eight the transformer
A Scrambled Breakfast
Imagine you wake one morning, refreshed from sleep, hungry for a simple but delicious meal of scrambled eggs, toast, and orange juice. But inexplicably, instead of scrambling the eggs, toasting the bread, and juicing the oranges, you find yourself forcing the eggs into the toaster, mashing the bread against the juicer, and attempting to crack oranges into the frying pan. How enjoyable will your breakfast be?
This thought experiment is (like many thought experiments) absurd, but it also illustrates the importance of recipes (the way we manipulate and combine resources) vs. ingredients (the raw materials we begin with). The scrambled orange, toasted eggs, juiced bread breakfast starts with the same raw materials as the more conventional scrambled eggs, toasted bread, and juiced oranges breakfast. It adds the same amount of energy (supplied in the toaster, the range heating up the frying pan, and the muscle power in moving and mashing the ingredients). Yet somehow, with the same ingredients, the two recipes don’t produce equivalent results. The way the ingredients are put together matters.
The recipes-and-ingredients metaphor comes from economist Paul Romer, one of the originators of modern economic growth theory. In a seminal 1990 paper with the humble title Endogenous Technological Change, Romer was the first economist to produce a model of economic growth that featured technological change as a key variable within the model, subject to change based on other variables.1
Romer coined the recipes metaphor to explain the distinction between designs (which are a kind of knowledge) and ingredients (physical resources) to non-economists. In The Concise Encyclopedia of Economics he writes:
Economic growth occurs whenever people take resources and rearrange them in ways that are more valuable. A useful metaphor for production in an economy comes from the kitchen. To create valuable final products, we mix inexpensive ingredients together according to a recipe. The cooking one can do is limited by the supply of ingredients, and most cooking in the economy produces undesirable side effects. If economic growth could be achieved only by doing more and more of the same kind of cooking, we would eventually run out of raw materials and suffer from unacceptable levels of pollution and nuisance. Human history teaches us, however, that economic growth springs from better recipes, not just from more cooking. New recipes generally produce fewer unpleasant side effects and generate more economic value per unit of raw material.2
Romer’s assertion is a central one to this book. “Recipes” here are synonymous with “designs” or “processes.” They’re the ways we put things together, a core type of knowledge. Early human history is full of examples of new designs for tools and new processes for creating things of importance to us that produced more value out of the same resources. The design for a bow and arrow transforms sticks, stones, and rawhide into tools that can bring home more meat with less effort and less risk. Farming, compared to hunting and gathering, was a process that transformed the same amount of land, with less labor, into dramatically more food. Almost every example of progress in growing more food per acre is an example of a new recipe—a new design for a device, a new way of putting existing ingredients together. That creation of new ways of putting ingredients together to get new value out of them continues to this day.
Melt Down Your iPhone
As a thought experiment to illustrate the relative importance of recipes vs. ingredients, of designs vs. materials, consider your cell phone. Perhaps you have a smart phone such as an iPhone or an Android phone. What’s the value of the raw materials in your phone? How does it compare to the overall value of the phone?
As I write this, I have an Apple iPhone in my pocket. It weighs 137 grams, or just under 5 ounces. Among its many material components are an estimated 27 grams of plastic, 20 grams of glass, 14 grams of aluminum, perhaps 30 grams of lithium-ion battery, and so on.3
What are these materials worth? If we melted down this iPhone (not something to try at home), separated its component materials, and sold them on the open market, the raw materials would be worth at most a few cents.* The value isn’t in the raw materials then.
The value is in the design, in the recipe, in the knowledge that transforms incredibly tiny quantities of generally plentiful raw materials into a device that can connect you instantly to others nearly anywhere on the planet, that can access a sizable fraction of the world’s data, that can capture, store, and replay images, sounds, and videos, and much more.
