My article explained why airships could transform the freight market and offered my thoughts on how they should be designed and operated. Airships feature a tantalizing scaling property—the bigger they get, the better they perform. If you want a cargo airship that can compete in transpacific cargo, it needs to be big. No one in the industry was doing what I thought needed to be done—targeting the intercontinental cargo market with a large, rigid-body airship as quickly as possible using an iterative, hardware-rich approach.

Perhaps surprisingly, my airship article resonated with a lot of people. Veritasium made a great video based on it that has racked up 3.5 million views so far. Because so many people read the post and watched the video, I feel that I now must come clean and admit that I got something wrong. I aspire to be 100% accurate in all my posts, so I regret the error.

But I don’t regret it that much, because it turned out great.

One of the thousands of people who read my airship article was an engineer named Jim Coutre. Jim began his career at SpaceX, where he worked on complex multidisciplinary systems like the stage separation systems on Falcon 9 and the solar arrays on the Dragon capsule. He also spent several years at Hyperloop, where he rose to become chief engineer.

After reading the article, Jim started a spreadsheet in March 2023. He was methodical. He worked through all the systems that would be required to make an unmanned cargo airship work, and put cost and performance bounds around them. He devised a feature set to address cargo loading and unloading. He made manufacturing cost estimates. He did all the technoeconomics that were missing in my post.

Jim only found one major discrepancy. In my article, I noted that freight service operates in three tiers—ship, truck, and plane, or basically, slow, medium, and fast. There are no bridges across oceans, so on transpacific routes there is only slow and fast. There was an opportunity, I argued, to introduce a medium-speed mode at truck-like prices. Airships could be that medium-speed mode with truck-like economics.

The problem is that today’s air freight service is not as fast as I had assumed. You can cross the Pacific in a plane in less than a day. You can pay for parcel service that will get you your package in 2 to 3 days. But for air freight service, end-to-end delivery takes a week or more, involving multiple parties: in addition to the air carrier and freight forwarder, at both the origin and destination, there is a trucking company, a warehouse, a customs broker, and an airport. Each touchpoint adds cost, delay, and the risk of theft or breakage.

Once you account for all these delays and costs, the 4 to 5 days it takes to cross the Pacific on an airship starts to look pretty good. If you can pick up goods directly from a customer on one side and deliver them directly to a customer on the other, you can actually beat today’s air freight service on delivery time.

This changes everything. Since airships are, after all, competitive with 747s on delivery time, you can earn the full revenue associated with air freight, not just the lower trucking rates I had assumed. Cargo airship margins, therefore, can be much higher than I had realized.

Today’s 747 freighters have almost no margin. They operate in an almost perfectly competitive market and are highly sensitive to fuel costs. They simply won’t be able to compete with transpacific airships that are faster end to end, less subject to volatile fuel prices, and operating with cushy margins. A cargo airship designed to compete head to head in the air freight market could take the lion’s share of the revenue in the air cargo market while being highly profitable.

Last year, Casey Handmer introduced me to Jim, with and for whom he worked at Hyperloop.1 I got to know Jim a bit. We met up in person at Edge Esmeralda in June—he presented at the Hard Tech Weekend there that Ben Reinhardt and I co-organized. We talked about airships a lot. We strategized. We initiated some customer conversations. We received validation.

Over the summer, Jim incorporated Airship Industries. He hired a team of cracked ex-SpaceX engineers. And he raised a large pre-seed round, in which I’m delighted to say that my syndicate (which you should possibly join) is the largest investor.

Airship Industries is designing its vehicle to dominate transoceanic air freight. It checks all the right boxes. It shortens end-to-end freight delivery time. It lowers freight handling costs, delays, and breakage. It’s highly profitable on a unit basis. It lowers fuel burn and carbon emissions by 75 percent without any sustainable fuel breakthroughs.2

In my last airship article, I expressed some doubt that cargo airships were startupable. Airship development and certification is capital intensive. I thought and still believe that airships can very likely match the economics of trucks. But even if you succeed at building a great cargo airship, if you are limited to charging trucking prices, the margins will be very thin. No one wants to invest a lot of capital in a risky endeavor for thin margins. But if, as I am now convinced, operating margins could be huge by competing directly in the air freight market, then airships are definitely startupable.

Here’s another way to look at it. Many software investors eschew hard tech startups because of their capital intensity, but it’s hard to deny that huge returns are possible in hard tech: just consider SpaceX. Bring me another SpaceX! the reluctant investors might say.

But even SpaceX looks like small potatoes next to an industry like global logistics. For a Falcon 9-sized investment, instead of revolutionizing a $2 billion/year (10 years ago) commercial launch market, you could transform a market that is at least 30 times bigger, with similar unit economics to SpaceX.

I am thrilled to see Airship Industries take shape. It’s happening. There will soon (soon in the grand scheme of things at least) be thousands of giant airships crossing our oceans, transforming global logistics and connecting economies. Cargo airships are going to be big.

“A society does not ever die ‘from natural causes,’ but always dies from suicide or murder—and nearly always from the former.” — D. C. Somervell.1

À propos of nothing, I have found myself wondering recently what it would be like to live through a collapse. Would I see it coming? What would be the signs?

A number of times in human history, a society has gone from a relatively high level of sociopolitical complexity to a much lower one—rapidly, within the span of a few decades. This is what we will call collapse. Collapse manifests as a lower degree of social differentiation and economic specialization, less centralized control, less behavioral control, less investment in art and monuments, a lower flow of information within society, less sharing and trading of resources, a lower degree of social coordination and organization, and territorially smaller political units. And a lot of people probably starve, if they don’t meet more violent ends.

Collapse is a fate that befell at least the Western Zhou empire; the Harappan civilization of the Indus Valley; medieval Mesopotamia in parts of the Abbasid caliphate, including the Anarchy at Samarra; the Egyptian Old Kingdom; the Hittites; the Minoans; the Mycenaeans; the Western Roman empire; the Olmecs; the Lowland Classic Maya; Teotihuacan, Monte Albán, and Tula in the Mesoamerican highlands; Casas Grandes in northern Mexico; the Chacoans in what is today New Mexico; the Hohokam in southern Arizona; the Eastern Woodlands civilization, including the Mississippians centered on Cahokia in today’s East St. Louis; the Huari and Tiahuanaco in Peru; the Kachin of highland Myanmar, who oscillated between complex and egalitarian social forms as described by James C. Scott; and the Ik of northern Uganda, who have simplified society to such an extent that they allegedly reject familial bonds, although this has been disputed.

Collapse has happened often enough that it is not likely to be a series of flukes, but a general feature of human social organization. Not every society eventually suddenly collapses; it may be the case that when one does it is because some particular conditions obtain. What are those conditions? Can we come up with a general explanation? And while the subject is interesting as a pure matter of social science, we all want to know: could it happen here?

The GOAT on the topic of collapse is archeologist Joseph Tainter. His 1988 book The Collapse of Complex Societies weaves together historical and prehistorical fact, an insistence on explaining the cross-sectional variation, rigorous theorizing including an embrace of marginal analysis, and generally great social scientific judgment.2 It is a tour de force. If you want to understand why it has lived rent-free in my head for the last few months, as several friends can attest, read on.

Why complexity?

If we’re going to understand why societies sometimes spontaneously simplify, we must first have a solid theory about why they become complex in the first place. In both a historical and analytical sense, simple human societies arise first. These simple societies are highly egalitarian and non-hierarchical. Why do they move toward greater hierarchy, stratification, inequality, and complexity?

There are broadly two views on this question. One view is dominated by class conflict. The state reflects domination and exploitation based on divided interests. A ruling class coercively subjugates the population out of greed and selfishness. Marxists are not the only exponents of this view, but they are perhaps the most vehement, viewing society as sharply divided between workers who engage in social production and elites who appropriate the output. Of course, subjugation of subpopulations happens—American slavery is a gruesome example. The pure class conflict view is that subjugation explains the entirety of society, which is composed of ruling elites and subject populations.3

At the other end of the spectrum are integrationist or functionalist views, which are based on shared interests between members of society. Even an egalitarian society is going to face problems, and many of these problems are most readily addressed by creating some form of hierarchy and social division of labor. For example, limited water resources may require the creation and maintenance of an irrigation system, including the need to mobilize and direct labor. The threat of invasion may require the establishment of military defense, including a command and control system. In general, society faces some problem, which requires the creation of public goods, which requires the creation of administrators, who are rewarded for realizing the benefits of centralization. Complexity solves social problems and serves population-wide needs.

Tainter adopts a moderate position, one that leans integrationist but also includes a role for class conflict. Complexity in society does exist to solve problems and provide benefits to the populace. And yet, “compensation of elites does not always match their contribution to society, and throughout their history, elites have probably been overcompensated relative to performance more often than the reverse.” Public choice considerations mean that even if complexity arises to solve broad-based social problems, the ultimate distribution of the benefits can be influenced by greed and power. “Integration theory is better able to account for distribution of the necessities of life, conflict theory for surpluses.”4

Although the distribution of the social surplus is not always fair, in what follows, the role of complexity in society as a problem-solving mechanism is what is most important. Without this foundation, collapse is no big deal, or good, or perhaps it is even the ascension of society to a Marxist anarcho-primitivist Utopia. We can sympathize with this view when true subjugation is occurring, while recognizing that, in the general case, complex society exists to solve social problems.

Collapse theory

There are many non-general or underspecified theories of collapse. Tainter goes through these exhaustively, but I’ll run through a few of them that deserve special mention.

1. Depletion of a vital resource. These explanations are popular with environmentalists, and feature strongly in books like Jared Diamond’s Collapse (which came out 16 years after Tainter’s). Tainter has contempt for depletion arguments as a causal mechanism, because, as we have just discussed, the complexity of society exists to solve problems including resource depletion. What about all the times that resources are effectively stewarded? Is it not true that for most resource/society/time period combinations, societies do just fine in not collapsing due to resource depletion? Depletion arguments don’t explain the cross-sectional variation, why sometimes societies effectively manage resources and other times they don’t. “If a society cannot deal with resource depletion (which all societies are to some degree designed to do) then the truly interesting questions revolve around the society, not the resource. What structural, political, ideological, or economic factors in a society prevented an appropriate response?”

2. Insufficient response to circumstances. Suppose a society is faced with a problem, perhaps depletion of a vital resource. Not responding to the problem can lead to collapse. But why does this insufficient response occur? Often, historians have argued that a society is a lumbering dinosaur, a runaway train, or a house of cards—static, incapable of changing directions, or fragile. While these theories rightly recognize that collapse depends more on the characteristics of a society than on its stresses, they too do not explain the cross-sectional variation. After all, societies sometimes do respond to serious problems in dynamic, agile, and robust ways. What explains why they would suddenly stop doing that?

3. Elite mismanagement. To some extent, exploitation and misadministration is a normal feature of hierarchical societies. Even if we take a class conflict view, shouldn’t elites, if they are even slightly rational, view the support population as a vital resource? If so, then the problem becomes the same as in the “vital resource” explanation given above. If we blame elite greed and self-aggrandizement, why should we assume that this is variable, and if it is variable, how can we explain it? Again, allegations of mere elite mismanagement do not explain the cross-sectional variation.

Tainter discusses many other theories, and holds particular contempt for decadence theories of collapse, which are common in the literature, but which he considers mystical and non-scientific.5 They too do not explain the cross-sectional variation.

So what does explain the cross-sectional variation? Tainter develops a theory based on diminishing marginal returns. Diminishing marginal returns are ubiquitous in economic analysis and indeed in life. The first bite of a pecan pie is sublime; the 20th may be cloying. The same principle operates in countless domains. The exceptions are usually temporary, yielding increasing returns to scale over some range, but eventually succumbing to diminishing returns. Tainter argues that there are diminishing returns to complexity itself.

Society adds complexity to address problems and stresses. In an American context, this is easy to understand. When drugs are unsafe, we increase the stringency of FDA review. When federal projects are too polluting, we pass the National Environmental Policy Act. When there is an oil shock, we create a federal Department of Energy. Terrorist attack? Department of Homeland Security. Financial crisis? CFPB.

This added complexity accumulates. As it does so, it requires resources—Tainter emphasizes energy and fiscal resources6—to maintain. Often, the resource demands of one piece of complexity necessitate more complexity, as when a higher tax rate necessitates new resources to be put into legitimization and coercion. The complexity accumulates as a system. At first, the cost-benefit ratio of this added complexity is very favorable, and the marginal benefits are high. As more complexity is added, the marginal benefits diminish, then go to zero, before turning negative.

A society that is past complexity level C2 on the graph above is in a very precarious position. Many members of a society at C3 would rather be at C1, although there is no direct path there because, as just noted, the complexity itself behaves as a system. As Tainter puts it, “when the marginal cost of participating in a complex society becomes too high, productive units across the economic spectrum increase resistance (passive or active) to the demands of the hierarchy, or overtly attempt to break away.” He emphasizes that this can be equally true across the income spectrum; everyone from the peasants to the merchant class to the nobility will be tempted to defect from the current system. “A common strategy is the development of apathy to the well-being of the polity.”

The situation can spiral out of control quickly. An overtaxed peasantry may put up little resistance to invaders. Increasing costs can make public services unsustainable. An increasing share of resources may have to be devoted to legitimation and control. The economy weakens. The ability or desire to meet new challenges evaporates. Collapse is only one new problem away.

According to Tainter, collapse can temporarily be prevented by the acquisition of a new technological capability or energy subsidy. With the additional resources afforded by the technology or subsidy, societies can support a higher degree of complexity. I think Tainter’s graphical representation of this point gets it wrong, but the image below from Ben Reinhardt accurately captures how I envision it.

Even this possibility, however, does not change the logic that the returns to complexity eventually diminish and go negative. If a society keeps increasing its level of complexity, it will inevitably get to a point at which the population would prefer less complexity.

Let’s think about the Roman Empire

Although Tainter tests his theory against all cases of societal collapse, he goes in depth on three cases. I will focus in particular on one of these, the case of the Western Roman Empire, since it apparently features so prominently in the minds of so many.7

Under the Republic, Rome had a policy of expansion, which may have been driven by internal needs, like a lack of opportunity for many citizens at home. Conquered territories were looted. Conquest paid for itself. Expansion provided so many resources that, during the late Republic, direct regular taxation of Roman citizens in Italy was abolished. “In 167 B.C.” explains Tainter, “the Romans seized the treasury of the King of Macedonia, a feat that allowed them to eliminate taxation of themselves.” And “after the Kingdom of Pergamon was annexed in 130 B.C. the state budget doubled.”

