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Imagine the fantastic amount of coordination required to move the economy from an oil based one to whatever the next “energy source” is going to be! Suppose the new technology is hydrogen. Then we’d have to build networks of pipelines, filling stations, repair industries, oversight, education, etc. in order to build and service this incredible network. Clearly this is a case where the massive amount of coordination required (across 50 state lines remember) as well as the network externalities involved and potential for free-riding on infrastructure contributions means that the private, free-market, competitive sector could never do such a thing.

There’s just one little problem with such a narrative: it has already happened. Several times. Recall the transition from coal to oil over 100 years ago, and think about the transition to mobile telephony. I sure do remember reading all of those horror stories about how the unplanned, chaotic, uncoordinated market really screwed the pooch on those tasks. And on the mobile telephony – it is probably that greedy, profit seeking mobile phone companies have done more good in the developing world than the entire 65 year experience with Western foreign aid programs. After all, over 2.5 billion of the world’s poor still do not have toilets. Less than 1.5 billion (it is estimated) go without cellphones.

And no, it is not correct to say, “well, the government owns and regulates the airwaves, and without that regulation, cell phone technology would never have existed.” Think about why.

One Response to “Getting from Here to There”

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