The End of Poverty Will Be Downloaded at 14kbps

Meet the Ghost Gunner, a home milling machine. Billed as your one-stop shop to craft AR-15 lower receivers, it's a lump of metal and code that turns raw metal into machines of killing. From the site:

Ghost Gunner is a general purpose CNC mill, built upon a large body of open source work, including the gshield 3 axis motion hardware, the grbl g-code parser and motion controller, and popular microcontrollers. All GhostGunner schematics and design files will be published into the public domain, and anyone can program anything for the machine.

FedEx and UPS have elected to decline shipping the device. I understand why. It doesn't take particularly sophisticated game theory to pick out the implied threat posed by the ATF. "Nice shipping company you got there, pal. It'd be a real shame if we found contraband in your trucks."

But think of what the Ghost Gunner really is: an amateur, with no knowledge whatsoever of metallurgy, engineering, design, or gunsmithing can take a pile of scrap and make something useful out of it. Tech like this eliminates the highest barrier for the home manufacturer: expertise. The machine knows the proper milling technique. The machine runs the lathe. The machine knows the proper annealing soak temperature gradients.

Imagine that you're a farmer in rural Uganda. There's an antique tractor rusting at the corner of a field that you haven't been able to get replacement parts for thanks to supply route disruptions courtesy of the local tinpot warlord. Luckily for you, a foreign rogue piloting a nighttime zeppelin airdropped a repurposed Ghost Gunner into the center of the village complete with software to crank out all the pump/compressor/belt wheel/alternator casings you'll need to get your tractor running again. All you have to do is feed in the scrap metal and Bob's your uncle.

Yes, yes. I'm simplifying of course. But a big part of what leads to economic development is what economists call "capital deepening." Airlifting a two million dollar John Deere combine into rural Africa is a waste of perfectly good machinery because to get to the point where such a device can be used properly, farmers need extensive supply chains, commercial infrastructure (roads, rails, &c), and the expertise to use and maintain the thing properly. To get to that point, folks need to be able to start small, to be able to cheaply get their existing gear into working order and to upgrade appropriately (recall your Smithian sympathy & Hayekian humility: "appropriate" in this instance cannot be dictated from afar, as the local residents know best the constraints of their particular situation). Ghost Gunner and similar devices drastically reduce the cost of capital improvements. Demand curves still slope down, people.

Code for new blueprints can be published cheaply and easily by the many, many, many civic-minded engineers throughout the world. These plans can be downloaded cheaply and easily even at throttled rates by bargain-basement ISPs.

It's easy enough for me to be a scold to do-gooder, affluent Westerners who seek to ban sweatshop labor, it's much harder to actually improve the BATNA of the world's poorest. Open source hackers building cottage manufactoriums are doing just that. Instead of hobbling them by refusing to ship their wares, we should be buying them up and giving them away to the world's disenfranchised.

Clobberin' Time

Reading Pinker's The Better Angels of our Nature has prompted me to think more about the nature of civilization and violence. Bound up in that is euvoluntary exchange (obviously).

See, there's the nearly intractable joint determination problem when we're thinking about why it is the human world is so vastly more wealthy than it was in antiquity. Or even in prehistory, supposing that the experiences of modern forager communities help illuminate the violence inherent in the system, so to speak. The puzzle has a lot of facets: we know (or suspect) that the following stuff all goes together: the rise of strong central elites that curbed the rapaciousness of local elites, the advancement of technologies that permitted economies of scale (including economies of scale in taxation!), liberal democracy, (relatively) free trade, bourgeois virtues, cosmopolitanism, &c. We know what the ingredients in the stew of prosperity are, but our experiences with misadventures in foreign aid suggest that we don't understand how to repeat the recipe's instructions.

Economic growth and all the good things it brings enjoys one and only one proximate cause: trade. Trade happens thanks to production, which is cradled by hammocks of trust strung between the palms of The Law growing in the grove of peace. Extend the metaphor as you see fit. It might be interesting to posit changes to some of the parameters of the general equilibrium and imagine what might happen. Perhaps fortunately, there's no shortage of parameter adjustments to choose from. Many of them sit nestled in comic book universes.

That's right, I want you to consider euvoluntary exchange in the Marvel universe.

Consider first what capital accumulation means in a world where the Incredible Hulk goes on periodic urban rampages. It's a bit of an error to treat these incidents the way you might treat other existential threats like earthquakes or floods. Yes, port cities (especially in the Pacific Rim) are at risk of tsunami, but this risk is a function of geological instability, whereas the risk of HULK SMASH comes exclusively from the probability that Bruce Banner happens to run into a gang of toughs on or about Skid Row. In the Marvel universe (Silver Age or later anyway, and I'm not getting into Gray Hulk or any of the other side stories), cities are at risk simply from being cities.

