensive randomized controlled trial to test their argument. The results? None of their hypotheses were supported. The passages quoted below are from a front page New York Times article in which they express their surprise, and for some, their incredulity.

(p. A1) If the government wants poor children to thrive, it should give their parents money. That simple idea has propelled an avid movement to send low-income families regular payments with no strings attached.

Significant but indirect evidence has suggested that unconditional cash aid would help children flourish. But now a rigorous experiment, in a more direct test, found that years of monthly payments did nothing to boost children’s well-being, a result that defied researchers’ predictions and could weaken the case for income guarantees.

After four years of payments, children whose parents received $333 a month from the experiment fared no better than similar children without that help, the study found. They were no more likely to develop language skills, avoid behavioral problems or developmental delays, demonstrate executive function or exhibit brain activity associated with cognitive development.

“I was very surprised — we were all very surprised,” said Greg J. Duncan, an economist at the University of California, Irvine and one of six researchers who led the study, called Baby’s First Years. “The money did not (p. A15) make a difference.”

The findings could weaken the case for turning the child tax credit into an income guarantee, as the Democrats did briefly four years ago in a pandemic-era effort to fight child poverty.

. . .

Though an earlier paper showed promising activity on a related neurological measure in the high-cash infants, that trend did not endure. The new study detected “some evidence” of other differences in neurological activity between the two groups of children, but its significance was unclear.

While researchers publicized the earlier, more promising results, the follow-up study was released quietly and has received little attention. Several co-authors declined to comment on the results, saying that it was unclear why the payments had no effect and that the pattern could change as the children age.

For the full story see:

Jason DeParle. “Cash Stipends Did Not Benefit Needy Children.” The New York Times (Weds., July 30, 2025): A1 & A15.

(Note: ellipsis added.)

(Note: the online version of the story has the date July 28, 2025, and has the title “Study May Undercut Idea That Cash Payments to Poor Families Help Child Development.”)

The academic presentation of the research discussed above, can be found in:

Noble, Kimberly, Greg Duncan, Katherine Magnuson, Lisa A. Gennetian, Hirokazu Yoshikawa, Nathan A. Fox, Sarah Halpern-Meekin, Sonya Troller-Renfree, Sangdo Han, Shannon Egan-Dailey, Timothy D. Nelson, Jennifer Mize Nelson, Sarah Black, Michael Georgieff, and Debra Karhson. “The Effect of a Monthly Unconditional Cash Transfer on Children’s Development at Four Years of Age: A Randomized Controlled Trial in the U.S.” National Bureau of Economic Research (NBER) Working Paper 33844, May 2025.

AI Cannot Know What People Think “At the Very Edge of Their Experience”

The passages quoted below mention “the advent of generative A.I.” From previous reading, I had the impression that “generative A.I” meant A.I. that had reached human level cognition. But when I looked up the meaning of the phrase, I found that it means A.I. that can generate new content. Then I smiled. I was at Wabash College as an undergraduate from 1971-1974 (I graduated in three years). Sometime during those years, Wabash acquired its first minicomputer, and I took a course in BASIC computer programming. I distinctly remember programming a template for a brief poem where at key locations I inserted a random word variable. Where the random word variable occurred, the program randomly selected from one of a number of rhyming words. So each time the program was run, a new rhyming poem would be “generated.” That was new content, and sometimes it was even amusing. But it wasn’t any good, and it did not have deep meaning, and if what it generated was true, it was only by accident. So I guess “the advent of generative A.I.” goes back at least to the early 1970s when Art Diamond messed around with a DEC.

This is not the main point of the passages quoted below. The main point is that the frontiers of human thought are not on the internet, and so cannot be part of the training of A.I. So whatever A.I. can do, it can’t think at the human “edge.”

(p. B3) Dan Shipper, the founder of the media start-up Every, says he gets asked a lot whether he thinks robots will replace writers. He swears they won’t, at least not at his company.

. . .

Mr. Shipper argues that the advent of generative A.I. is merely the latest step in a centuries-long technological march that has brought writers closer to their own ideas. Along the way, most typesetters and scriveners have been erased. But the part of writing that most requires humans remains intact: a perspective and taste, and A.I. can help form both even though it doesn’t have either on its own, he said.

“One example of a thing that journalists do that language models cannot is come and have this conversation with me,” Mr. Shipper said. “You’re going out and talking to people every day at the very edge of their experience. That’s always changing. And language models just don’t have access to that, because it’s not on the internet.”