Tainter views the initial looting of newly conquered territories as an energy subsidy. After all, the economy was mainly agricultural, and agricultural products are basically stored sunlight. The treasure that was looted in each new conquest was the conversion of many years’ worth of agricultural products into other forms of wealth, and you can still view it as embodied energy to some extent. Yet the seizure of many years’ worth of accumulated sunlight, so to speak, cannot be matched by taxation of annual agricultural output, one year’s captured sunlight. The energy subsidy continues only as long as expansion does. Meanwhile, the administration costs of an expanding domain increase at least in proportion to the size of the controlled territory, and likely faster.

Under the Principate, the empire began to feel unwieldy. Expansion slowed and eventually halted. Claudius conquered Britain, and Trajan conquered Dacia, but Hadrian ended expansion and gave up recent conquests in the Middle East. The slowdown and reversal of expansion affected the Empire’s finances. After the initial looting of newly conquered territories, regular tribute and taxation were imposed, but these did not yield the same resources for the Romans as the accumulated treasure brought home in the initial conquest. This reduction of revenue created fiscal problems for the Emperors, who needed to pay for the military, the administration of the Empire, public works, and a hefty public dole.

The fiscal situation briefly stabilized under Antoninus Pius, but, under his successor Marcus Aurelius, new stresses surfaced, including 15 years of plague and wars with Germanic tribes. Commodus and Septimius Severus continued the policy of currency debasement of the denarius that had been initiated as far back as Nero. This naturally resulted in inflation, which continued through the 200s, by the end of which the currency was thoroughly debased. The economy was in shambles. To a considerable degree, Rome reverted to a non-monetary economy: Aurelian conscripted tradesmen to build the walls around Rome, and Diocletian collected taxes in the form of supplies directly usable by the military instead of in money. 

Although some of the early years of the Principate were relatively stable and prosperous, without a continued energy subsidy from expansion, the Emperors felt the weight of the Empire’s complexity. This came to a head in the Crisis of the Third Century, during which the Empire almost collapsed.

Under the Dominate, established by Diocletian, the Empire increased its degree of authoritarianism. This staved off collapse, at the cost of requiring an increase in social complexity. The sizes of both the military and the civil administrations doubled. Taxes were crippling; rates had to go up to account not only for increased spending but also because the tax base was shrinking. The Empire instituted rigid control of individuals and their output. A system of serfdom was imposed to prevent peasants from abandoning the land. Many occupations became hereditary, with soldiers’ sons required to be soldiers, and so on.

This increase in authoritarianism in the Dominate illustrates Tainter’s point that the complexity of a society increases as a system. The choice facing Diocletian and his successors was to collapse or to intensify social control. Each intensification of social control required yet more social complexity, for example systems of coercion to enforce compliance. The burden of it all continued to grow.

This growing complexity and its negative marginal returns resulted in apathy and defection:

“Contemporary records indicate that, more than once, both rich and poor wished that the barbarians would deliver them from the burdens of the Empire. While some of the civilian population resisted the barbarians (with varying degrees of earnestness), and many more were simply inert in the presence of the invaders, some actively fought for the barbarians. In 378, for example, Balkan miners went over en masse to the Visigoths. In Gaul the invaders were sometimes welcomed as liberators from the Imperial burden, and were even invited to occupy territory.”

We therefore come to Tainter’s conclusion that “the collapse of the Roman Empire in the West cannot be attributed solely to an upsurge in barbarian incursions, to economic stagnation, or to civil wars, nor to such vague processes as decline of civic responsibility, conversion to Christianity, or poor leadership.” Rather, the collapse was due to a high and increasingly costly level of social complexity. 

Minor objections

A few quibbles.

Tainter published his book in 1988, and many of his background assumptions about the state of the world no longer hold. This is particularly true regarding energy. In the 1980s, like today, there was concern about transitioning away from fossil fuels, but the rationale was somewhat different—people were concerned that the oil was running out.

In a world that is running out of fossil fuels, there is a close parallel to the end of Roman territorial expansion. Just as Roman conquests yielded many years of accumulated solar energy as loot, fossil fuels represent millions of years of accumulated solar energy. If the Romans couldn’t manage the shift from accumulated surplus energy to real-time energy harvesting without escalating complexity to the point of negative marginal returns, so too might we fail to make that transition. “A new energy subsidy is necessary,” writes Tainter, “if a declining standard of living and a future global collapse are to be averted.”

In 2024, however, this does not seem like a serious problem. We are not running out of fossil fuels. Advances in fracking mean we have plenty of them for the foreseeable future. Rather, the problem is a more mundane (though still concerning) one of resource management, where the resource in question is our atmosphere and oceans. We still have to transition away from fossil fuels because of climate change, but this is a governance problem of the kind we have faced before, as when we globally banned ozone-depleting substances. Climate change is a more costly problem than the hole in the ozone layer, but structurally, in Tainter’s framework, it is different from the end of an energy subsidy.

In 2024, we also have energy tools that did not exist in the 1980s. Solar panel and battery prices have fallen by 97+ percent since 1988. The same drilling and subsurface engineering improvements that have driven down the cost of oil and gas in the shale fields could also make geothermal energy viable basically anywhere. After all, geothermal works in Iceland, and everywhere is Iceland if you drill down deep enough. And, of course, clean nuclear energy has existed since the 1950s, although in terms of construction costs the industry has experienced negative learning since the 1970s.

The problem for the energy transition is not the loss of an energy subsidy, but rather that the accumulated complexity makes it expensive and slow to deploy the clean sources. Obstacles like the National Environmental Policy Act and the Nuclear Regulatory Commission are a much more significant problem than lack of technology. With current and soon-arriving technology, we could have much more energy abundance than at any time in human history. Industrialists like Casey Handmer believe we will soon have enough clean energy to end water shortages in the Western US and produce non-crustal hydrocarbon fuels at scale.

If we are not as committed as Tainter is to the modern analogy to fossil fuels running out, then there is less need to frame the historical collapse discussion in terms of energy subsidies. Although energy is a critical resource, it is not the only one. Simply thinking of the problem in terms of resources in general is adequate, without any loss of power for the underlying theory.

Separate quibble: Tainter believes in declining marginal returns to basically everything, including research and development. This puts him firmly in the mainstream in innovation economics, echoing recent papers like Benjamin Jones on the “burden of knowledge” and Bloom et al. on ideas getting harder to find. These are all good economists, and I have no real quarrel with their empirical work narrowly construed, but I think much of the interpretation is wrong.

Availability of new ideas has a funny relationship with economic growth. As Jason Crawford has noted, ideas were very easy to find in the Stone Age. Modern humans went over 200,000 years without inventing the wheel. These were people who were biologically identical to us. They lived in a completely stagnant economy with no increase in GDP per capita from generation to generation. Once discovery started to happen, it built on itself exponentially. New ideas made it easier to find new ideas. Growth surged.

Moreover, even today, it’s clear that some technologies enable new discovery paradigms. Computing and molecular biology come to mind. A single graduate student in biology in 2024 can sequence genomes, edit them, and create novel organisms—activities that enormous teams of scientists with huge budgets could not do a few decades ago. It’s a golden age. Perhaps LLMs too will enable smaller and less-experienced teams to achieve bigger breakthroughs than what was possible before. There are many respects in which the burden of knowledge is lower today due to abstraction or gains from trade. Most computer programmers no longer really need to know how computers work, which was not true in the past.

Instead of diminishing marginal returns to innovation, I think it’s much more plausible that Tainter’s accumulated complexity is behind slowing rates of both economic growth and measured research productivity. I’ll have much more to say about this in the future, including some arguments I am not deploying here, but for now I just want to flag that my enjoyment of Tainter’s book does not imply endorsement of his analysis of innovation.

My final quibble is that Tainter appears too eager to portray collapse as a logical choice.

“To the extent that collapse is due to declining marginal returns on investment in complexity, it is an economizing process. To a population that is receiving little return on the cost of supporting complexity, the loss of that complexity brings economic, and perhaps administrative, gains. Again, one is reminded of the support sometimes given by the later Roman population to the invading barbarians, and of the success of the latter at deflecting further invasions of western Europe.”

Collapse, in other words, is bad for most elites and of course for modern historians with a “civilizationist” bent. But it can be good for the support population, many of whom are peasants involved in primary food production, who are relieved of the crushing weight of administrative bloat after a fresh societal collapse. Maybe the majority of people can be better off.

While I appreciate the anthropologist’s value neutrality, this seems unlikely to me. One reason is raised by Tainter himself: “One ambiguity in this view is the major loss of population that sometimes accompanies collapse. The Maya are a classic case in point. How advantageous can the Maya collapse have been if it resulted in major population loss?” He argues that it’s possible that depopulation may have preceded the Mayan collapse, or that the population may have migrated to the surrounding area.

Maybe. Regardless of the specific evidence on Mayan depopulation, I suspect that just as the complexity of a society grows as a system, it collapses as a system. There is no reason to believe that simplification stops at the optimal point. In my mind, there is a family resemblance to financial contagion. Financial crises have macroeconomic effects that are out of proportion to the initial shocks or failures. Even if we believe that a particular financial firm deserves to fail, that doesn’t mean there will be no innocent victims, because the financial system contracts as a system. Similarly, supply chain difficulties during the pandemic, although minor in the grand scheme of things, gave us a taste of what bigger shocks could look like. They look like they would spill over into even larger disruptions. It may be in peasants’ interest for society to decomplexify to some degree, but once the process gets rolling, it may continue beyond the point where they benefit.

Thankfully, Tainter is clear that a collapse today would not be so rosy as he maintains past ones were. “Collapse for such [highly industrialized] societies would almost certainly entail vast disruptions and overwhelming loss of life, not to mention a significantly lower standard of living for the survivors.” In part, this is because “much of the population does not have the opportunity or the ability to produce primary food resources.”

More generally, we might say (Tainter does not) that many more people today are in some sense elites because their livelihoods are a product of social complexity, even if they are not government administrators themselves. If you have to quit your job as an ML researcher to become a primary food producer, that sounds bad, no matter how severe the tax burden is and even if you have the knowledge and skill to succeed at food production. I’d be disappointed not to be a Chief Economist anymore, but I don’t think they have those in simple societies. Even the 1.4 percent of the labor force that is involved in agriculture works in a highly mechanized and globalized way, dependent on global supply chains for access to tractors, fuel, and fertilizers as well as markets for their products. The productivity hit they’d take from collapse would be enormous. In the modern world, we all have a stake in not collapsing that greatly outweighs, say, our tax burdens. If we collapse, it won’t be rational.

Relatedly, Tainter points out that the nature of collapse would be different in the modern era. At our point in history, there are no isolated states. We have not had any collapses of individual states in Europe since the fall of Rome, because any collapsing state would be quickly taken over by one of its neighbors. Europe, and virtually the whole globe, is fully spanned by complex societies. Because members of these “peer polity systems” do not wish to be invaded, they “tend to evolve toward greater complexity in a lockstep fashion as, driven by competition, each partner imitates new organizational, technological, and military features developed by its competitor(s).”8

As a product of its time, some of this analysis is driven by Cold War dynamics. But it seems correct, especially if Pax Americana is in doubt, that countries are forced by defense and geopolitical considerations to complexify as their neighbors do. The world today is one system. Tainter doesn’t focus too much on supply chains, but they would bolster his argument. Imagine that global trade in a few basic commodities like oil and fertilizer broke down. A lot of other production would halt as producers starve to death or otherwise lack the resources to continue. This would collapse other trade linkages. The conclusion is a scary one. “Collapse, if and when it comes again, will this time be global. No longer can any individual nation collapse. World civilization will disintegrate as a whole. Competitors who evolve as peers collapse in like manner.”

Application to current conditions

“The people desire disorder.” – The Book of Poetry

Can we apply Tainter’s ideas to contemporary America? It’s unsettling to do so, but we must. It’s hard to disagree with a few propositions that, with collapse theory in mind, should give us pause.

Sociopolitical complexity is high. I’m not the only one who thinks so. Here’s Steven Teles from 2013:

“In recent decades, American politics has been dominated, at least rhetorically, by a battle over the size of government. But that is not what the next few decades of our politics will be about. With the frontiers of the state roughly fixed, the issues that will define our major debates will concern the complexity of government, rather than its sheer scope.

“With that complexity has also come incoherence. Conservatives over the last few years have increasingly worried that America is, in Friedrich Hayek's ominous terms, on the road to serfdom. But this concern ascribes vastly greater purpose and design to our approach to public policy than is truly warranted. If anything, we have arrived at a form of government with no ideological justification whatsoever.

“The complexity and incoherence of our government often make it difficult for us to understand just what that government is doing, and among the practices it most frequently hides from view is the growing tendency of public policy to redistribute resources upward to the wealthy and the organized at the expense of the poorer and less organized. As we increasingly notice the consequences of that regressive redistribution, we will inevitably also come to pay greater attention to the daunting and self-defeating complexity of public policy across multiple, seemingly unrelated areas of American life, and so will need to start thinking differently about government.”

Nicholas Bagley, 2021:

“Inflexible procedural rules are a hallmark of the American state. The ubiquity of court challenges, the artificial rigors of notice-and-comment rulemaking, zealous environmental review, pre-enforcement review of agency rules, picayune legal rules governing hiring and procurement, nationwide court injunctions—the list goes on and on. Collectively, these procedures frustrate the very government action that progressives demand to address the urgent problems that now confront us.”

Moreover, we often choose more complex solutions for public choice reasons. If we had instituted even a conservatively estimated carbon tax in the 1990s, we would be three decades into leveraging the power of the market to drive investment in clean technologies—this seems like it would have worked out well and been relatively simple.9 But a carbon tax was not popular with the public and it burdened many special interests, so we relied instead on an enormous and farcical patchwork of regulations, incentives, and mandates to drive the energy transition. Special interests like the incentives, even if they would also, as clean energy producers, do well under a carbon tax. While subsidizing clean energy production, we continue to restrict its supply through burdensome permitting rules. A carbon tax coupled with permitting reform would be both simpler and more effective than what we have today.

For Rome, currency debasement was a sign of fiscal stress arising from excess complexity. In the United States, seigniorage revenue is not as fiscally important as borrowing is.10 The debt data is worrisome. CBO estimates the federal government will run a deficit greater than or equal to five percent of GDP basically forever, rising to over nine percent of GDP by 2054, when federal debt held by the public will equal $146.3 trillion. Narrow questions of affordability are beside the point—Japan has a much higher debt-to-GDP ratio, so it’s reasonable to believe that we are not in any immediate danger of a default. The more serious issue is that, like Rome, our political system seems to be incapable of bearing the short-term pain of spending cuts or tax increases.11

Complexity in the American system feels like a one-way ratchet. We add but we do not often subtract. Tainter’s contention that sociopolitical complexity grows as a system seems correct in the American context.

