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Munger’s Technology 3.0: Time for a Cool Change

Book Review

By Leslee Kulba- “I need to drive screws in some wood furniture I’m assembling. I open an app on my smart phone and tell the app, “rent drill.” A car – I don’t know where it is, and I don’t need to – picks up a drill that matches my pre-programmed preferences from a hardware store.

Munger is probably best known in Western North Carolina for his debate on Matt Mittan’s WWNC show. Munger was running as the Libertarian candidate for governor.

The car delivers it to a security-coded pod outside my apartment. My phone vibrates: “drill delivered.” I assemble the furniture and return the drill to the pod. The pod is smart; its software is connected through the “Internet of Things,” and the pod tells another car – no particular car, just whomever is nearby, according to the software – that there is a pickup.

So begins Tomorrow 3.0, a book by Duke University professor of economics and political science Mike Munger. Munger is probably best known in Western North Carolina for his debate on Matt Mittan’s WWNC show. Munger was running as the Libertarian candidate for governor. He and Pat McCrory accepted Mittan’s invitation to debate, but Beverly Perdue declined.

Years later, Mittan would remark he continued to hear people say that was the best debate they had ever heard.

Tomorrow 3.0 considers the current technology shift, which Munger believes is on a par with the Industrial Revolution, from a philosophical perspective with implications for public policy. The preface begins with a legend about Dwight Eisenhower, who, as president of Columbia University, in lieu of choosing between Alternatives 3C and 4B, postponed laying sidewalks.

The next year, sidewalks were laid democratically, where the students had trampled with their feet. The moral of the story was that government should facilitate a people’s achievements rather than playing Procrustes.

Another reason city councils err in planning for the future is people don’t know they want new technology until they experience it. “If I had asked consumers what they wanted, they would have said, ‘Faster horses!’” surmised Henry Ford. Early adopters will always be outvoted by people familiar with existing technology. That’s why Bird, uninvited, drops hundreds of scooters on the sidewalks. It gives people a chance to experience the advantages of something new before, as Munger puts it, “the umpire strikes back.”

Granted, existing businesses will be threatened any time something consumers prefer hits the market. That’s how innovation works. Already, local hoteliers and neighborhoods have organized to demand restrictions on Airbnbs, and cabbies have complained that Uber drivers don’t have to deal with the regulatory hassles they do.

Munger recalls how the buggy lobby got laws on the books that required a man with a red flag to walk in front of any self-propelled vehicle. One law approved by the Pennsylvania legislature but vetoed by the governor actually would have required the driver of an automobile chancing upon livestock to stop, disassemble the vehicle, and conceal the parts behind bushes until the animal was pacified.

The technological revolution, for those who haven’t noticed, is the shift to the Uber-for-everything model. Munger explains it as the perfect storm of all-pervasive, pocket-sized, portable cellphones using Internet technology to connect buyers and sellers. A generation ago, it made sense to purchase a drill – or an outboard motor – and store it in a facility constructed better than most homes in the world for $200 a month, even though most drills are only used about 30 minutes in their entire lifetimes.

One might post a card on a community bulletin board and wait; but even then, concerns over the trustworthiness of either party would have to be taken seriously. If somebody got lost transferring the drill, they’d have to go home and wait until the other party picked up the phone and make other arrangements. Now, it’s second nature to find an item (Amazon), trust the vendor (online reviews), send money (secure payment with stored account information), and arrange delivery (Uber).

Munger observes the new wave of entrepreneurship is capitalizing not as it has traditionally done on making new and better things, but on reducing transaction costs for unused capacity. Manufacturing jobs will attenuate, the workweek could contract, but renting on-demand what must now be purchased should gift people a higher standard of living. Things still manufactured should be of a higher quality because it will be in owners’ best interests to foster strong relations in their rental communities.

“The most important aspect of entrepreneurship [is] imagining an alternative future, creating something at the risk of destroying parts of the current reality,” writes Munger; and, “The logic of markets selling reduced transaction costs to commodify excess capacity is irresistible.” Leadership should ask if their policies are protecting the railroad or getting people and things where they need to be.

[ED NOTE: Munger found it amusing that the reviewer had been trying unsuccessfully for about a month to obtain a hard copy of Tomorrow 3.0 from a bricks-and-mortar store.]

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