Jul 6 2009, 11:10AM
"Free" vs. Peak Oil
I haven't read Chris Anderson's new book "Free: The Future of a Radical
Price," but I've been following the debate over Malcolm Gladwell's New
Yorker review and Anderson's response. Gladwell summarizes Anderson's
basic argument as: The digital age is exerting inexorable downward
pressure on the prices of all things "made of ideas." This revelation is not unique to Anderson. I mean, hey, it's 6:30 am and I'm blogging for free about articles I read
for free for you who will read it for free and meanwhile, my "free"
gmail account is trying to sell me a "Didgeridoo for Sleep Apnea."
But
underlying this copious pile of free is a steady stream of electrons
that keeps our eyes and ears hooked into the ideas beaming out of our
computers, TV's, stereos, and twitter-enabled smart phones. Between
2000 and 2005 according to this pdf report by Jonathan Koomey, the amount
of electricity used by servers alone doubled to account for 14 power
plants world wide and $7.2 billion dollars. Is there some tension
between free ideas and limited energy and natural resources? Are free
ideas and Peak Oil compatible? Or do they have some strange synergy? I
think so, but the unified theory of it all remains to be thought, so
I'm throwing it out to you, readers. Respond freely.
The low cost of energy has underwritten much of what we accept as
reality. Free shipping for buying an extra book on Amazon is a case in
point. But so is the bargain price of goods made in China with
subsidized fuel and cheap container transport. And so are suburban
McMansions, enabled by mortgages that didn't take the cost of power
into account. Long commutes in big cars were enabled by cheap gas,
which seemed inconsequential until it topped $2 a gallon (and then $3
and then $4.) In the US, energy is a "right" as much as an expense, which changes its psychological price, at least.
Anderson (as quoted by Gladwell) says "From the consumer's perspective,
there is a huge difference between cheap and free. Give a product away,
and it can go viral. Charge a single cent for it and you're in an
entirely different business.... The truth is that zero is one market
and any other price is another."
So what happens as the economy of free, with its viral geometric
expansions, hits the economy of not-quite-free-and-increasingly-scarce
energy? It seems to me that the price of energy will increase and
somewhere along the way it will loop back and start either choking the
flow of these free ideas, or putting a new price on them. But in the
case of oil, the price of the resource itself is determined in the
sphere of necessarily free ideas and information. Because much of the
information about the world oil market is open and freely available,
multiple participants in the market can price the product and transfer
"free" news of its price frictionlessly around the world. As the
resource rises in price, and the value of news falls, there will be two tiers of information about
it--free and pricey. Will the market still work if the free information
becomes worthless?
And what about not-free CO2? We are at one of those watershed moments
in history where we plan to reverse a million years of free CO2 emissions and
start charging for something that looks like, and is, air. The grand
hope is that charging for carbon will create new economies that care
about limiting CO2 emissions. But limiting those emissions will require
huge knowledge economies, and a lot of information, both of which need to be sustained through money. Free might not work for us there.
Obviously, this is a disorderly smorgasbord of a reaction to a book I haven't read, and I
welcome your thoughts and reactions. But I have one basic reaction to
the concept of "free" ideas, and that is that probably, somebody,
somewhere is paying. A massive shift in technology, behavior, and
pricing finds me sitting here this morning snickering at didgeridoo ads
and creating free blog posts, but somewhere, a real economy of
money, resources, and carbon is piling up. Somewhere, someone is mining
coal, someone else is cursing the coal trucks that roll past her house
every few minutes, somebody's having an asthma attack from the combo of
emissions and ozone required to produce the electricity that's powering my computer and yours. And meanwhile, somebody else is looking at his sheep on the
edge of the Sahel and wondering where they're going to go when the
grass finally dries up. Free may be another name for a high price that's spread very
far and very thin.
Congratulations Lisa, well put!
I can share my personal experience in dealing with this conundrum, in fact it made change my career!: when I first read "The Digital Word" by Nicholas Negroponte I was teaching digital media to entrepreneurs (that was 1999), was an avid reader of Wired, early adopter of all kinds of digital gadgetry, etc, etc.
The future was going to be amazing! We would dematerialize the economy, we will stop living in a brick and mortar world! Then, I can't remember exactly, maybe I was looking up information on Frank Tipler's Singularity or something else, I discovered dieoff.org, peak oil, The Limits to Growth books and a whole new and unsettling world for me to swallow.
My take on this is that it should be obvious that energy and materials are involved in all human activities, even we are a 100W machine! We need food (energy), protection from the environment and socializing, and not much more. This is, of course, the hunther gatherer version of us, we are now (at least in industrialised countries) a very different beast. Almost everything we do is mediated by a complex web of relationships (think about getting those Christmas cherries from Chile if you live in the northen hemisphere, or globalised production of goods) that involve gathering natural resources and using energy to transform them. And every part of that process uses energy and materials and produces some waste.
In my own utopian dreams we should use the digital world to spread knowledge, especially knowledge about how to live more sustainably, to avoid long distance commuting and to come up with more efficient processes in general.
But let's not forget that more efficiency normally leads to more use (so we are more efficient but we need more of the stuff anyway), and that wealth (even if you earn it with a "dematerialized" job) leads to a greater material expenditure.
At the end we need everything, technology is a necessary condition for change (renewable energy, smart grid, etc) but it is not enough, we also must change the concept of wealth, we should "dematerialize happiness"...
"I haven't read Chris Anderson's new book "Free: The Future of a Radical Price," but I've been following the debate over Malcolm Gladwell's New Yorker review and Anderson's response... I mean, hey, it's 6:30 am and I'm blogging for free about articles I read for free for you who will read it for free and meanwhile, my "free" gmail account is trying to sell me a "Didgeridoo for Sleep Apnea.""
The system we live in now and shall likely continue to live in, wherein capital is provided for goods in services, suggests to me that markets set the value of a thing at least as well as anything else can. This means that anything the market says you can get for free, is worth precisely that: nothing. Equally so the blogging trend and this post; you are regurgitating points made by Malcolm Gladwell (and so on) who is regurgitating (after analysing) Chris Anderson's book, who is regurgitating crap hippies were writing about in the 60s, which never quite panned out as any of them expected.
The most valuable point I've seen mentioned about this book is the delicious irony of a book called "Free" that costs $20.
Now, don't get me wrong. I oftentimes spend hours reading opiniony stuff, and most of the routine tasks with which I and others fill our days are almost valueless in and of themselves. However, life is not an exercise in market efficiency, and the value of things changes all the time. This is evidenced not only by things like computer processors, but also by people. Look at the median income levels and the sheer volume of service economy jobs, and if you live in an urban area, you may see people on the side of the road, holding signs and waving. That's correct, it is now cheaper to pay someone to hold a sign than to nail it into the ground... it probably has to do with permits, but the point stands. Human life is worth less than a couple pieces of paper and a stake.
There's an excellent point to be made in that "free" isn't a very sustainable economy in most scenarios, because someone's job, or several jobs, hangs in the cost of a service or good. I feel that many bloggers are helping to destroy journalism as it stands, because what reasonable consumer would be willing to pay for something they can get for free, either direct through the newspaper's free website, or free through a blogger quoting or reposting it?