Our economy is stagnating. American total factor productivity growth, the broadest and best estimate of economic growth, has stagnated since around 1973.

The brunt of stagnation has not been evenly distributed. The rapid increase in computing power over the past 50 years has made software developers, who are complements to computing power, valuable. Doctor salaries are doing fine, driven by medical supply restraints. White collar professionals like investment bankers continue to do well. It is the bottom half of the income distribution that has borne the burden of a stagnant economy.

If we look at, say, real pre-tax incomes in the second quintile, this group had essentially zero growth in pre-tax income between 2004 and 2022, while the top quintile had about 19 percent cumulative growth. The 2008 recession was deep for them. There are many caveats to be made—is pre-tax income the right metric,12 people do not stay in the same quintile throughout the life cycle, household sizes are changing, etc. Fine. It doesn’t change the basic idea that American stagnation has been highly uneven across the income distribution and has hit the bottom half harder than the top half.

There has been a wave of nihilistic populism. On both the left and the right, demagogues and useful idiots are tapping into the public's dissatisfaction and distrust of our political and social systems. On the right, I interpret this populist wave to be mostly non-cognitive. Do conservatives actually believe vaccines don’t work and that we should let Vladimir Putin roll over Ukraine? Do they really believe the 2020 election was stolen? Or do they simply like to espouse positions to antagonize liberal opponents? It seems that what they really demand is “not this.”

Among some on the left, there appears to be opposition in principle to enforcing laws against property crime. Defund the police, overthrow capitalism. October 7 denialism and Hamas apologia. This far-left populism is equally destructive as the right-wing version, and it is possibly less non-cognitive and more sincere.

Tainter says that when complexity reaches a high level, people start to defect by developing “apathy to the well-being of the polity.” With the caveat that neither Twitter nor college campuses are real life, at least for a subset of the population, we are far beyond apathy. Hostility is a better word.

We should consider the possibility that Tainter-style dynamics are at play. We have allowed a great deal of sociopolitical complexity to build up over the past several decades. We are deep into the range where the marginal value of complexity is negative, where it is inhibiting value creation more than it is solving problems. This has gone on for a few decades, yielding stagnation and resentment. Most elites, following the path of least resistance and mostly concerned for their narrow well-being, have done nothing to slow or reverse the buildup of complexity. At least some portion of the population would welcome the barbarians.

If Tainter’s theory is correct, America is a ticking time bomb.

ρ(doom,abundance) < 0

“Once a complex society enters the stage of declining marginal returns, collapse becomes a mathematical likelihood, requiring little more than sufficient passage of time to make probable an insurmountable calamity.”

Yikes.

Although most aspects of Tainter’s theory are persuasive and straightforward application to the contemporary United States is somewhat frightening, there are reasons not to panic. There are no modern industrial societies in Tainter’s data, and it’s not clear that the dynamics would be identical to what he proposes. New energy technologies are poised to create more energy abundance than we’ve seen at any point in history. And collapse can take a long time: “As seen in the cases of the Romans and the Maya, peoples with sufficient incentives and/or economic reserves can endure declining marginal returns for centuries before their societies collapse.”13

It’s fair to call the risk of American or global economic collapse speculative. When someone tells you to take extraordinary measures to address a highly speculative risk, beware.14 A happy coincidence is that we need not do anything exotic here. As it turns out, the set of policy actions one might take to stave off collapse is virtually isomorphic to the set one might take, on the flip side, to produce abundance.

We need earnest culling of net-harmful social complexity. We need new resource subsidies to become available through deploying new technology.15 We need to make it easier to deploy and iterate at scale. We need the government to act effectively and earn societal trust. We must eliminate low-value bureaucracy and procedure. We need to make sure that prosperity is widely shared, not only through transfers but in a primary income sort of way. The no-collapse agenda effectively is the abundance agenda.

There are plenty of reasons to prioritize an abundance agenda without resorting to concerns about collapse. While we are far from an elite consensus needed to drive change, there is already a cluster of people working on abundance, progress studies, and supply-side politics.16 A prosperous society is its own reward. I want to live in a world of material plenty and technological wonder.

And yet, at least for me (and maybe now also, by the end of this essay, for you), the risk of collapse provides some additional motivation. It’s not fear of imminent demise, but rather a clear-eyed understanding of the social dynamics. After studying collapse theory, we know better how the system works, and we know what needs to be done. Let’s go root out some low marginal-product complexity.

Another part of aviation that has suffered over the last half-century is general aviation, particularly its low-end segment, personal aviation, in which people fly themselves to their destinations instead of hiring a private pilot to do it. Aviation is simply not practical personal transportation today. Where, one might ask, is my flying car?

Lately I have become obsessed with the Federal Aviation Administration’s new MOSAIC rulemaking on light-sport aircraft. The agency’s proposed rule is smart, counterintuitive, and potentially transformative. If not literal flying cars, it could make personal aviation in general much more viable. It’s an action that deserves both applause and careful study.

The safety continuum

FAA is primarily a safety regulator. In 1996, in order to address perceived conflicts of interest after a handful of airliner crashes, Congress removed the agency’s authorization to promote the development of civil aviation, saying that safety was the highest priority. FAA takes its safety mandate very seriously. Importantly, consistent with Congressional direction, it doesn’t apply the same safety standards to all activities, but instead explicitly adopts a “safety continuum,” which is worth reviewing before we get to the content of the MOSAIC rule.

The safest form of aviation is on type-certified Part 25 airliners flying on Part 121 airlines by highly trained, licensed commercial airline pilots. The explicit safety target that FAA and other regulators have settled on is that catastrophic events should be “extremely improbable,” meaning one per billion flight-hours. The regulation of this kind of aviation is nothing short of maniacal. Consequently, it can cost billions of dollars to develop a Part 25 airliner through type certification.

Next along the safety continuum come type-certified Part 23 aircraft. These include most general aviation aircraft, and they can be up to 19,000 pounds of maximum takeoff weight and include seating for up to 19 passengers, although many of them are small four-seaters. To fly a Part 23 aircraft, you must have a private or recreational pilot’s license. In 2017, FAA modernized the Part 23 rules to be less prescriptive, allowing the use of consensus standards (most commonly, ASTM’s).

The third spot on the continuum are light-sport aircraft (LSAs). This was a category FAA created in 2004 to fill a spot on the safety continuum between Part 23 aircraft and experimental amateur-built aircraft. No type certification is required, but the aircraft must still be built according to consensus standards. Under today’s rules, LSAs are subject to a number of restrictions to limit the size of the category: maximum speed is 120 knots, maximum weight is 1,320 pounds, the aircraft can only have 2 seats, and it can be powered only by one engine, which must be reciprocating. If you only want to fly LSAs, you don’t need a full private pilot’s license. FAA created a sport pilot certificate that can qualify you to fly an LSA with half the flight training.

Next along the safety continuum come experimental aircraft. This is America. You can build any aircraft you like, and if you can build it, you can fly it, subject to rules designed to limit the risk to the rest of the airspace and people on the ground. You can also buy a kit aircraft from a manufacturer and build it yourself. These aircraft are not only not type certified, they are not necessarily built according to any particular standards. You must be at least a private pilot to fly an experimental aircraft.

Rounding out the unsafe end of the safety continuum come ultralights. It turns out that FAA is perfectly willing to let you kill yourself in a flying vehicle as long as that vehicle weighs less than 254 pounds and can’t exceed 55 knots, and you do it in the daytime and in an unpopulated area. You need zero pilot training, the aircraft doesn’t have to be registered, and it doesn’t have to be built according to any particular standards.

The safety continuum makes sense. US airlines carry hundreds of millions of paying passengers per year. Those passengers have high safety expectations, particularly because some of them feel out of control on an airliner in a way that they don’t in a car they’re driving or riding in.1 The airline business doesn’t work without a high safety bar. Furthermore, flying big vehicles poses a bigger risk to people on the ground, who are more likely to be harmed by a crash. It is worth reducing that externality through policy measures to ensure safety.

At the other end of the safety continuum, there are some pretty big benefits to allowing experimentation. The system of permissionless innovation under which the Wright brothers worked is directly responsible for us having aviation at all. We made rapid progress in the early days of aviation by sacrificing a lot of test pilots. Even today, new aviation technology often starts out in the experimental and light-sport world and works its way up to airliners over time as safety regulators figure out how to certify it as safe. Composite materials are one example—they were used in experimental aircraft for decades before the 787 became the first majority-composite airliner.

Another benefit of the safety continuum is that it provides an onramp for aviation engineering. Let’s say you were starting a company to build airliners. You could have trouble finding engineers with Part 25 experience—you might have to hire them away from Boeing or Airbus. But fortunately, it’s relatively easy to find engineers who have built experimental or Part 23 aircraft before. The Part 25 rules are more strict, but the basic principles of aviation engineering are the same no matter the size of the plane. If the lower end of the continuum were not there, Part 25 development would suffer.

For contrast, consider nuclear regulation. Although NRC is currently doing a supposedly risk-informed rulemaking for advanced reactors, it doesn’t really operate according to a safety continuum. Texas A&M has an on-campus reactor that produces 5 watts of thermal energy—similar to a chemical hand-warmer—and that reactor is nevertheless licensed as a utilization facility under the same framework used for all research and energy-producing reactors. This heavy regulation means that few new reactors are being built, which in turn means that if you are starting a new nuclear company, you’re going to have mostly engineers who have never built a nuclear reactor of any kind before. This lack of space for experimentation, as I discussed with Last Energy CEO Bret Kugelmass recently, is one reason for stagnation in the nuclear industry.

Less safe is more safe

There are two ways—one relatively obvious, one counterintuitive—that less stringent safety rules along the safety continuum can make us more safe over time.

Let’s start with the obvious one. If the compliance costs of safety regulation get too high, it will shut down iteration and innovation in the industry. These innovations include safety enhancements. After all, pilots and passengers generally want, other things equal, to be safe, so an unfettered free market will deliver cost-effective safety-improving innovations over time. It’s possible by some lights that the market will not produce the optimal amount of safety at all relevant margins, and so regulation persists. Yet everyone should recognize that there is such a thing as overregulation.

FAA does recognize this. The graphic below comes from a document in which they explain the safety continuum doctrine. “If certifcation [sic] requirements and oversight are overly stringent,” they write, “safety can be jeopardized because the burden of certification will prevent the adoption of safety enhancing technologies.” It’s hard to get more clear than that.

There is second way that less rigorous safety standards can improve safety, one that is more paradoxical or at least counterintuitive. FAA can adjust the boundaries of the different points on the safety continuum. If through deregulation it can increase the attractiveness of being in a safer part of the continuum, it can increase overall system safety while in a static sense only decreasing safety standards.

Amazingly, FAA explicitly recognizes this too, and is now through the MOSAIC rulemaking expanding the light-sport category in a deregulatory manner to induce pilots to upgrade their spot on the safety continuum from experimental to light-sport.

Since the 2004 rule, light-sport category aircraft have shown a lower accident rate than experimental amateur-built airplanes. The FAA considers that the successful safety record of light-sport category aircraft validates certification requirements established in the 2004 final rule and provides support for expanding the scope of certification for light-sport category aircraft and operations. As a result, the FAA identified this proposed rule as an opportunity to expand the 2004 final rule to include a wider variety of aircraft, increase performance, and increase operating privileges to extend these safety benefits to more aircraft. The FAA intends for these expansions to increase safety by encouraging aircraft owners, who may be deciding between an experimental aircraft or a light-sport category aircraft, to choose aircraft higher on the safety continuum and, therefore, meet higher aircraft certification requirements.

The data they are referring to are below. The y-axis measures the number of fatal accidents per 100,000 flight-hours. TC/Personal refers to Part 23 (type certified) aircraft used for non-commercial personal purposes. EAB is experimental amateur-built, and SLSA stands for special light-sport aircraft. These kinds of aircraft are all used by similar people and for similar purposes. The SLSA data is more volatile because of a low number of flight-hours compared to the other categories, but in most years, experimental aircraft are about twice as deadly as light-sport aircraft.

There are about 6 times as many EAB flight-hours as SLSA flight-hours, so if we move a large chunk of the EAB activity to SLSA, it could result in a net reduction in aviation fatalities, holding total flight-hours constant. To induce people to upgrade their spot on the safety continuum from experimental to light-sport, FAA needs to make the light-sport category more attractive, and boy are they delivering on that.

MOSAIC could be transformative

Modernization of Special Airworthiness Certification (MOSAIC) is the name of the new rulemaking initiative from FAA to expand the definition of light-sport aircraft. As discussed above, the explicit goal here is to make the new category so attractive that many recreational pilots switch from more dangerous experimental amateur-built aircraft to light-sport aircraft that are designed according to consensus standards. The changes are sweeping. Let’s walk through the relevant sections of the NPRM to see how FAA is expanding the category.

Additional Aircraft Classes

Under current rules, light-sport aircraft explicitly exclude helicopters and powered-lift aircraft (e.g., tilt-rotors and eVTOL aircraft). MOSAIC proposes to allow any kind of aircraft to be considered a light-sport aircraft if it meets the other criteria. This means we could see helicopters and eVTOLs come to market under light-sport rules—designed under consensus standards and not type certified.

It doesn’t mean that sport pilots would be allowed to fly all of these new light-sport aircraft. MOSAIC is decoupling the definition of light-sport aircraft from sport pilot privileges (that is, sport pilots cannot necessarily fly all light-sport aircraft by default). By doing this decoupling, FAA can be aggressive in deregulating the vehicles (not requiring them to be type certified) while being more cautious about expanding the privileges of pilots. Sport pilots can expand their privileges through additional ratings, although a rating does not necessarily exist for every aircraft considered an LSA.

To fly light-sport helicopters, sport pilots would have to get a helicopter rating, which they could only get for a helicopter that has simplified flight controls, about which more below. No rating would initially exist for light-sport powered-lift aircraft. FAA says this area is rapidly developing, and it expects that future rulemakings could expand privileges to cover these aircraft. This means that a two-seat eVTOL aircraft could come to market as an LSA, but you’d still need to have a private pilot’s license to fly one initially.

Maximum Takeoff Weight

MOSAIC would allow light-sport aircraft to not be so light. Current rules limit LSAs’ maximum takeoff weight to 1,320 pounds, except for seaplanes, which get to be up to 1,430 pounds. Under the new rule, FAA is scrapping the weight requirement entirely. The agency notes that other requirements like maximum stall speed implicitly limit the weight of aircraft, so perhaps LSAs will top out at around 3,000 pounds.