The knowledge embedded in your iPhone is a combination of multiple threads of knowledge going back at least two centuries and arguably farther. Indeed, here we must go a level deeper than Paul Romer’s metaphor of “recipes.” The value of the iPhone design owes much to abstract knowledge of electromagnetism, the principles of radio, materials physics, and theories of computing, which are much broader than any single design. The lineage of knowledge goes back to Benjamin Franklin’s first experiments showing that lightning was electrical, to Ada Lovelace and Charles Babbage’s work in the 1800s on the principles of computer programming (before any computers existed), to Faraday and Maxwell’s work defining the laws of electromagnetism, to Marconi’s assembly of the first functional radio, to Isaac Newton and Gottfried Leibniz’s respective inventions of calculus in the 1600s (without which the design of an iPhone or its component chips would never have occurred), and more.
A design or recipe as rich and complex as that of an iPhone (or any similar or equivalent device) and all the components within it derives not just from one or two direct ancestors, but dozens, scores, or hundreds of ancestors. The recipe for the iPhone includes dozens of components that have their own recipes, which in turn include ingredients that have their own complex recipes, and so on. And all of those recipes draw upon our knowledge of the laws of physics and chemistry and principles of engineering that we’ve accumulated over time.
The accumulated knowledge of materials, computing, electromagnetism, product design, and all the rest that we’ve learned over the last several centuries converts a few ounces of raw materials worth mere pennies into a device with more computing power than the entire planet possessed fifty years ago. Twenty years ago, if you had $200, you wouldn’t have been able to purchase a mobile phone, let alone one that played music, took pictures, stored your contacts, surfed the web, showed your position on a map of the world, accessed your e-mail, and could double as a flashlight, a medical encyclopedia, or any of thousands of other functions brought to it by add-on applications.
In fact, no matter how much money you had, it would have been impossible to have the iPhone’s capabilities with you in your pocket twenty years ago. The closest you could have come would have been a luggable computer with a portable power supply, an incredibly expensive and bulky portable phone of the early generations, a pitifully slow modem, and a personal servant to carry it all. Imagine going out to a restaurant with your personal iPhone replacement following you with a giant backpack full of gear! What’s replaced all of that is accumulated knowledge. And not only has it gotten rid of bulky gear, it’s also made the resulting product affordable to millions of people.
This is one of the key ways in which knowledge differs from material resources. Where material resources may be used up (or, more frequently, disposed of or converted into less useful forms), knowledge simply accumulates. And the more knowledge there is available in the world, the greater the possibility there is for new and valuable combinations of that knowledge that can be manifest in novel and useful forms. We think of our world as running out of resources, and yet we are creating more and more pieces of knowledge that can be combined with one another to create more and more astounding advances. We are growing richer in ideas, richer in designs for useful devices, richer in understanding the basic laws that govern the universe, richer in discrete pieces of knowledge that can be combined into new and more useful innovations.
As Paul Romer has written, “Every generation has underestimated the potential for finding new recipes and ideas. We consistently fail to grasp how many ideas remain to be discovered. . . . Possibilities do not merely add up; they multiply.”4
Nylon Mania, or How to Support an Elephant Balancing on a Pencil
Consider the invention and improvement of plastics. We often think of plastic materials as being cheap, and indeed, that is one of their virtues, along with their low weight, easy manufacturing, suitability for molding into all sorts of shapes, and high degree of durability. As I write this, I can count more than thirty objects made of or containing substantial amounts of some plastic within my sight, ranging from the laptop on which I write these words to the upright lamp that provides illumination. Plastics are lighter, cheaper, and easier to mold than metals. They’re lighter and less fragile than glass. They’re lighter, easier to mold, and more weather and water resistant than wood. And they are a classic case of the world moving forward through the creation of new recipes.
The first plastic was invented in 1855 when Alexander Parkes, a metallurgist and inventor from Birmingham, England, combined cellulose from wood pulp with camphor extracted from laurel trees, producing a hard, flexible, transparent material he named Parkesine. When the cellulose and camphor mixture was heated, it could be molded into virtually any shape. It could be combined with dyes to give it color, something very difficult to do with metals or wood. When cooled it would keep its shape and proved light and durable. It was a perfect material for all sorts of light-duty objects.5
A great material did not immediately turn into commercial success. Parkes tried and failed to market the material, twice forming companies and seeing them go under. It was a pair of American brothers, John Wesley Hyatt and Isaiah Hyatt, who, in the search for a replacement for the ivory used to make billiard balls, hit the right balance of quality and cost in manufacturing, and brought celluloid to the world.
