The price of personal freedom is dropping

Unless you live in a wifi-proof cave, you probably know that Google’s launching a phone. But unless you’re at least modestly nerdish (sign: you obsess over the best way to sync files between devices), you may be paying less attention to the subtext and implications. Google’s phone will likely be sold unlocked, meaning no contracts necessary. It will also have wifi, meaning you can access the web—and, importantly, Google Voice, Skype and other voice services—from home and the growing number of free wifi hotspots around the world. Better yet, with white space wifi becoming a reality, and big tech players supporting its use for subscription-free wireless plans, you could have free internet and phone calls everywhere. (Rumors are that Google’s new phone can work with white space frequencies. We’ll likely know more January 5.)

Just another tech story? Not if you’ve been following the bigger story, as described brilliantly in  the book Free by Chris Anderson. When (not if) free wireless and free voice calling become a reality, it will eliminate yet another common cost for the wealthy and—if, as planned, made widely accessible—provide unprecedented information access for the poor. My current cell phone plan costs about $75 per month, my current internet plan about $30, and my current home phone about $30 as well. (I’ll leave aside the rationale for each—it’s complicated.) That’s about $135 a month, or $1,620 per year. I’m fortunate to have a well-paying career, but to someone making about $10 minimum wage in Toronto, $100 a month is equivalent to 120 hours of work per year—or about three weeks of labor.

Such rapid deflation—let’s call it “freeflation”—is unprecedented. Economists worry about deflation because dropping prices mean that people postpone purchases, and postponed purchases slow economic growth and trigger or exacerbate recessions. Fortunately (for economies, but not necessarily individuals), prices usually go up. That’s particularly the case with scarce resources like oil: if supply shrinks but demand remains steady or rises, prices go up. An oversimplification to be sure. But one thing’s certain: runaway inflation’s bad, but deflation—under traditional economic models—can be equally so.

But freeflation? There’s no real precedent for what we’re experiencing. In just a few years, we’ve seen the price of access to encyclopedic knowledge drop from thousands of dollars to free, making that knowledge both universally accessible and more comprehensive. There are parallels throughout information technology, communications and publishing. Everything Midas touched turned to gold. Everything the internet touches, it seems, turns to free. And rather than postpone purchasing decisions, free speeds consumption. But consuming information doesn’t diminish it; rather, it usually creates more information.

From computers to couches

The reasons underpinning freeflation have been well-documented by people like Anderson and, while he more rarely discusses the economic implications, Ray Kurzweil. Basically, everything digital seems to follow a type of Moore’s Law. Computer processing power doubling every two years (or so) is the most well-known phenomenon. But data storage now appears to be at least doubling annually, a phenomenon sometimes referred to as Kryder’s Law. That means around 2020, you’ll be able to purchase 14 terabytes of data for $40, enough to hold about 3.7 million high-resolution photos.

But you probably won’t purchase that storage. Why? Because it’s equivalent to $2.86 a terabyte, and there are undoubtedly better ways to monetize that storage than charge you for it directly. (One of them is advertising, which is what Google uses to subsidize its free offerings.) And while these monetization strategies might carry some cost—like how advertising steals some of your attention—most of us will be okay with it, as we are now.

Certainly, some might argue that I’m ignoring very real physical requirements, like houses and food and heat and clothes and transportation. And, right now, these indeed remain costly. The point isn’t that everything will, immediately, become free. The point is that the trend for many things, and pretty much everything that gets digitized, is towards free. And this trend is not confined to information products alone. Information products—first text-based, then still photography and audio, now video—came first because they were the most amenable to digitization. But we’re also increasingly seeing the facilitation of free by information technology, through services like Craigslist (which allows people to easily give away free products and services), CouchSurfing (which allows people to find and offer free accommodation for travelers) and PickupPal (which allows people to offer and hitch free rides to get to those couches).

Next up is almost certainly energy production; solar panels, as Anderson points out, are like the circuits we’ve become so good at improving exponentially. Make energy an information technology and it, too, should ride a curve of increasing efficiency. In fact, Google is working directly in this area because—due partly to the increasing cheapness of hardware—energy is one of its biggest costs. And while it’s likely further down the line, 3D printers (which you can now buy—watch this and blow your mind) and molecular manufacturing promise to essentially make the entire physical world information technology, due to the fact that the plans for physical goods will be distributed as information, with many plans likely developed and distributed as openly and freely as Wikipedia.

While I’m interested in the technological aspects of these changes, I’m also intrigued by the social implications. After all, freeflation promises not just a bounty of free products and services, but also a potential bounty of free time due to less need for moneymaking labor. I’m by no means predicting “the end of work” or some information technology-spawned utopia. But I do think drastic social changes are inevitable, and that the potential for creating happier lives—built not around increasingly available (and hence decreasingly scarce and valuable) material stuff, and more around the social connections, experiences and pursuits that truly make us happy—is at least a possible, and definitely a desirable, outcome.

Call me when it happens and we can discuss.

No charge.