From a safety perspective, they also argue that a weight limit is counterproductive. It discourages a more robust airframe design. It results in more jostling during turbulence, which could increase pilot workload. And it could preclude the installation of additional safety equipment like ballistic recovery systems. Under MOSAIC, then, LSAs will be able to about double in size and be safer as a consequence.

Maximum Airspeed in Level Flight

Another big change is to maximum cruise speed. Current light-sport rules limit LSAs to 120 knots. The MOSAIC NPRM notes that even student pilots, who are less experienced than sport pilots, are allowed to go faster than that. Furthermore, there is no evidence that there is a safety benefit from such a low speed limitation. “FAA has not noted any definitive data that links cruise speed as a contributing factor in accidents involving light-sport category aircraft.” Consequently, FAA is more than doubling the LSA speed limit to 250 knots.

Relatedly, current LSA rules require aircraft to have fixed landing gear. With the speed limit more than doubling, that no longer makes sense as it would wildly increase drag at cruising speeds. Under MOSAIC, FAA will allow LSAs to have retractable landing gear. It doesn’t link that change to higher speeds, but I think it’s only logical that if you are allowing 250 knots you have to allow retractable gear. Sport pilots would require an additional rating to operate retractable landing gear, since it’s important to remember to extend the landing gear before you land.

Maximum Stalling Speed

The other speed limit that is relevant is the clean stall speed. Under today’s rules, LSAs must have a stall speed of no more than 45 knots. MOSAIC proposes to raise this limit to 54 knots for airplanes only. Stall speed is relevant because it affects the speed at which an aircraft comes in for a landing. Since kinetic energy increases with velocity squared, this is a parameter that affects the amount of energy involved in a landing accident. FAA says that since the creation of LSAs in 2004, there have been 501 landing accidents involving an LSA, and only 7 of them were fatal. Consequently, there is room to go up from 45 knots.

While an increase to 54 knots is welcome, this is one of the few parameters in the MOSAIC rule that could generate some objection from stakeholders, who will want it to be higher still. If it were increased to the low 60s knots, the category could include planes like the forthcoming Pipistrel Panthera.

Maximum Seating Capacity

Another instance of decoupling of sport pilot privileges and aircraft specifications is passenger capacity. Today’s light-sport rules limit everything to two seats (the pilot plus one passenger). MOSAIC would allow airplanes (but not other kinds of LSAs) to be manufactured with up to four seats. Sport pilots would still be limited to transporting one passenger. This is consistent with FAA taking aim at four-seat experimental airplanes flown by non-sport private pilots, trying to make it attractive for private pilots to “upgrade” their spot on the safety continuum to a standards-based aircraft. Undoubtedly, a lot of sport pilots will comment on this change, asking to be allowed to also carry additional passengers rather than flying with empty seats.

Engine and Motors

Under today’s light-sport rules, LSAs are limited to a single reciprocating (piston) engine. What this has meant in practice is that turboprops are not allowed. MOSAIC eliminates this limitation, prescribing no limit on the number or type of powerplant on the aircraft. FAA justifies this elimination by noting that modern turbines are simpler to operate than piston engines because of fancier firmware on the turbines.

While a turboprop LSA sounds awesome (a mini PC-12, anyone?), this change allows far more than turboprops. A big movement in the eVTOL space is distributed electric propulsion. While batteries aren’t good enough to yield good range yet, there are a lot of advantages to electric motors—simplicity, fast spin-up, reliability. Distributed propulsion also yields redundancy and noise reduction.

Without a limitation on propulsion technology, there is no rule stopping a manufacturer from using a turbogenerator and using it to power a slew of electric motors. It’s up to the market to figure out whether something like this would be practical, but FAA rules won’t stand in the way.

Simplified flight controls

This is the part where my jaw hit the floor. MOSAIC makes specific provision for “simplified flight controls.” In today’s airplanes, pilots have direct control of flight surfaces and available power. Imagine if instead of moving flaps and rudders you could just tell the airplane to turn left. You could fly it like in an arcade game. The aircraft would be responsible for keeping itself in a safe flight envelope, and it would take suggestions from the pilot as to what to do.

FAA is non-prescriptive about what simplified flight controls could look like. The requirements if manufacturers want to opt into simplified flight controls are that:

1. The pilot cannot directly control flight surfaces or engine power.

2. The aircraft is designed to prevent loss of control regardless of pilot input.

3. The pilot has a means to discontinue the flight safely and quickly (triggering an emergency landing, return to starting point, course change, or a holding pattern).

These flight controls could range from arcade-style controls to full self-piloting. Because these simplified controls would vary from model to model, FAA is proposing a model-specific endorsement for pilots who wish to fly any aircraft with simplified flight controls.

Here’s your flying car

After World War II, expectations for general aviation were sky high. The war had driven significant advancements in aeronautics, navigation, and communication technologies. There were a large number of military surplus planes and a lot of trained pilots returning from the war. For someone alive in 1945, who had perhaps witnessed the social transformation wrought by the automobile, it would seem only natural that general aviation would be the next step in personal transportation.

Of course, it didn’t play out that way. The government significantly tightened certification requirements for general aviation in 1945 and 1965. With the market flooded with cheap, surplus military aircraft, it was hard for manufacturers to make money investing in new, more advanced models. And, of course, piloting an airplane using conventional flight controls is not as simple as driving a car, requiring significantly more skill, with lapses in attention more catastrophic.

If general aviation is to make a comeback, something like the MOSAIC rule is a prerequisite. By making a category of aircraft that doesn’t require type certification, is actually useful for transportation (250 knots and 4 seats), and can be flown with less skill via simplified flight controls, FAA is opening the door to a bigger market and vastly more innovation.

Without the need for type certification, manufacturers can iterate on their designs more rapidly without going through the costly supplemental type certification process. They can include cheaper uncertified avionics. They can do over-the-air software updates.

Meanwhile, simplified flight controls and making LSAs actually useful could greatly increase demand for these aircraft as transportation. That increased demand feeds directly into manufacturing investment and the pace of iteration. The more progress there is in making these small planes really great, the more the demand for them will increase, creating a flywheel effect.

If we can get LSAs into mass manufacturing, production costs of the airframe could go down further. Mass manufactured items tend toward the cost of inputs. Aviation manufacturing entails more burdensome supply chain integrity requirements than other industries, so LSAs will likely never get as cheap as a Toyota Camry despite having similar mass, but it could be a smaller multiple of the cost.

In the near term, I’d love to see a MOSAIC aircraft that had the following:

• 4 seats

• 200+ knot cruise speed

• Distributed electric propulsion (maybe vectorable) powered by a turbogenerator and small battery for buffer and reserves

• 1000 nmi range

• STOL capability to maximize versatility. DEP helps with this, and you have to have low stall speed anyway

• Ultra-simplified controls including autopilot and autoland

• Starlink on board for passenger connectivity, over-the-air avionics updates, and maintenance monitoring

• Weight-saving and performance-improving technologies like ethernet-based addressing of actuators instead of more traditional fly-by-wire

• Active turbulence reduction

• A ballistic recovery system

This is the kind of aircraft that could draw people into flying, kicking off the flywheel of innovation and making personal aviation relevant again.

Two cheers for FAA

One reason I wrote this post is because I wanted to publicly praise FAA for such an innovative and thoughtful action. FAA’s longstanding safety continuum philosophy makes eminent sense, and with MOSAIC they are applying it with rigor and insight. This rulemaking will indeed, over time, make general aviation safer, both by increasing safety innovation and by inducing experimental pilots to upgrade their spot on the safety continuum. This is the public sector operating at its finest.

Although I have nothing but applause for the civil servants behind the MOSAIC rule, the policy change also makes a darker point about the history of general aviation in the United States. There’s nothing magical about the current moment that makes it the right time to expand the class of aircraft that don’t need to be certified. If it is the right policy now, and it is, then it was likely the right policy decades ago. If we had never introduced type certification into four-seat aircraft, we could be in much better shape today. Our present stagnation in general aviation is a direct result of 70 years of the wrong policy choices being made by FAA and its predecessors. There are many other areas, both within aviation and in the economy overall, where we are similarly making the wrong policy choices. If we want both safety and prosperity, we need to root them out.

The comment period for the MOSAIC rulemaking closes on January 22, 2024. It will take several months after comments close for the rule to be finalized and take effect. When it does, we’re going to have to throw a big party.

The simulator is a small chamber made of 20-cm thick concrete blocks. From the outside of the door, which housed four subwoofers and four midrange speakers, protruded wires that supplied power and signal to the system. Inside the chamber there is room for only one person—sitting, not standing.

They have taken all possible measures to reduce acoustic resonance. A tiny window on the side is made of inch-thick plexiglass. The floor has thick carpet, the walls are covered with acoustical foam. Oh, and when the door closes, the chamber is airtight.

I am not very claustrophobic, but as I sat in the chamber, my mind alternated between musing about when I was going to run out of air and bracing myself for the boom. I gripped the arms of the chair. I had heard many times that sonic booms are not only loud, but startling.

When the boom finally came, I was most surprised by how mild it felt compared to the buildup. What they played for us was the sound of a boom emitted by an F-18 at cruise altitude. It was probably 100 PLdB, or around 85 dB(A), perhaps five decibels quieter than a Concorde’s boom. They also played a softened boom, of the kind future low-boom aircraft might produce, and it was indeed wholly inoffensive.

We used a different simulator as well, and saw some other acoustic equipment, and chatted with the NASA scientists. Then Matt and I said our thanks and goodbyes, walked into the parking lot, got into the rental car. Finally, we could speak privately. Even the loudest boom we heard, we both thought, was not that big of a deal.

Fifty years ago today, on March 23, 1973, Alexander P. Butterfield, the Administrator of the Federal Aviation Administration, issued a rule that remains one of the most destructive acts of industrial vandalism in history.

“No person may operate a civil aircraft at a true flight mach number greater than 1 except in compliance with conditions and limitations in an authorization to exceed mach 1 issued to the operator under Appendix B of this part.”

This text was slightly modified in 1989 and again in 2021, but the upshot remains the same. The rule imposed a speed limit on US airspace. Not a noise standard, which would make sense. A speed limit.

This speed limit has naturally distorted the development of civil aircraft. For fifty years, the aviation industry has worked to improve subsonic aviation. Commercial passenger aircraft are safer and more economical today than they were in 1973, but they are no faster.

The global airline industry brings in around $800 billion in revenue per year, but only a tiny fraction of the funds sloshing around the industry has been invested in supersonics, and only a minuscule sliver of those private investment dollars have gone toward low-boom designs that could make supersonics go mainstream.

If we had propagated the rate of growth in commercial transatlantic aircraft speeds that existed from 1939 to the mid-1970s, we would have Mach-4 airliners by now. But the overland ban put an end to all that. It made small supersonic aircraft, which need to fly shorter overland routes, essentially illegal, closing off the iteration cycle that could drive progress in the industry.

A sonic boom is caused by a shockwave that is similar to the wake of a boat. When a boat moves very slowly in the water, it doesn’t make a wake. As its speed increases, the disturbances it creates in the water pile up on each other, creating a shockwave. This shockwave propagates much farther than an ordinary ripple in the water. This difference between shockwaves and ordinary disturbances explains why you can hear a plane’s sonic boom at cruise altitude, but not its engine noise.

The analogy also corrects a misconception some people have about sonic boom, that it only occurs when an aircraft crosses the sound barrier. Like the wake of a boat, a shockwave is generated the entire time the aircraft is flying supersonic. However, an observer on the ground only hears the boom once, just as someone swimming in a lake only experiences the wake of a boat once as the boat passes by.

Unlike a boat, an airplane has wings and an empennage. Each appendage of the aircraft initially emits its own small shockwave. As the aggregate shockwave propagates from the aircraft towards the ground, all the overpressure bits of the shockwave migrate to the front of the waveform, and all the underpressure bits migrate to the back. This creates an N-like waveform that we experience like a rapid-fire double boom.

We know from research in sonic boom simulators and from dive maneuver studies that human response to sonic boom is driven almost entirely by the sharpness of the N-wave. If you could round the corners off the N-wave, slowing the rise time of the overpressure on the bow shock, you would have an extremely unobjectionable boom that just sounds like a regular noise.

NASA will soon be testing an experimental low-boom aircraft called the X-59. First flight is due this year. The aircraft is designed to have a cruise sonic boom in standard atmosphere of 75 PLdB or less across the boom carpet. With design margin, it may turn out to be even quieter than that.

Once the aircraft checks out, NASA will use it to start booming American cities again. The purpose of the program will be to gather data on human response to sonic boom. After two or three years of collection, the data will be analyzed and turned over to FAA and foreign regulators who participate in ICAO’s Committee on Aviation Environmental Protection, ostensibly to help design a sonic boom standard.

While I admire NASA’s work on X-59, we already know what the studies will say. 75 PLdB is certainly acceptable. We know this because, as NASA titled one report, there have been Six Decades of Research on sonic boom. In fact, since the report came out in 2014, there have now been Seven Decades of Research.

Some of the research was glorious, if ill-advised. In 1964, over a period of six months, the FAA dropped 1,253 sonic booms over Oklahoma City in a study known as, and I’m not joking here, Operation Bongo II. These were not baby booms. They were full-sized, unabated N-waves.

1964 was a different time, and the government was extremely bullish on supersonics. The US was soliciting designs for an American supersonic airliner to rival Concorde, with Boeing eventually winning the contract on January 1, 1967.

FAA, ever eager to bolster supersonic aviation, put a gloss on the findings from Operation Bongo II. “The overwhelming majority,” their contractor cheerfully wrote, “felt they could learn to live with the numbers and kinds of booms experienced during the six month study.”

This was true. About 73 percent of respondents said they could live indefinitely with the cumulative level of sonic boom experienced in the study. But about 3 percent of the population was vehemently opposed to the point of filing complaints.

Most recently, in 2018, NASA dropped 52 shaped booms on Galveston, TX over the course of 9 days of testing. They did this not with a low-boom aircraft like the X-59, but with an ordinary fighter jet using a nifty maneuver. The pilot would go some miles offshore and climb to an altitude around 50,000 feet. Then he or she would roll the aircraft into an inverted position and pull “up” into a vertical dive, pulling out to recover around 30,000 feet. The aircraft goes supersonic during the vertical dive, generating a sonic boom.