One way to think about cities is that it's just another technology. It's a technology that permits euvoluntary exchange by lowering the cost of doing business and by offering a wider range of consumption opportunities for residents in a much smaller geographical area. Take a stroll through Lower Manhattan the next time you find yourself in the Big Apple. Ask yourself how far and wide you'd have to go in Oklahoma (apologies to our cousins at Cherokee Gothic) to find the same array of goods on offer. Superheroes and their nemeses raise the relative price of this technology, suggesting that over a sufficiently long time horizon (thanks, Second Law of Demand), folks would substitute away from cities, perhaps indulging in exurban sprawl and investing more in high-quality, hardened communications networks. Extremely dense cities like Hong Kong and Singapore would likely never have arisen.

Why think about any of this? Well, the analog to the X-Men shooting eye beams all over LA is any overpowered organization with no overarching agent to keep it in check. As municipal police forces become increasingly militarized, or city councils more confiscatory, they become less distinguishable from a rampaging Incredible Hulk. It's worth pondering what some of the possible outcomes might be. What's more euvoluntary: to redirect police effort away from no-knock raids in support of the War on Drugs Peaceful People Who Use Drugs, to hobble the tax-and-regulation crony capitalism of local political elites, or to retool the organization of society towards a canvas of elite enclaves, middle class exurban sprawl, and impoverished city centers? The answer seems obvious to me: restrict the scope of state action to what it's good at and you'll have more opportunity for euvoluntary exchange. But what do I know? I'm a DC fan and I live in the 'burbs.

NGO PBJ

I caught a bit of a piece on NPR about a project in Haiti to combat malnutrition. There's a process for making enriched peanut butter that provides high-quality protein (this means that the protein contains all the essential amino acids, a rarity in plants) and enough lipids and glucose for basic nutrition.

So a charity organization called Meds and Food for Kids (MFK) builds a processing plant in a little town on the North Coast of Haiti, Cap-Haitien. Another charitable organization, Partners in Health (PiH) also builds a factory, this one bigger and up in the highlands where the peanut farms are. Both of these ventures are quasi-private, supported by charitable donations. Both NGOs insist on buying local peanuts, despite higher prices, using similar reasoning underpinning most locavore movements (keeping the money in the community or something).

Most economists would agree that this is inefficient, but opinions might be split on whether or not the inefficiency is tolerable. The Duflo argument that poverty and malnutrition retards growth opportunity is compelling and Haiti is well-known as a development basket case. Foreign businesses in Haiti have a storied history of being charged with exploitation, so this is an interesting test case for euvoluntary intuitions.

Since MFK and PiH are quasi-charitable orgs, how do you imagine wealthy westerners would react if Rosefield Packing Co Ltd would open a for-profit venture on the island? Suppose that this firm, which has been making peanut butter since 1933, produces the peanut paste at lower cost, using its international supply chain. Would it be euvoluntary or would folks cry exploitation once again? In equilibrium, what would the BATNA be? Bear in mind that MFK is already complaining that the PiH plant is threatening their operation. How would Skippy change the moral landscape?

Bio-Mechanic

Last week, one of our readers (or perhaps simply someone who ran into one of our posts on sweatshops) contacted me with a link to a rather chilling infographic. In it, we find rather awful tales of environmental damage, poor working conditions and industrial carnage. This in service of the consumer electronics market (though I must wonder to what extent the switchgear and server hardware production process differs, if at all), suggesting that it is the wealthy West's unslaked thirst for electronic geegaws that is responsible for these terrible, unseen consequences. Indeed, this non-euvoluntary market is rife with uncompensated externalities (chiefly, it seems, in the form of environmental damage and poor working conditions).

In the past few days, I've been slowly mulling over the externalities argument. The GTM claims that condition #4 is "no uncompensated externalities". I have no cause to gainsay this, but I would say that there's an interesting lacuna in the development of shifting to a manufacturing-based economy where many externalities are not merely uncompensated, but uncompensatable. Liquidity and credit constraints, restrictions on Foreign Direct Investment and even political barriers prevent firms from internalizing all the costs of production.

All is not lost however. One stylized fact from economies that have successfully transitioned to a more modern economy (Madagascar, Taiwan, heck, even the US in the 19th Century) is that as wealth grows, these restrictions ease. Workers want healthy, safe workplaces, well-educated kids (who may or may not prefer cheese) and clean natural environs. They get wealthy by producing stuff other people want, then trading with them. All that awful, non-euvoluntary production, left unhampered by (usually well-intentioned) meddling will transform, as a matter of empirical regularity, into something more closely approximating the euvoluntary markets we all love.

I might be willing to lend a conditional exception for extractive industries as described by Acemoglu, Johnson and Robinson, but that's a topic for another day.