For the full story see:

Benjamin Mullin. “Will Writing Survive A.I.? A Start-Up Is Betting on It.” The New York Times (Mon., May 26, 2025): B3.

(Note: ellipsis added.)

(Note: the online version of the story has the date May 21, 2025, and has the title “Will Writing Survive A.I.? This Media Company Is Betting on It.”)

If AI Takes Some Jobs, New Human Jobs Will Be Created

In the passage quoted below, Atkinson makes a sound general case for optimism on the effects of AI on the labor market. I would add to that case that many are currently overestimating the potential cognitive effectiveness of AI. Humans have a vast reservoir of unarticulated common sense knowledge that is not accessible to AI training. In addition AI cannot innovate at the frontiers of knowledge, not yet posted to the internet.

(p. A15) AI doomsayers frequently succumb to what economists call the “lump of labor” fallacy: the idea that there is a limited amount of work to be done, and if a job is eliminated, it’s gone for good. This fails to account for second-order effects, whereby the saving from increased productivity is recycled back into the economy in the form of higher wages, higher profits and reduced prices. This creates new demand that in turn creates new jobs. Some of these are entirely new occupations, such as “content creator assistant,” but others are existing jobs that are in higher demand now that people have more money to spend—for example, personal trainers.

Suppose an insurance firm uses AI to handle many of the customer-service functions that humans used to perform. Assume the technology allows the firm to do the same amount of work with 50% less labor. Some workers would lose their jobs, but lower labor costs would decrease insurance premiums. Customers would then be able to spend less money on insurance and more on other things, such as vacations, restaurants or gym memberships.

In other words, the savings don’t get stuffed under a mattress; they get spent, thereby creating more jobs.

For the full commentary, see:

Robert D. Atkinson. “No, AI Robots Won’t Take All Our Jobs.” The Wall Street Journal (Fri., June 6, 2025): A15.

(Note: the online version of the commentary has the date June 5, 2025, and has the same title as the print version.)

Substrate Startup Develops Less Complex and Cheaper Way to Etch Computer Chips

To prepare for a workshop next week I have been reading a lot about Stuart Kauffman and Roger Koppl’s theory of the adjacent possible (TAP), as it is applied to the growth of technology. One of the implications of TAP is the that new technology gets progressively more complex, in the sense of using an ever larger number of components. I think that is often true but I can think of a couple of counter-examples. So I was interested to read yesterday that the production of computer chips may provide another counter-example.

(p. B1) In March [2025], James Proud, an unassuming British-born American without a college degree, sat in Vice President JD Vance’s office and explained how his Silicon Valley start-up, Substrate, had developed an alternative manufacturing process for semiconductors, one of the most fundamental and difficult challenges in tech.

For the past decade, semiconductors have been manufactured by a school-bus-size machine that uses light to etch patterns onto silicon wafers inside sterile, $25 billion factories. The machine, from the Dutch company ASML, is so critical to the chips in smartphones, A.I. systems and weaponry that Washington has effectively blocked sales of it to China.

But Mr. Proud said his company, which has received more than $100 million from investors, had developed a solution that would cut the manufacturing cost in half by channeling light from a giant instrument known as a particle accelerator through a tool the size of a car. The technique had allowed Substrate to print a high-resolution microchip layer comparable to images produced by the world’s leading semiconductor plants.

. . .

(p. B4) Mr. Proud moved to San Francisco from London in 2011 as a member of the first Thiel Fellowship class, a college alternative for aspiring founders created by Peter Thiel, the venture capitalist.

. . .

After the Trump administration persuaded TSMC to build a plant in Arizona, Mr. Proud decided to build his own company. He and his brother Oliver, 25, started reading books and academic papers on semiconductor lithography. They questioned why the process had become so complex and expensive.

One of the major costs in modern lithography machines, which have more than 100,000 parts, is how they use high-powered lasers to turn droplets of molten tin into a burst of extreme ultraviolet light. The machines use the light to etch a wafer of silicon in a process known as EUV lithography.

. . .

The team spent much of 2023 building a custom lithography tool. It featured thousands of parts and was small enough to fit in the back of a U-Haul. They tested it in computer simulations.

In early 2024, Substrate reserved a Bay Area particle accelerator for a make-or-break test. The company ran into problems when vibrations near the particle accelerator caused the tool to gyrate and blur the image, Mr. Proud said.