NASA had microphones stationed around the city, recording the waveform in several neighborhoods. I was in Galveston for one day of the tests, and on the day I was there, the measurements at different sites ranged from 65.5 to 89.7 PLdB. One of the booms, which we knew was coming due to NASA’s comms and me watching carefully on the FlightAware app on my phone, was completely inaudible. For one of the louder booms, I watched a fisherman on the pier. He was briefly startled but went back to fishing in under one second.

NASA surveyed Galveston residents based on both individual event exposure and cumulative daily exposure. For cumulative exposure, 17 out of the 2,041 daily responses reported being highly annoyed, which is less than one percent. Given that some people are annoyed by anything, you’re not going to do better than that.

So let’s say that NASA has robust data from X-59 on human response to sonic boom, more robust than what we have managed to collect over the last 70 years. They bring it to ICAO, specifically CAEP’s Working Group 1, which devises noise standards, in around 2025 or 2026. What happens then?

Most likely, nothing happens then. European companies like Dassault and Airbus don’t want to do supersonics and have no interest in competing with American companies who do. Regulators like France’s DGAC are completely in these companies’ pockets. Europe generally acts like a bloc within ICAO, and standards are made by consensus, so it will be like running into a stone wall.

ICAO formally decides new environmental standards at the full CAEP meeting, which occurs every three years. If data arrive in 2025 or 2026, Europe can easily stonewall for two to three years to prevent a new standard from being developed by the CAEP meeting in 2028. They can do this either by arguing for a standard so stringent that nobody can meet it, or by correctly noting that a standard should normally be developed not only based on human response data, but also on verified commercial aircraft performance data, which do not exist yet.

Suppose a standard is developed at ICAO by 2031. Great, now every country can take it home and implement it. Before the FAA can formally adopt the new ICAO standard, it will need to do an Environmental Impact Statement under NEPA. EISs can be challenging in any circumstance, but for supersonics it will be especially hard because aviation will be one of the last sectors to decarbonize. Even if companies are using synthetic, net-zero fuel, the aircraft will still be burning liquid hydrocarbons, which raises emissions relative to creating synthetic fuels and, say, storing them underground. Environmental groups will inevitably sue, potentially delaying the standard beyond the EIS preparation time.

If we’re lucky, we’ll have a sonic boom standard implemented in the United States by the late 2030s.

There is a better way. Congress could repeal the supersonic ban this year in the FAA reauthorization act. I have proposed text along these lines:

Until such time as the Administrator creates standards that allow routine civil supersonic operations in the United States, civil supersonic operations shall be allowed in the United States provided that the aircraft's empirically determined or analytically predicted mean cruise sonic boom on the surface directly beneath the flight track is less than 90 PLdB for daytime operations or 80 PLdB for nighttime operations.

I think this proposal is very clever, if I do say so myself. It would change nothing overnight, because no aircraft that can do a cruise boom less than 90 PLdB exists.

What it would do is signal to the aviation industry that America is open for business. It’s time to build new low-boom aircraft. Manufacturers would start working on new designs, knowing that when they are ready to be certified there won’t be any further obstacles.

Furthermore, although my proposed interim standard is fairly permissive, airframers would likely aim for a boom lower than 90 PLdB. Reducing the boom through aircraft shaping causes increased drag and thus increased fuel burn, but the effect is nonlinear. I expect that airframers would set their sonic boom levels to be around the kink in the curve, perhaps, for a medium-sized airliner, around the low 80s in PLdB.

Ultimately, FAA would replace this interim standard, and it would do so based on the aircraft in operation. If it turns out that a lot of aircraft are operating at around 82 PLdB, that’s probably where FAA will draw the line. The first non-interim standard could also be more complex, using Mach number or aircraft weight as a correlating parameter. Today, heavier aircraft are allowed to be louder on takeoff and landing, and it makes sense for correlating parameters to be used in sonic boom standards as well.

I’m struck by the fact that American economic growth went off the rails in 1973, the same year the overland ban on supersonic flight came into force. The speed limit cannot be responsible for the entirety of the Great Stagnation, of course. The cumulative amount of missing growth is comparable to the entire economy, not to the size of the aviation industry. The numbers don’t add up.

Yet, the ban is not unrelated to economic stagnation. To borrow a term from Ross Douthat, there is something decadent about putting a complete halt to the development of a key technology simply because a few otherwise harmless sonic booms might annoy a vocal minority. With boom-shaping technology we know is possible, a tiny vocal minority. The cultural forces that led to and sustain the ban have certainly halted other progress.

We need to get back to doing great things. In an FAA-sponsored paper that came out in 1972, perhaps a last gasp of virtue before decadence set in, Prof. Ronald Kohl evaluated how to reduce sonic boom using focused laser beams to create a “phantom body.” He modeled a Mach-2.7, 600,000 pound aircraft and concluded it would take a 420 MW laser. If only we could have such nice things.

Fifty years of boomless skies is more than enough. If we want growth—if we want greatness—it’s time to make America boom again.

A lot of people think that the Zeppelin era ended merely because the Hindenburg erupted into flames in front of newsreel cameras, killing 35 of the 97 people on board in the inferno.

While the 1937 accident certainly didn’t help, the writing was already on the wall for passenger airship service. In the late 1930s, airplanes were finally getting good. The DC-3, which is still technically in service today, was introduced in 1936. By 1939, you could cross the Atlantic in less than a day on Pan Am’s Boeing 314 Clipper. And after World War II, the Lockheed Constellation, with its pressurized cabin, 5,400-mile range, and 340-mph cruise speed took over the transatlantic market.

Passenger airship demand was headed to zero no matter what. Airplanes won because they were faster.

But there is another market that is not as sensitive to speed: freight. A shipping container doesn’t suffer detrimental health effects from sitting for hours on end. It doesn’t complain about yet another airplane meal. It doesn’t feel gross if it doesn’t get a shower. It doesn’t get bored on a long flight.

Could airships make a comeback serving the freight market? The idea is compelling, but it faces serious obstacles. Along with my friends Ian McKay and Matt Sattler, I have spent a lot of time thinking about how to make cargo airships work. Here’s what we think.

Airship scaling laws

The physics of airships are unbelievably seductive.

All aircraft are subject to four forces: thrust and drag in the direction of travel, and lift and gravity in the vertical direction. For an aircraft in steady flight, the vertical and horizontal forces are in balance.

A useful way to summarize the performance of an aircraft is via the lift-to-drag ratio.1 If an aircraft can generate more lift and/or produce less drag, the performance of the aircraft is higher.

For an airship, which gets lift from lifting gas (aerostatic lift) instead of from wings (aerodynamic lift), the amount of lift is proportional to the volume of lifting gas. The drag is proportional to some combination of cross-sectional area and wetted area—in any case, it increases with area.

The performance of an airship, therefore, is proportional to volume divided by area. As an airship increases in size, both the volume and the area of the airship increase, but the volume always increases faster than the area. The volume is a function of length cubed, while the area is a function of length squared.

This simple square-cube law means that, in principle, the performance of an airship gets better as it gets bigger. Forever.

If your airship performance isn’t good enough, just double it in size. The lift will increase by a factor of 8, the drag will increase by a factor of 4, and the lift-to-drag ratio will therefore double. Still not good enough? Do it again. 🤯

To do cargo airships right, we need to make the biggest flying objects ever created. A modern cargo airship would make the Hindenburg puny by comparison.

How big is the market for cargo airships?

The market for cargo airships is massive if they can match the economic performance of trucks. To show this, let’s first look at the domestic freight market. I’ll use 2019 data so that the analysis isn’t skewed by Covid.

According to the Bureau of Transportation Statistics, average revenue per domestic ton-km is about 83¢ for air freight, 11¢ for trucks, and 2¢ for water transportation (in spite of the Jones Act). These modes are not equivalent in terms of the time it takes to get your goods—if they were, we would expect water transportation, which is cheapest, to take the whole market. Air freight will get cargo to your destination the same day, trucks will take a few days, and ships will take longer.

What we observe under these conditions is that, domestically, most of both the tonnage and value of cargo is transported via truck. Trucks are neither the fastest nor the cheapest mode of transport, but they provide a great value proposition—you get your stuff in a few days for much cheaper than air freight.

In the international market, the situation is different.

First, the costs are different. Both air and water freight are cheaper internationally than they are domestically. According to Boeing, in 2019 the global air cargo industry carried about 264 billion revenue-ton-kms and earned about $106 billion in revenue. This works out to about 40¢ per ton-km, less than half the cost of US domestic air freight. International water transportation is also cheaper than domestic, perhaps around 1¢ per ton-km.

Second, some modes are missing because a lot of countries are not connected by land. Looking at US import and export data, and excluding Canada and Mexico where US roads, rail, and pipelines connect, water transportation has claimed the majority of both the tonnage and the value. Airplanes carry less than 1 percent of the tonnage but about 39 percent of the value.

What if we introduced a new international freight mode? Suppose that, like trucks, it could get you your stuff in a few days instead of in a month or more via container ship. Suppose also that, like trucks, it was several times cheaper than today’s air freight.

By analogizing the international market with the domestic market, it seems possible that many customers, perhaps the majority by both tonnage and value, would choose the new truck-like mode.

How big would the global market be? Eyeballing a chart from UNCTAD’s annual Review of Maritime Transport 2020, containerized international maritime trade is around 8 trillion ton-miles, or about 13 trillion ton-km (out of a total of about 96 trillion ton-km of total international maritime trade).

Let’s say airships captured half of the 13 trillion ton-km currently served by container ships at a price of 10¢ per ton-km. That would equal $650 billion in annual revenue for cargo airships, notably much bigger than the $106 billion Boeing reports for the entire global air freight market. If one company owned the cargo airship market, taking only half of only the container market, it would be the biggest company in the world by revenue.

How many airships would we need to fill that demand? A lot. If each airship can carry 500 tons, cruises at 90 km/h, and is utilized two-thirds of the time, that adds up to around 260 million ton-km per year per airship. To produce 6.5 trillion ton-km per year would require 25,000 such airships. This is about the number of airliners in the world today.

None of this analysis yet assumes any expansion of the market from normal growth, from the availability of a new service class, or from the ability to go point-to-point rather than shipping between existing ports. But it’s easy to imagine new trading patterns and even new companies forming because cargo airships exist. Just as Uber and Lyft massively expanded the vehicle-for-hire market, the added supply chain flexibility afforded by airships would stimulate new demand.

Airship engineering basics

Airships come in three flavors: blimps, rigid-body, and semi-rigid.

Blimps are basically balloons with gondolas and motors attached. Like a balloon, they are overpressurized relative to the ambient air in order for them to hold their shape. This means that the hull skin of a blimp is constantly in tension. The amount of tension increases with the size of the blimp, which means that blimps can’t scale in size forever. At some point the stress on the hull fabric is too great for the material. Alternatively, the hull fabric has to become so thick that the weight becomes a problem.

You can push this limit to some extent with exotic materials. For example, Lockheed Martin has a design for a blimp with a 21-ton payload that uses a kevlar-based material for the hull. This airship, called the LMH-1, is notionally only the first in a line of airships. Lockheed says they could go up to 500 tons with this design, due to the strength of their special fabric.

However, if you might want to go bigger than 500 tons, or if you don’t want to use exotic materials in your high-volume production line, you probably want a rigid-body airship. A rigid-body airship, like the Zeppelins of yore, uses a system of internal trusses to keep its shape. Inside the hull, there are a series of gas cells, basically big bags of a lifting gas like hydrogen or helium. Unlike a balloon, these gas cells are not overpressurized relative to the ambient atmosphere. If they were to spring a leak, they would not rapidly deflate like a balloon—they would instead slowly mix lifting gas with air at the point of the leak.

Nothing regarding the truss system or the gas cells suffers from scaling limits. If you want a bigger airship, you can just scale up the design, adding trusses where necessary. In fact, the weight of the structure decreases as a fraction of lift as you get bigger. This means that the performance of rigid-body airships scales better than square-cube. Gas cells also can scale, either because you can have bigger gas cells or because you can have more of them as the hull increases in size.

The downside of a rigid-body airship is that the minimum viable airship size is much bigger than for a blimp. The structure of the hull adds weight, so you need enough lifting gas to overcome that weight, which you don’t get until the airship is a decent size.

In between a blimp and a rigid-body airship is a semi-rigid airship. A semi-rigid airship is like a blimp in that there are no gas cells and the hull is overpressurized relative to the ambient atmosphere, but it does have some internal structure to provide support. The amount of structure is not as much as in a fully rigid airship, and therefore the weight penalty is not quite as high.

These days, the Goodyear “Blimp” is no longer a blimp at all, but rather a semi-rigid airship made by Zeppelin Luftschifftechnik GmbH, the company founded by Ferdinand von Zeppelin to make rigid-body airships. Is that clear?

Another airship design strategy that is trendy these days is to make the airship “hybrid,” meaning that it requires a combination of aerostatic and aerodynamic lift to fly, at least when it is fully laden. The hull itself is an airfoil that generates lift with forward motion. This allows the airship to lift more than it could with a given quantity of lifting gas, but it also means that the airship loses the ability to hover and station-keep. Like an airplane, it has to keep moving forward not to crash into the ground.

In this post, I am considering only rigid-body non-hybrid airships as a possible solution for the intercontinental cargo market. We want massive scale and we don’t want to lose the option to come to a stop and float.

Trade study for a 500-ton airship

To get a flavor for the performance of a cargo airship, we asked an extremely experienced aeronautical engineer to parametrically size an airship based on historical airship size and performance data. Our base requirements were as follows:

• Range: 12,000 km

• Payload: 500 metric tons

• Cruise speed: 90 km/h

• Assumed headwind: 15 km/h

• Lifting gas: helium, for conservatism

Our engineer came back to us with the following design outputs:

• Fineness ratio: 5

• Length: 388 m

• Diameter: 78 m

• Gas volume: 1,129,380 m³

• Gross weight: 1,051,362 kg

• Empty weight: 422,601 kg

• Fuel: 128,761 kg

• Cruise shaft power: 3,435 kW

This would be by far the biggest aircraft ever built.2 A gross weight of 1,051 tons is 64% bigger than the 640-ton maximum takeoff weight of the late Antonov An-225. A length of 388 meters is 58% bigger than the Hindenburg’s 245 meters. Lifting gas volume of 1,129,380 m³ is more than 5.6 times the Hindenburg’s measly 200,000 m³.

As our engineer cheerfully noted, the fuselage of the Airbus A380, the world’s largest passenger aircraft, would not be out of place on our airship as a gondola. It is only 73 meters long.