Celluloid gave birth to polyvinyl chloride, aka PVC or vinyl, which found applications for waterproof clothing, home siding, pipes and plumbing, and casings for computers and other electronics. PVC’s cousin polystyrene turned out to be an extremely light and highly insulating material that went on to be called Styrofoam. PVC, celluloid, and other early plastics inspired the creation of Bakelite, an extremely tough and temperature-resistant plastic used in radios, phones, clocks, and circuit boards. World War I created a shortage of natural rubber (extracted from rubber trees) and spurred the first large-scale production of synthetic rubber (essentially a plastic). The wide variety of different plastics that had been created by the early twentieth century inspired yet more research. In 1927, DuPont Corporation, seeing the potential of devising new plastics with marketable characteristics, set out to create a synthetic replacement for silk. The result was polyamide, better known as nylon.6
DuPont introduced it at the 1939 World Expo, just two years before the United States entered World War II. The first product to use the material was the nylon stocking, which went on sale on May 15, 1940. They proved incredibly popular, with 64 million pairs selling in the United States between May and December of 1940 alone. Every woman had to have them. Then in 1941 the United States entered World War II, and all of DuPont’s nylon production was turned to wartime needs such as parachutes for American soldiers.7
Eight days after Japan surrendered in 1945, DuPont announced that nylons would be in stores again soon. In November, 30,000 women lined up in New York City and 40,000 women lined up in Pittsburgh to buy 13,000 pairs. Riots broke out. Mobs of women knocked down store shelves and displays to get to the few nylons on sale. A newspaper headline in Augusta, Georgia, proclaimed, “Women Risk Life and Limb in Bitter Battle for Nylons.”8
Such is the magic of plastics. Such was the superiority of nylon over the cotton and woolen fabrics that had been used for stockings before it. Such is the power of a new idea.
Today there are perhaps thirty major families of plastics, each of which has many variations, ranging from the polyvinylidene chloride sold as Saran Wrap to the polypropylene in bottle caps and the bumpers of cars to the hard ABS and polycarbonate used in security windows, electronics casings, traffic lights, eye glasses, and engine moldings. Plastics form the soles of shoes, the optics in LEDs, the components of electronic displays, and an increasingly large fraction of the world’s cars, airplanes, clothing, and the objects in one’s home.
We’ve learned, incrementally, how to mold matter to our desires. Our knowledge base has grown. The number of different recipes for matter that we possess, each of them with a different set of properties, has expanded over time.
We’ve done the same thing in dozens of other areas. Medicines are a prime example. The drugs and vaccines that have improved our lives, from the smallpox vaccine, to antibiotics, to humble aspirin, are all examples of tiny amounts of raw materials rendered valuable by the precise way those materials are cultivated and synthesized, and the discovery of the effects those materials will have on our bodies. Drugs are almost pure distilled knowledge, barely material at all.
Are we done? Have we exhausted the set of useful new recipes for matter? That perception—that we’ve made all the important discoveries already—has always been with us. In 1900, Lord Kelvin, one of the most eminent physicists and mathematicians of his day pronounced that, “There is nothing new to be discovered in physics now.”9 The decades that followed introduced both relativity and quantum mechanics and overturned almost all that we understood of physics. Any prediction today that we’ve reached the limits of our ability to produce new designs for matter is just as wrong as Kelvin’s prediction was in his day.
If anything the number of new material recipes we can conceive of now is larger than at any time in the past, and the properties of the materials we are now working with are more remarkable than those of any material—natural or artificial—that we’ve ever encountered. Plastics are far from the end of the road in our growing ability to craft matter to our liking. We’re in the midst of a material science revolution.
Consider Boeing’s next major airplane—the Boeing 787 Dreamliner. The aircraft is constructed half out of carbon fiber composites, next-generation materials made from carbon and plastics that have a better strength-to-weight ratio than steel or aluminum. There is five times as much carbon composite as steel in the airframe of a 787, two and a half times as much carbon composite as aluminum. The result is that the aircraft is lighter than any previous aircraft of its size, burning 20 percent less fuel per passenger mile than its predecessors.