A frantic, daylong search found that the air-conditioning system was causing the vibration. Substrate adjusted the fan speed until the process printed “very beautiful and tiny things repeatedly” on a silicon wafer, Mr. Proud said.

For the full story see:

Tripp Mickle and Mike Kai Chen. “A Less Costly Route To Computer Chips?” The New York Times (Weds., Oct. 29, 2025): B1 & B4.

(Note: ellipses, and bracketed year, added.)

(Note: the online version of the story has the date Oct. 28, 2025, and has the title “Can a Start-Up Make Computer Chips Cheaper Than the Industry’s Giants?”)

Trump’s Budget Director Is Competently Dedicated to Dismantling the Deep State

Before the 2024 Presidential election I quoted an op-ed piece by Walter Block and another by Thomas Sowell in which Block argued, and Sowell implied, that given the choice between Donald Trump and Kamala Harris, the better choice was Trump. I still agree with their op-eds.

A related, but different issue is whether on balance, Trump’s policies will hurt or help the economy. His tariffs, industrial policy, and crony deals will hurt. His deregulation and downsizing of government will help. I hope, but do not know, that the helps will help more than the hurts hurt.

The New York Times ran a long front-page article on Trump’s Budget Director Russell T. Vought that bolsters my hope. I quote from that article below. Vought is serious and competent and dedicated to “a much smaller bureaucracy.” When he nominated him, Trump wrote “Russ knows exactly how to dismantle the Deep State and end weaponized government.”

But a Vought failure would not prove Block and Sowell wrong. Even if Trump does more to harm the economy than to help it, he still will not match the harm that would have been done by Harris.

(p. A1) Russell T. Vought, the White House budget director, was preparing the Trump administration’s 2026 budget proposal this spring when his staff got some surprising news: Elon Musk’s cost-cutting team was unilaterally axing items that Mr. Vought had intended to keep.

Mr. Vought, a numbers wonk who rarely raises his voice, could barely contain his frustration, telling colleagues that he felt sidelined and undermined by the haphazard chaos of the Musk-led Department of Government Efficiency, according to six people with knowledge of his comments who, like others interviewed for this article, spoke on the condition of anonymity for fear of retribution.

. . .

Mr. Vought, who also directed the White House Office of Management and Budget in President Trump’s first term, had spent four years in exile from power. He worked through Joseph R. Biden Jr.’s presidency from an old rowhouse near the Capitol, where he complained of pigeons infesting his ceiling and coordinated with other Trump loyalists to draw up sweeping, detailed plans for a comeback.

He had carefully analyzed mistakes from the first term. And he had laid out steps to achieve the long-sought conservative goal of a president with dramatically expanded authority over the executive branch, including the power (p. A14) to cut off spending, fire employees, control independent agencies and deregulate the economy.

. . .

He works long hours and weekends in his suite in the Eisenhower Executive Office Building next to the White House, where he oversees a staff of more than 500.

On the wall is a photo of his favorite president, Calvin Coolidge, the farm boy and small-town mayor historians say most purely embodied the conservative principles of small government and fiscal austerity.

. . .

“Russ knows exactly how to dismantle the Deep State and end weaponized government,” Mr. Trump wrote in a statement when nominating Mr. Vought.

. . .

Rob Fairweather, who spent 42 years at the Office of Management and Budget and wrote a book about how it operates, said there is reason for Mr. Vought to have confidence in a legal victory.

“What he’s doing is radical, but it’s well thought out,” Mr. Fairweather said. “He’s had all these years to plan. He’s looked clearly at the authorities and boundaries that are there, and is pushing past them on the assumption that at least some of it will hold up in the courts.”

Mr. Vought is already looking forward to that outcome, declaring on Glenn Beck’s show this spring: “We will have a much smaller bureaucracy as a result of it.”

For the full story see:

Coral Davenport. “Ticking Boxes on His Checklist To Make Trump All-Powerful.” The New York Times (Tues., September 30, 2025): A1 & A14.

(Note: ellipses added.)

(Note: the online version of the story was updated Oct. 3, 2025, and has the title “The Man Behind Trump’s Push for an All-Powerful Presidency.”)

The Review of Austrian Economics Publishes Diamond’s Review of Creative Destruction

The Review of Austrian Economics published my review of Dalton and Logan’s Creative Destruction book on Sept. 17. It can be viewed, but not printed or saved, at: https://rdcu.be/eIMJN