After sizing the vehicle, our engineer performed some trades, varying one free parameter at a time to see how it affects the other aircraft characteristics. Varying range scales the vehicle roughly linearly—if you want to increase the range to 15,000 km, you obviously need to carry more fuel, so the vehicle gets a little bigger and more powerful. For this 25% increase in range, you add about 2% in length, 5% in gas volume, and 4% in cruise shaft power. You also have to increase fuel by about 30%. All told, the 25% increase in design range reduces payload transport efficiency by about 3.5%.

The story is different when we vary payload instead of range. As I noted above, airships benefit from a square-cube law as they increase in size. Lift scales with volume and drag scales with area. This means that bigger airships are better, and smaller airships are much, much worse.

Let’s look first at how the length of the airship varies with payload. As you can see below, there is a steep penalty for reducing airship size. To carry a payload that is only 40% as large as our 500 tons, you still have to make the airship 77.5% as long. To carry a payload that is only 10% as large as ours, you still have to make one about 56% as long! Meanwhile, to add 60% additional payload capacity, you only have to increase the length by 15%.

How does this affect transport efficiency? It’s a massive effect. You reduce transport efficiency by 36% if you reduce payload by 60%, and you reduce efficiency by 65% if you reduce payload by 90%. On the other hand, if you increase payload by 60%, you get a 21% improvement in transport efficiency.

For airships, bigger is clearly better.

Another important parameter to look at is design cruise speed. When I initially started thinking about cargo airships, I thought it would make sense to take a cue from Hindenburg, which cruised at 125 km/h. As I will discuss below, maybe that is still the right choice, but even at that speed, you are on the wrong side of some unpleasant math.

The power needed to drive an airship is proportional to velocity cubed. Because the mission takes less time when the ship is moving faster, the total mission fuel required is proportional only to velocity squared. The net effect is that transport efficiency decreases quadratically with cruise speed.

Nevertheless, there are a couple of factors that still militate for a faster design cruise speed. I’ll discuss them in the next section.

Other cargo airship design considerations

Autonomy. If you’re taking a load of cargo across the Pacific Ocean on a multi-day journey, you can’t expect a single crew to be awake and on duty the entire time. Making the airship unmanned not only saves you crew salaries, it lets you delete a lot of crew support infrastructure on the airship—the bunks and galleys and heads. This saves weight, money, and complexity.

Cargo airships would probably be among the easiest vehicles to make unmanned. The sky is big and empty, but it’s especially empty over the ocean at the lowish altitudes, below airliners’ Class A airspace, where airships would fly. Even when you get over land and near landing facilities, airships are slow moving relative to other aircraft, so there is time for a remote pilot to take over if any off-nominal condition occurs.

Lifting gas. In our study, we assumed helium as the lifting gas in order to be conservative. As I’ve noted in a blog post for the CGO, current FAA guidance disallows the use of hydrogen as a lifting gas.3 Yes, hydrogen burns, and that can be hazardous, as the Hindenburg showed. But there were many, many horrible accidents in the early days of aviation, and we have dealt with the risks they uncovered through better engineering. In the last year or so, I have heard rumors of some European companies that want to use hydrogen lifting gas, so it’s possible that EASA could lead the way and FAA would eventually follow.

Hydrogen has some significant benefits over helium as a lifting gas. First, it is lighter and supplies about 8% more gross lift. One thing that should be obvious from our trade study is that an improvement in gross lift would carry through the rest of the design. For given performance requirements, it would decrease the required volume of lifting gas, reduce the length and diameter of the structure, reduce total drag, reduce required shaft power, reduce empty weight, reduce fuel requirements, and increase transport efficiency.

The other major benefit to hydrogen is that it is much cheaper than helium. The USGS estimates the private sector price of helium to be $7.57/m³, while hydrogen is sometimes available for $0.11/m³. It would cost almost $8 million to fill our 500-ton airship with helium, and just over $100k to fill it with hydrogen. Lifting gas doesn’t get used up the same way as fuel does, but through leaks and venting, it wouldn’t be just a one-time charge. Hydrogen is cheap enough that you can design to vent it to help keep the ship trim.

Finally, there is a genuine question of whether the world has enough helium for a cargo airship fleet. As we noted above, if half the ocean container market gets upsold to airship service, that is demand for around 25,000 airships. That works out to about 26 billion m³ of lifting gas. The USGS estimates that the entire planet has helium reserves of around 40 billion m³. Global helium production is only around 160 million m³ per year, enough for about 141 airships.

There is a lot that is unrealistic here. If we tried to run a global airship fleet on helium lifting gas, the price of helium would skyrocket, making the economics worse. Other industries that use helium would complain. Helium production could perhaps increase a bit, but it would still take many decades or even a century to saturate the airship market.

In short, for this industry to reach scale, hydrogen lifting gas is a must. Whether you could start with helium for the first few airships and transition to hydrogen later is an open strategy question.

Both hydrogen and helium gas would leak out of the gas cells over time. They are very small molecules and and it’s hard to make light, truly impermeable membranes. To prevent hydrogen from accumulating outside the gas cells and posing a fire risk, it would be important to design adequate ventilation systems inside the hull.

Materials. By extrapolating from the rigid-body airships of the past, our study implicitly assumed aluminum as the material for the airship’s truss structure. Most companies working on airships today have chosen to use carbon fiber instead. Carbon fiber has a much better tensile-strength-to-weight ratio than aluminum does, but it isn’t nearly as good as aluminum at handling buckling loads. Accordingly, the only way to use carbon fiber safely is to do a ton of finite element analysis to determine the particular locations on the structure where you need extra support.

Another consideration is simplicity in manufacturing. If you’re assuming a production line that is going to turn out 25,000 airships, welding metal is much simpler than setting carbon fiber. There are super cool thermoplastic carbon fiber composites that can be kinda-sorta welded, but there’s still a remaining question as to how strong the joints would be against buckling loads.

Another possibility would be to use magnesium metal instead of aluminum. Magrathea Metals is an early-stage startup producing magnesium metal from brines. If they can get the cost of magnesium metal down lower than aluminum, it’s possible magnesium would be a good option for airships. Magnesium is lighter than aluminum, both castable and weldable, and stronger than carbon fiber (and aluminum!) against buckling loads.

Fuel. Ideally, airship fuel would be neutrally buoyant, the same density as the surrounding air. This would ensure that as the fuel burned off throughout the journey, there would be no need to vent lifting gas. You could do this by using as fuel a mixture of the slightly heavier-than-air propane (C₃H₈) and the slightly lighter-than-air ethane (C₂H₆).

Propulsion. One thing you would not want to do is power the airship with piston engines. Piston engines are more complex than turbines or turboprops and require more frequent overhauls. At best, aviation piston engines require an overhaul every 2,000 hours of operation, and some of them have much lower time between overhaul. Given that we will be operating the cargo airship for perhaps 130 hours to cross the Pacific, that is only 15 crossings before you have to overhaul the engines.

If you want to put a turboprop or turbofan engine on each side of the airship, there are plenty of off-the-shelf options. The airship requires little power compared to an airplane. In principle you could operate the airship with a single engine, but it’s probably worth having a second for redundancy.

Another possibility is to use a turbine onboard to generate electricity to power ducted fans. This would be less efficient than using a turboprop or turbofan directly, but it would have a few advantages.

First, if you wanted the airship to operate on electricity in anticipation of fuel cells or other forms of onboard electricity being available, then this would let you swap out the turbogenerator for the other electricity source in the future without having to redesign the entire propulsion system.

Second, electric ducted fans could be more easily vectored. They could supply a bit of vertical thrust when needed to help with mountains or landing. They could provide a little redundant buoyancy control.

Third, more speculatively, lightweight thin-film solar panels could be mounted on the top of the hull to extend the range of the vehicle if it were electric. We haven’t done the trade at exactly what price and performance of panels would be needed to make this work, but if solar continues to improve it could be an option.

Electric motors are getting more power dense these days, and they are very reliable. Although it would be less thermodynamically efficient to convert fuel to electricity first and then to thrust, the ancillary benefits could be worth it.

Speed. Although we discussed cruise speed in the trade study section, that is not the final word on speed. Speed is an economic parameter as well as an engineering one. If you fly faster, that might be less energetically efficient, but it might produce additional value in at least two ways.

First, speed itself is valuable to customers. If you can get customers their goods one or two days faster across the Pacific by using more fuel, that could be worth it. You pay more for the fuel, but you also charge more for the service, and if it nets you money, then it’s a good trade.

Second, faster speed means that each airship can do more ton-kilometers of service per year. By earning more revenue per ship, you reduce the capex fraction of the final price of service. It would take a relatively sophisticated economic model to decide what the optimal speed is, but I think it would be faster than what you would choose if only basing it on operating expenses and customer preferences.

Winds. Airships are highly sensitive to winds because they fly so slowly. The headwind penalty is nonlinear with wind speed. To cope with this, you may want to increase design cruise speed a bit over what you would have naïvely chosen. You’d burn more fuel in still air, but you’d burn less when you faced significant headwinds.

The other approach would be to take a deliberate strategy of riding the winds. With real-time wind data, it should be possible to plan a route that uses winds to minimize fuel burn and increase overall performance. It would be bringing a form of sailing back, only using tons of atmospheric data and autonomous route planning to do it in modern style.

A successful system for optimizing for winds would have a large benefit and could be a game changer.

Mountains. Airships do not fly as high as airplanes, and therefore they are affected by terrain. In particular, the Andes, the Rockies, and the Himalayas could pose problems for cargo airships. Below is a map made by yours truly with all the places at an altitude above 1,500 meters blacked out. Those are possibly no-go zones.

Possible solutions include using vectored-thrust electric fans for propulsion to get a bit more altitude at the cost of forward speed while crossing mountain ranges.

Another option is to simply carry less payload when a route crosses mountains; this will enable the airship to attain more altitude.

The final possibility is simply not to cross these mountain ranges. While there is value in bringing cargo to inland destinations on a point-to-point basis, the real value proposition of cargo airships is transoceanic, where trucking-like economics and performance don’t exist. Sticking more or less to transoceanic routes may make sense.

Hangaring. Airship hangars are expensive! Ideally you’d want to design the airship not to need a hangar, ever. The airship and its moorings would need to be sturdy enough to withstand winds on the ground—a surprising number of early airship accidents happened because airships got blown from their moorings.

Figuring out how to do airship construction outdoors instead of in a hangar could also be valuable, as your rate of production then would not be dependent on the number of hangars available.

If you absolutely needed a hangar, you could get an inflatable one. There are companies that make these for planes as large as the A380, and they advertise an ability to make them arbitrarily big. Our cargo airship could certainly put that claim to the test.

Buoyancy control. For some time, I was enamored by the concept of active buoyancy control for airships. To see why this would be useful, first imagine a cargo airship without such a system. When a cargo airship reaches the end of its journey, it lands at an airship port using vectored thrust and/or venting of gas to get down to the ground.

Then unload 500 tons of cargo. The airship would suddenly want to pop back up into the air. With 500 tons of weight removed, it would become very buoyant again.

The low-tech way of dealing with this problem is using a lot of water ballast on the ground. Put 500+ tons of water into tanks onboard the airship, then unload the cargo.

The fancier way to address the problem is to have a system onboard for compressing lifting gas and storing it in a high-pressure tank. With gas removed from the gas cell, the cell would shrink and ambient air would fill the void around it. The airship would become statically heavier. You could make it heavy enough to land without vectored thrust or venting of gas, and you could continue compressing lifting gas until the airship was heavy enough to remove the payload without water ballast.

This concept has been talked about in airship circles for a long time. There is an active patent for such a system, but I doubt it’s defensible.

More important than the patent, compressor pumps may not be good enough yet to make this work. If you’ve ever seen a bouncy house get filled, think about how long that takes. And then think instead about compressing hundreds of thousands of cubic meters of lifting gas instead of a tiny amount of air to make a bouncy house rigid. The process would be too slow, the pumps would probably burn out, and the system as a whole could be too heavy.

Still, if someone out there has invented a super-fast, light, reliable, and powerful compressor pump, it could have an application in cargo airships.

Landing facilities. Landing facilities for cargo airships need not be super fancy. They would need to be big enough to fit an airship, say something like the size of four football fields laid end to end for the airship itself, plus additional room for other equipment and operations. Paraphernalia needed onsite would include:

• Refueling equipment and supplies

• Unloading equipment

• Moorings and water ballast

• Spare parts and mechanics

There could be landing facilities all over the place, including one near each major importing and exporting company. Some companies might prefer to have their own landing facility directly on site.

For landing facilities that are not on site for a single customer, you would need integration with trucking for last-mile delivery. Speedy unloading and transfer to trucks would be critical for a fast turnaround to let the airship go earn more money.

Simplicity. To realize the vision of cargo airships, they should be simple and manufacturable in large numbers. There will always be a tendency to add on fancy systems that provide some safety or performance benefit. Keeping the airship as simple as possible is probably necessary to be able to manufacture them at a sufficiently low cost and in high-enough numbers to make the business work.

Maintaining a commitment to simplicity in the face of FAA certification could be challenging. For example, the remote piloting capability would probably require the use of a triple-redundant satellite link. I think this is worth it for the ability to delete the entire crew, but what other safety system creep will there be? Obviously airships must be safe, but we need the simplest possible safe airship.

Are cargo airships startupable?

We’ve been assuming a cargo airship can do 260 million ton-km/year at 10¢/ton-km for annual revenue of $26 million/airship. The fuel cost of doing 260 million ton-km would be around $4 million, leaving $22 million/year for other costs including insurance, capex amortization, ground support, maintenance, and profit. This depends on a lot of assumptions, but if you can build the airship at rate production at a cost around $100 million, the math is getting close to working.4

Can you build a 388-meter airship for that cost? I think the answer is definitely maybe. A high rate of production tends to drive costs down toward the cost of inputs. 25,000 units might not get us all the way there, but it will help. Keeping the design as simple as possible will help.

On the design side, we have been conservative. Switching from helium to hydrogen lifting gas will help. Increasing speed to trade fuel burn for higher utilization could improve airship economics further. Doubling the payload to 1,000 tons could make the math work if 500 tons doesn’t do it. And on the demand side, charging 12¢ or 15¢ instead of 10¢ per ton-km may also be viable.5

However, even if the math works in steady state, there’s still a question of whether the whole enterprise is startupable.

Iterative design. One thing that makes new aerospace companies successful is iterative versus linear design. At an iterative design company like SpaceX, they fly the first version of the rocket as quickly as possible, expect some rate of failure, and learn from the failures. At a linear design company like Boeing, they design the rocket to the nth degree, and then expect it not to fail.

