BTW, one of the main drivers of deflation is productivity improvement. This device has the potential of cutting energycosts well over 90%.
As I said that drives deflation.
Previously you'd buy the raw materials for a dollar; sell the product for two dollars; and walk off with a one dollar profit. Under a deflationary regime you have a product on the shelves that cost you one dollar. The price has fallen to 20 cents. You will take an 80 cent loss on every product you sell ~ which gives you an aggregate loss of expected income of $1.80 per product item.
Imagine what it's doing to the supply chain, and as you go out of business you no longer order the raw materials to make new items.
This happened in the lead in to the Great Depression as well. One of the big drivers in that one was the replacement of belt-driven systems operated from a central coal powered steam plant to on site electric motors hooked up through copper wire to a larger and more efficient power grid or to an on site generator. Half the jobs in factories disappeared in about 2 years (some think as little as 1 year for major industries).
By the 1960s you had operations in automotive plants that had originally required 1,000 men reduced to a couple of dozen men (with one of those guys being the low paid fellow who pulled grates off the steel shavings pits, and then climbed down in there and shoveled them out ~ I know that job well ~ took another 20 years to automate it).
The elimination of jobs in the production of goods is taking place now faster than ever ~ to the point where energy costs are almost as consequental as labor costs. This new device (if it works) will whack energy costs faster than labor costs can drop. In the end all the stuff is Free and you'll get your money for nothin' (courtesy Dire Straits).
The entire history of the Industrial Revolution consists of eliminating jobs by making production more efficient.
This allows the workers who are displaced to shift into producing other things, which then themselves become cheaper.
In 1800, Britain, the wealthiest country on the planet, had per capita income roughly equal to that of many African countries today.
We may hit some tipping point where the system stops working, but it hasn’t happened in over 200 years, other than for brief periods.
True, but costs would also be dropping at the same time for all things. So your sales price will be cut, but so will the cost to produce. Other marginal things that are too energy intensive would be possible, like water purification and desalinization. Things can be located now where they are closest to raw materials, not where they have a sufficient grid to deal with the capacity. Higher quality products and novel processes would now be profitable where they aren’t now. The lesser costs from energy savings. would cascade thru the system.
Yes, wages would be a problem as they are not elastic, especially in unionized industries. Still I think there would be an increase in purchasing power, and make more labor intensive industries far more profitable.
Debt would also be an issue if revenue drops. That would be the biggest factor is the challenge it would present to the financial system. There would be a great many losers but many many winners too.
Your government in DC will be more than happy to ad tax to whatever your new machine creates in energy. Obama was right? It takes government spending and taxing to keep the economy afloat? Yikes..Who would of thought it?
You are really missing something that I thought was obvious.
Human beings don’t like to work, they like to play. There is nothing magic about work and jobs. We work by necessity to live but also to provide as much free time as we can afford.
So when a technology comes along that will reduce the amount human work and capital that is necessary for survival it will be embraced by the human race.
Less work, more play.