Beyond composites, material scientists are currently singing the praises and potentials of carbon nanotubes and graphene sheets. Carbon nanotubes, first discovered in 1952 but brought into wide awareness within the scientific community in 1991, are hollow tubes whose walls are a lattice of carbon atoms. They have incredible properties. They have a strength-to-weight ratio 300 times that of steel. A one-millimeter-thick strand of carbon nanotube can support 14,000 pounds of weight. They conduct heat 10 times as well as copper, and conduct electricity 1,000 times as well as copper. On top of all of this, they are slightly harder than diamonds.
Nanotubes can only be constructed in small batches of short lengths today, but every year brings innovations that bring down their cost, increase their length, and increase the amount that can be produced.
Graphene sheets, essentially unrolled carbon nanotubes, or one-layer-thick sheets of carbon atoms each bonded to their neighbors, give their nanotube cousins competition in the prize for most astounding properties. Two hundred times stronger than steel and able to be made in wide sheets, a layer of graphene a millimeter thick is so strong that it would take an elephant balancing on a pencil in order to penetrate it.10 Graphene is a better heat conductor than any known material, and at room temperature a better electrical conductor than any known material. It has potential applications in making super-hard, electrically conducting, super-heat-resistant plastics, in making highly efficient low-cost solar cells, and in making ultra-dense electrical capacitors for energy storage. Like carbon nanotubes, graphene is currently expensive and manufactured primarily in small sizes and batches, but production is improving rapidly every year.
Both carbon nanotubes and graphene sheets are new recipes for matter with new and highly desirable qualities. They’ll allow us to build planes, cars, homes, furnishings, clothes, electronics, medical devices, and a plethora of other devices that are lighter, stronger, and more efficient than the ones we have now. And the primary physical ingredient of both is not some rare substance found only miles below the crust of the Earth. It’s carbon, the fourth most abundant element in our universe.
The thing that adds the value to turn carbon into graphene or carbon fiber or carbon nanotubes is the input of our new ideas. Our set of useful recipes for matter continues to expand. There is no clear end of that expansion in sight.
The Toilet of Alessandro de’ Medici
It’s difficult in this context to define just how much value has been created by new inventions and the general accumulation of knowledge over time. Paul Romer estimates that half of all historic economic growth can be attributed to innovation, specifically to the creation of new designs for products and services. But surely even that estimate undervalues the impact of new knowledge. Had the idea for agriculture never been developed or never taken hold, humanity might very well still be comprised of a few million individuals, living in bands of a hundred or fewer hunter gatherers, illiterate, lacking the wheel, living a completely Stone Age lifestyle.
Shouldn’t we thus say that virtually all economic growth has been a result of, or at least dependent upon, the invention and subsequent improvement of agriculture? Isn’t a large fraction of our economic growth similarly dependent upon the inventions of the wheel, of literacy, of arithmetic, and of the printing press? Isn’t almost all of the economic growth of the last two centuries dependent upon our new innovations and discoveries?
Would we be any better off than we were 200 years ago if we hadn’t produced ways of generating more food from the same land? If we hadn’t discovered the laws of electromagnetism and how to use them to build telegraphs, telephones, radio, television, and the Internet? If we hadn’t sorted out the principles that govern the heat engines that power our vehicles and machines? If we hadn’t come to understand that germs cause disease, and used that knowledge to improve sanitation, devise vaccines, and create antibiotics?
No. We’d be just as poor as we were in 1800. The average human life would be around thirty years, instead of sixty-seven across the world and nearly eighty in developed nations. The difference has not been an influx of new resources. It’s been the creation of new and useful ideas, the discovery of new pieces of knowledge about how the world works. And that process is not only far from exhausted—it’s accelerating.
As economist William Nordhaus has put it, commenting on the nature of innovation, and how much we underestimate the value it provides us, “The lowly toilet is classified as furniture, but delivers a service that would delight a medieval prince.”
Billions of people around the world now possess flush toilets. Alessandro de’ Medici, the first Duke of Florence, scion of the mighty Medici family, relative to four popes and two queens, and himself one of the richest men in Europe, never did.
* Actually, we would find that no one would be willing to buy such tiny quantities of these commodities from us.