The SpaceX way has an impressive track record, not just creating a new launch player, but also figuring out how to land rockets, driving costs down, and sending more mass to orbit than any other company or country. If you look at the comparative failure of Blue Origin, which despite generous funding from Jeff Bezos has still not reached orbit, you can see the difference.

If an airship startup is going to be successful, it is going to have to design iteratively. This means building and operating prototypes in quick succession, which costs a lot of money.

Square-cube is a double-edged sword. The square-cube law that we find so seductive when increasing the size of an airship is commensurately devastating when you decrease the size. For most of aerospace, a common way to iterate is on a subscale prototype. For a rigid-body airship, this doesn’t work so well.

Certainly, if you drive both the payload and the range close to zero, you can make a prototype that is of a manageable size. But it won’t give you much practice with mission-relevant activities like loading and unloading cargo.

A small rigid-body airship for good physical reasons should not exist. At the low scale you’d want to go after in a seed stage, a blimp is far more natural, but it is far from what you actually want to build in the end.

FAA certification gates revenue service. Even if you get to a full-scale prototype, you can’t use it to make money, at least not in the US. FAA certification is required before you transport anything for money.

How much would it cost to type certify a 500-ton airship? Your guess is as good as mine. Large airplanes cost billions to certify. Maybe an airship would cost less because it is actually much less complex than a large airplane. Then again, maybe a 500-ton, unmanned, preferably hydrogen-powered airship would cost more because it is so novel.

The requirement to be FAA certified is a major challenge for all aviation startups, and some of them do and will get through it. In airships, it adds a lot of uncertainty to an already uncertain endeavor.

The siren song of beachhead markets. There are a lot of places in the world where cargo service is challenging and worth far more than 10¢/ton-km. Supporting mining operations in northern Canada comes up frequently. Parts of Africa where the roads are impassable for part of the year. Delivering massive windmill blades.

These high-value markets should certainly be addressed first, but I think a lot of people make the mistake of designing a smaller vehicle to serve them exclusively. If you want to make a business out of serving these markets, then obviously you should size the vehicle accordingly.

But if, instead, you want to get to intercontinental market scale as quickly as possible, it makes more sense to design the 500-ton model and then fly it wherever it is most profitable to do so. Designing your aircraft for the beachhead market is a huge distraction, particularly when there are certification costs that have to be paid for each new model.

Existing startups. There are existing companies working on cargo airships, and while I hate to criticize people who are doing exciting and interesting things (and I won’t call them out by name), none of them are doing what I recommend—going after the intercontinental market with a large, rigid-body airship as quickly as possible using an iterative, hardware-rich approach.

Companies in this space generally land on linear design and a 20-to-60-ton aircraft design that isn’t economically compelling for a big market. Consequently, execution is slow and fundraising is challenging.

However, I understand why they are doing it the way they are. My suggested approach would be more capital intensive while retaining a lot of risk until fairly late in development. I am not sure it’s fundable.

A better world

In my experience, once you start thinking about giant cargo airships, it’s hard to stop.

Try to actually picture it in your mind—an object the size of the Empire State Building floating across the sky a thousand feet above your head. They would be so common that you would see them daily, driving commerce and extending the gains from trade further than ever before. They would, of course, obey every law of physics, but to our minds trained on today’s mundane reality, they would appear to defy gravity.

For me, they would carry symbolic value. Every time I saw one, I’d remember that great things are possible.

What should we make of this? Are computers and the Internet economically unimportant inventions? I find it hard to make this case. The way I work would be completely different without computers. I’m old enough to remember the 80s, and yet I can’t imagine doing research without Google and Wikipedia. My org runs on Slack and Google Docs—I shudder to think what it would be like to type up a draft on a typewriter and circulate it among colleagues for feedback. How did anything get done in olden times?

Intuitively, introspectively, the productivity statistics should be through the roof. But they aren’t. That’s why we have economic data, so that we aren’t fooled by our intuitions. The numbers constrain the stories we can tell about the world.

The next iteration of the computers, Internet, smartphone sequence appears to be machine learning. “AI” is having a moment. Github Copilot (my favorite AI tool) is already here—it is not speculative technology. Large language models have definitively passed the Turing test. Diffusion is transforming digital art and soon video. DeepMind’s AlphaZero and AlphaFold models have mastered StarCraft and protein folding; Meta’s CICERO plays Diplomacy at a human level. Today’s models are the worst that they will ever be—they will only get better from here.

Consequently, it seems staggeringly obvious that some form of AI should, real soon now, create unprecedented economic abundance.

But what if that’s wrong? Chow, Halperin, and Mazlish note that markets are not yet expecting any productivity gains from AI. What if AI ends up like the Internet—transformative to our daily lives while somehow not actually delivering major productivity gains? It’s worth considering.

An industrial perspective. I like to reason about the economy sector by sector because it imposes a bit of intellectual discipline. Stating what you expect or expected a particular technology to do to a given sector, and then summing across all the sectors is more concrete and rigorous than just stating what you expect the effect on the economy will be. In addition, you can initially focus on a few big sectors because it’s only the big sectors that can really move the needle on aggregate productivity.

Housing. The biggest driver of housing costs in major urban areas is land use policy. Computers don’t really help us here. Local policy is firmly in the realm of flesh and blood, of trust and human relationships and beating the other side. Perhaps the Internet has been helpful in spreading information about land use liberalization and organizing the YIMBY movement. But it’s not clear to me, even granting that, how AI could revolutionize land use policy.

One area where I wrongly expected the Internet to play a bigger role is in breaking the real estate agent cartel. In the Year of Our Lord 2023, real estate agents still reap nearly six percent of the sale price of most homes. Prices have gone up, so in dollar terms, real estate commissions are at all time highs. If the Internet could not break the real estate cartel, I am not sure why machine learning models would.

What else could AI do to make our housing sector more productive? Maybe something in construction? Boston Dynamics’s Atlas robot can do impressive construction-like things, but I am skeptical of such capital-intensive approaches to construction. For now, I am not seeing it and am writing off housing as a big chunk of the economy that the AI revolution will not really affect. Go prove me wrong.

Energy. The biggest challenge in energy is deployment. If you want to build a solar farm or a wind farm or a nuclear power plant or a geothermal plant on federal land or a natural gas pipeline or an electric transmission line or a mineral mine, you are in for years of delay, regulatory headaches, public opposition, and lawsuits. Computers and the Internet did not really affect this deployment challenge, nor do I know of any reason to believe AI will solve it.

Other aspects of the energy industry have benefited from information technology. Resource exploration and extraction is more effective with digital tools, like the sensor packages that go downhole in the shale fields. Computer-based tools have helped optimize the design of energy-producing equipment like turbines. They could also help us discover new materials and battery chemistries.

AI tools, then, are promising for some aspects of the energy industry, but unless we fix the deployment obstacles associated with energy projects, the economic productivity gains could be bottlenecked. 

Transportation. We are bad at transportation in the US for reasons that don’t have anything to do with digital technology. We could automate our vehicles, but so far the Biden administration has opposed reducing even cargo train crew size by one for basically make-work reasons. Supersonic flight has been illegal over the United States for 50 years. We seem constitutionally incapable of building high-speed rail service in this country. The Anglosphere has uniquely high subway and urban transit costs. Don’t get me started on the Jones Act.

Of course, there have been some gains from digital tools. Ride sharing is an innovation that stems directly from smartphones and the Internet. As in all engineering disciplines, digital tools have made automobile and aircraft design better. Yet again, the bigger issues are non-digital. It’s not clear to me how digital tools or AI are going to dramatically increase our productivity here unless we address those issues first.

Health. I can think of all kinds of ways that digital technology, whether it’s simply computers and the Internet or new AI algorithms, should be able to improve medical productivity. But the reality is that the field moves very slowly; it took a global pandemic to get us modest telemedicine service.

The biggest opportunity to improve health productivity is to get humans out of the loop entirely. In this regard, drugs are unreasonably effective—if you can replace a surgical procedure performed by highly trained specialists with a few pills, that is a clear productivity gain.

The biggest gain from AI in medicine would be if it could help us get drugs to market at lower cost. The cost of clinical trials is out of control—up from $10,000 per patient to $500,000 per patient, according to STAT. The majority of this increase is due to industry dysfunction.

Milky Eggs, an ML-focused engineer who has seen clinical trials close up, despairs of ever fixing it. “The problems seem nearly intractable in their scope and magnitude,” says Milky. “Even if a return to positive real rates leads to a renewed focus on the ‘world of atoms,’ it could take decades for the industry to become more efficient!”

I’ll stop there. OK, so that’s only four industries, but they are big ones. They are industries whose biggest bottlenecks weren’t addressed by computers, the Internet, and mobile devices. That is why broad-based economic stagnation has occurred in spite of impressive gains in IT.

If we don’t improve land use regulation, or remove the obstacles to deploying energy and transportation projects, or make clinical trials more cost-effective—if we don’t do the grueling, messy, human work of national, local, or internal politics—then no matter how good AI models get, the Great Stagnation will continue. We will see the machine learning age, to paraphrase Solow, everywhere but in the productivity statistics.

Swimming in content. The one industry that AI is sure to disrupt is media. In media, there are no environmental impact statements, and the First Amendment ensures the industry is open to all. I expect we’ll soon have AI-authored newsletters, virtual celebrities, algorithmically generated movies, and more. We will be swimming in content.

There are those who think that more content is a bad thing. We will waste more time. We will be more distracted. But even putting those issues aside, we may be reaching diminishing marginal returns to media production. When I lived in Portugal as a child in the late 1980s, we had no Internet and two TV channels. I don’t know how much more content I have access to today, but it is perhaps a million times more (Ten million? More? I’m not even sure of the order of magnitude.)

That increase in content is life changing, but if the amount of content increased by another factor of a million because of AI, it’s not clear my life would change at all. Already, my marginal decision is about what content not to consume, what tweeter to unfollow, and more generally how to better curate my content stream.

And what should we say about the fact, as Ezra Klein notes, that the cost of bullshit will go to zero? In my opinion, the most trenchant prediction about the near-future media landscape comes from Neal Stephenson in his otherwise forgettable1 Fall, or Dodge in Hell. To cope with a wave of online public shaming, one of the characters floods the Internet with AI-created bullshit. After all, if nothing on the Internet is believable, you don’t have to worry about what the Internet might say about you.

In response to an Internet full of bullshit, users require the use of an “editor,” a service that edits the news feed for you. It weeds out the stuff that you don’t want and gives you the good stuff. Many users can only afford an algorithmic editor, like a spam filter for news. The well-to-do have human editors who monitor the news feed and artisanally curate it for their customers.

A funny thing happens in the book. Some customers, it turns out, prefer the fake news. They prefer bullshit. With “editors” existing as a competitive market, services spring up to give the people what they want. The most uproariously funny consequence in the novel is that a new cult called the Leviticans forms—naturally, they only believe in the book of Leviticus.

Stephenson’s use of the word “editor” is apt. It gets at an asymmetry between content creation and content curation. Writing is easy; editing is hard. Large language models like ChatGPT can write, but they are unable to curate their own output. They are unable to make it consistently good. To be sure, LLMs will only get better from here. But in a world of unlimited content, I only want the works of staggering genius. It’s not clear that a model trained in some sense to give the average next token can ever produce something so far above average.

Even if AI dramatically increases media output and it’s all high quality and there are no negative consequences, the effect on aggregate productivity is limited by the size of the media market, which is perhaps 2 percent of global GDP. If we want to really end the Great Stagnation, we need to disrupt some bigger industries.

I could be wrong. I remember the first time I watched what could be called an online video. As I recall, the first video-capable version of RealPlayer shipped with Windows 98. People said that online video streaming was the future.

Teenage Eli fired up Windows 98 to evaluate this claim. I opened RealPlayer and streamed a demo clip over my dial-up modem. The quality was abysmal. It was a clip of a guy surfing, and over the modem and with a struggling CPU I got about 1 frame per second.

“This is never going to work,” I thought. “There is no way that online video is ever going to be a thing.”

Exponential growth not only in processors but also in Internet speeds made short work of my denunciation of video streaming. I think of this experience often when I make predictions about the future of technology.

And yet, if I had only said, “there is no way that online video will meaningfully contribute to economic growth,” I would have been right.

Elsewhere. Over at the CGO, I have a piece arguing that Congress, not FAA, should take the next steps on legalizing supersonic flight over the US. If you’ve gotten to the end of this and can stand more from me, you should read that one as well.

Drilling through basement rock is harder than drilling through the sediment. In part, this is because granite itself is harder than sedimentary rocks. Mechanical drill bits are more likely to break against very hard rocks. But also, drilling deep as such is also challenging. Today’s mechanical drills, optimized for oil and gas requirements, can’t long withstand the high temperatures and pressures associated with very deep wells. Making matters worse, every time a drill bit breaks, the entire drill string needs to be pulled out of the ground and replaced, a process known as tripping. The delays and costs associated with tripping increase as the hole gets deeper. If you want to reduce the cost of drilling really deep holes, you need a drilling system that doesn’t break as it comes in contact with granite, can handle high temperatures and pressures, and that doesn’t require tripping.

What if we lived in an amazing sci-fi future, or perhaps a long time ago in a galaxy far, far away? Could we not construct some sort of giant light saber to replace mechanical drill bits? Is there a way to use pure energy to obliterate the granite?

That is what Quaise Energy is working on. The company is developing a drilling system that uses gyrotron-generated mm-wave directed energy to vaporize granite.

The prize if Quaise succeeds is that high-efficiency geothermal energy becomes available everywhere on the planet. No matter where you are on Earth, if you go deep enough, it is hot. To reach the 500ºC temperatures Quaise is focused on, they may have to drill to a depth of 3–20 km, depending on the geology. This whole depth spectrum becomes possible with a cost-effective way to drill through granite.

Reaching 500ºC temperatures is critical. In fact, forgive the pun, it is supercritical. When water is heated and compressed above 374ºC and 218 atmospheres, it becomes a supercritical fluid with unfamiliar properties. Among these is that its enthalpy goes up significantly compared to water in its ordinary liquid or steam forms. This means that it becomes a better carrier for heat energy. By targeting 500ºC heat at depth, Quaise reckons they will be able to produce supercritical steam at the wellhead.

What would we do if we could produce supercritical steam anywhere on the planet? At a minimum, we would get rid of the boilers at coal-fired power plants. These boilers burn coal to produce supercritical steam to feed into the turbines that then produce electricity. But if we could produce supercritical steam from the ground without boilers, we could convert our dirty coal plants into zero-carbon electricity sources by simply piping the steam from the ground into the turbines.

In addition to being great for our climate, this move makes excellent business sense. Re-using coal turbines from plants that would otherwise retire saves money. So does locating on a site that already has the necessary generating permits and connections to the grid. Producing electricity in this way could be extremely cheap—cheaper even than wind and solar, yet with the reliability and density of fossil energy.

Quaise today announced that they have raised a $40 million Series A. I’m pleased to have invested in the round through my syndicate, and I’m excited to follow along as they unlock the true power of clean geothermal energy.

If you are interested in investing with me in companies like Quaise, be sure to check out my AngelList syndicate.

A benefit of climate change is that lots of smart people are rethinking energy, but I fear they aren’t going far enough. If we want not just to replace current energy consumption with low-carbon sources, but also to, say, increase global energy output by an order of magnitude, we need to look beyond wind and solar. Nuclear fission would be an excellent option if it were not so mired in regulatory obstacles. Fusion could do it, but it still needs a lot of work. Next-generation geothermal could have the right mix of policy support, technology readiness, and resource size to make a big contribution to abundant clean energy in the near future.

Let’s talk about resource size first. Stanford’s Global Climate and Energy Project estimates crustal thermal energy reserves at 15 million zetajoules. Coal + oil + gas + methane hydrates amount to 630 zetajoules. That means there is 23,800 times as much geothermal energy in Earth’s crust as there is chemical energy in fossil fuels everywhere on the planet. Combining the planet’s reserves of uranium, seawater uranium, lithium, thorium, and fossil fuels yields 365,030 zetajoules. There is 41 times as much crustal thermal energy than energy in all those sources combined. (Total heat content of the planet, including the mantle and the core, is about three orders of magnitude higher still.)

Although today’s geothermal energy is only harvested from spots where geothermal steam has made itself available at the surface, with some creative subsurface engineering it could be produced everywhere on the planet. Like nuclear energy, geothermal runs 24/7, so it helps solve the intermittency problem posed by wind and solar. Unlike nuclear energy, it is not highly regulated, which means it could be cheap in practice as well as in theory.

At a high level, the four main next-generation geothermal concepts I will discuss do the same thing. They (1) locate and access heat, (2) transfer subsurface heat to a working fluid and bring it to the surface, and (3) exploit the heat energy at the surface through direct use or conversion to electricity. It is the second step, transferring subsurface heat to a working fluid, that is non-obvious.

What is the right working fluid? What is the best way to physically transfer the heat? Given drilling costs, what is the right target rock temperature for heat transfer? These questions are still unresolved. Different answers will give you a different technical approach. Let’s talk about the four different concepts people are working on right now, including their strengths and weaknesses, before turning to the bottlenecks in the industry.

Concept #1: Enhanced geothermal systems

Like today’s conventional geothermal (“hydrothermal”) systems, enhanced geothermal systems (EGS) feature one or more injection wells where water goes into the ground, and one or more production wells where steam comes out of the ground. Hydrothermal systems today not only need heat resources close to the surface, they require the right kind of geology in the near subsurface. The rock between the injection and production wells needs to be permeable so that the water can flow through it and acquire heat energy. The rock above that layer needs to be impermeable, so that steam doesn’t escape to the surface except through the production wells.

EGS starts with the premise of using drilling technology to access deeper heat resources. This makes it viable in more places than hydrothermal, which relies on visual evidence of heat at the surface for project siting. If you see a volcano or a geyser or a fumarole, that might be a good location for a conventional hydrothermal project. But there are only a limited number of such sites, and if we want to expand the geographic availability of geothermal we have to use deeper wells to access heat sources that are further below ground.

Once we have our deeper wells, we need a way for water to flow between them. Fortunately, since 2005, petroleum engineers have gotten good at making underground fracture networks. By using modified versions of the fracking perfected in the shale fields, geothermal engineers can create paths of tiny cracks through which water can flow between the two wells. This fracture network has a lot of surface area, which means it is relatively good for imparting heat energy to the water.

EGS has some advantages over the other next-generation geothermal concepts. From a technical perspective, it is not a big leap from existing hydrothermal practice, so the technology risk is low. In addition, the high surface area of the hot underground fracture network is good for creating steam.

Yet today’s EGS also has a disadvantage relative to the other approaches. Because the system has an open reservoir exposed to the subsurface, most EGS projects plan to use water as a working fluid. Water does not become supercritical until it reaches 374ºC (and 22 MPa). Using today’s drilling technology, EGS projects usually will not reach these temperatures, because it costs too much to drill to the required depths. Fluids in their supercritical states have higher enthalpy than in their subcritical states, so depth limitations mean EGS can’t bring as much heat energy to the surface as it could if it had access to a supercritical fluid.

Even so, EGS is promising. This year, Fervo raised a $28M Series B to pursue this approach. It also signed a deal with Google to power some of its data centers, part of the search giant’s plan to move to 100% zero-carbon energy by 2030.

Concept #2: Closed-loop geothermal systems

Imagine that, like EGS, you had an injection and a production well, but instead of relying on a network of fractures in the open subsurface to connect them, you simply connected the two wells with a pipe. The working fluid would flow down the injection well, horizontally through a lateral segment of pipe, and then up through the production well. Because such a system is closed to the subsurface, it is called a closed-loop system.

Relative to EGS, closed-loop systems have both advantages and disadvantages. A key advantage is that the working fluid can easily be something other than water. Isobutane has a critical temperature of 134.6ºC, and CO2’s is only 31.0ºC. Even with today’s drilling technology, we can reach these temperatures almost everywhere on the planet. Closed-loop systems offer the higher enthalpy associated with supercritical fluids at depths we can reach today. In addition, closed-loop systems work no matter the underlying geology, removing a risk that EGS projects face.

The big disadvantage of closed-loop systems is that pipes have much lower surface areas than fracture networks. Since heat is imparted to the working fluid by surface contact, this limits the rate at which the system can acquire energy. A solution to this is to use not just one horizontal segment, but many, like the radiator-style designs shown below. These segments can be numerous and long enough to ensure adequate heat transfer.

The problem remains, however, that these radiator-style segments are expensive to drill with today’s technology. It is possible that with experience and better drilling techniques the cost could be reduced to make this approach viable. Closed-loop startup Eavor is pursuing this approach, starting with a project in Germany taking advantage of that country’s generous geothermal subsidies.

Concept #3: Heat roots

What if you could combine the advantages of closed loops—like the ability to use a supercritical working fluid—with a way to capture the heat from a much larger surface area than that of a simple pipe? That’s the goal of Sage Geosystems’s Heat Roots concept.

Sage starts with a single vertical shaft. From the base of the shaft, they frack downwards to create a fracture pattern that gives the impression of a root system for a tree. They fill this “root” system with a convective and conductive fluid. Then, using a pipe-in-pipe system, they circulate a separate working fluid from the surface to the base of the shaft and back. At the base of the shaft, a heat exchanger takes the energy concentrated by the heat root system and imparts it to the working fluid.

This “heat roots” approach enables a lot of the benefits of closed-loop systems, like the ability to use supercritical fluids, without the main drawback of needing long horizontal pipe segments. The roots draw in and concentrate heat from greater depths than the primary shaft. In other words, closed-loop’s problem of limited surface area is solved by doing additional subsurface engineering outside of the closed loop.

A disadvantage of a monobore, pipe-in-pipe design is the limited flow rate of working fluid. In the oil and gas industry, the widest standard well diameter is 9⅝ inches. It would be non-trivial to go wider than that—you would need special drilling equipment and new casing systems. The power output of the entire system is directly proportional to the flow rate, so the monobore heat roots design is constrained in this way.

This may or may not be a problem. If the cost of constructing each individual well is low enough, then the solution would be to stamp out hundreds of thousands of these wells. What matters is the cost per watt and that the design is reproducible. It may be possible to make these or similar wells work almost anywhere by simply drilling deeply enough, although that is not yet proven.

Sage raised a Series A earlier this year and is currently working on a demonstration well in Texas. “Once we get through a successful pilot these next few months,” says Sage CTO Lance Cook, “we are off to the races.” In addition to its heat roots design, it is also studying a few other configurations.

Concept #4: Supercritical EGS

What if we had much better drilling technology? Put aside the fancy stuff, like horizontal segments—what if we could simply drill straight down into the earth much deeper and faster and cheaper than we can today?

This one capability would unlock a huge increase in geothermal power density. With depth comes higher temperatures. If we could cheaply and reliably access temperatures around 500ºC, we could make water go supercritical. This would unleash a step-change in enthalpy, without the closed loops otherwise needed for supercritical fluids. By doing EGS (concept #1) in these hotter conditions, we could get the biggest benefit of EGS—a high surface area to use to transfer heat—with one of the biggest benefits of closed-loop systems—the use of a supercritical working fluid. In addition to higher enthalpy, supercritical steam will produce higher electrical output in virtue of a higher delta-T in the generator cycle. Output of the cycle is directly proportional to the temperature differential between the steam and ambient conditions.

The benefits of producing supercritical steam at the surface go beyond these physics-based arguments. A huge potential advantage would be the ability to retrofit existing coal plants. With many coal plants shutting down in the next several years, a lot of valuable generator equipment could be lying around idle. These generators take supercritical steam as an input and use it to produce electricity. The generators don’t care whether the steam comes from a boiler fired with coal or from 15 km underground. Piping steam from a geothermal production well straight into a coal plant turbine would allow the power plant to produce the same amount of electricity as it did under coal, except with no fuel costs and no carbon emissions.

Even if free generating equipment isn’t just lying around, supercritical geothermal steam could significantly increase the output and decrease the cost of geothermal electricity. The question is whether we can achieve the necessary cost reductions in ultra-deep drilling. Rotary drill bits struggle against hard basement rock. They break and then have to be retrieved to the surface, where they are repaired and sent back downhole. This process is time-consuming and expensive. Non-rotary drilling technologies like water hammers, lasers, plasma cutters, and mm-wave directed energy have all been proposed as ways to let us drill deeper faster. By optimizing for hot, dense, hard basement rock, we could drill much deeper than we can today.

The big downside of supercritical EGS is that these advanced drilling technologies haven’t been proven yet. The big advantage is what it could enable: high-density geothermal energy anywhere on the planet. Literally every location on the planet can produce supercritical steam if you drill deep enough into the basement rock—you may have to drill 20 km to reach 500ºC temperatures in some spots, but it’s there.

Quaise is an example of a company pursuing this supercritical EGS approach. The gyrotrons used in fusion experiments produce enough energy to vaporize granite. Quaise is commercializing mm-wave directed energy technology out of MIT’s Plasma Science and Fusion Center.

Policy is suboptimal but not a deal-breaker

Unlike nuclear fission, which is regulated to near-oblivion, geothermal faces relatively few policy obstacles. I will highlight two areas where policy could easily be improved, but even if these problems are not fixed, they will likely only slow, not stop, maturation of the next-generation geothermal industry.

The first issue involves permitting. While our goal for this technology should be to enable geothermal anywhere on the planet, the natural starting point for working down the learning curve is in areas where high temperatures are closest to the surface. If you look at a map of temperature at depth in the United States, you will notice that the best spots for geothermal drilling overlap considerably with land owned by Uncle Sam.

Drilling on federal lands involves federal permitting—which involves environmental review. Environmental review, mandated by the National Environmental Policy Act any time a federal agency takes a major action that could affect the environment, can take years.

Conveniently, the oil and gas industry got themselves an exclusion from these requirements. The effects of drilling an oil and gas well on federal lands are rebuttably presumed to be insignificant, as long as certain limitations apply—for example, the surface disturbance of the well is less than 5 acres. Oil and gas wells are very similar to geothermal wells, so it makes sense that they would have very similar environmental impacts. As I have written for CGO, simply extending oil and gas’s categorical exclusion to geothermal energy is an absolute no-brainer.

This permitting issue shows that the nearly non-existent geothermal lobby is (surprise!) less effective than the oil and gas lobby. It may also be less effective than the wind and solar lobbies. Geothermal execs have complained that tax subsidies for geothermal are lower than for wind and solar. I am no tax expert, but if I am reading Section 48 of the tax code correctly, there is a 30% tax credit for utility-scale solar and only a 10% credit for a geothermal plant—that’s a big disparity. (There is also a 30% tax credit for investing in a facility to produce geothermal equipment and a 10-year 1.5¢-per-kWh subsidy for geothermal plants that break ground in 2021. [Update: It’s actually a 2.5¢/kWh subsidy because there is mandatory inflation adjustment and the basis is 1992. Hat tip: SW]).

Neither permitting barriers nor inadequate subsidization are likely to hold back geothermal forever. There are ways, however inconvenient, around the permitting obstacles, like operating on private lands. An unfavorable subsidy environment relative to solar might mean a slower start as financiers dip their toes into geothermal waters more gradually, or it might mean that projects move to Germany, where geothermal feed-in tariffs are quite generous. Even if they aren’t dealbreakers, we ought to fix these policy mistakes so that we can reap the benefits of abundant geothermal energy sooner rather than later.

Technologies that could accelerate deployment

Although some of the geothermal concepts I discussed above will work using today’s technology, there remains R&D to be done to unlock the others, and there are advances to be made that would help all players.

The first area where technical development is needed is in resource characterization—the ability to predict where the heat is in the subsurface and what geology surrounds it. Better predictions reduce project risk and reduce up-front exploration costs. Imagine you are drilling a geothermal well and it is not as hot as you expected it to be. Do you keep drilling and go deeper? Do you give up and drill somewhere else? Either way, it’s expensive. With more accurate predictions, we can keep these cost surprises under better control.

Machine learning is one possible way to crack resource characterization. The National Renewable Energy Laboratory has laid some good groundwork on machine learning and geothermal resources, and a startup called Zanskar is using what appears to be a similar approach. In addition to ML, bigger and more granular data sets as well as new sensor packages that could shed more light on subsurface conditions would be helpful.

Next: we need to harden rotary drill bits and other downhole equipment for geothermal conditions. Geothermal drilling involves higher temperature, pressure, vibration, and shock than oil and gas drilling. Since oil and gas represents the lion’s share of the drilling business, today’s bits aren’t optimized for geothermal conditions. A modern bottom hole assembly includes a drill bit and also equipment for electricity generation, energy storage, communication and telemetry, and monitoring and sensing. It’s a lot of electronics.

Fortunately, NASA and others in the space industry are already working on suitable high-temperature electronics. To land a rover on a planet like Venus or Mercury, or to send a probe into the atmosphere of a gas giant like Jupiter, we need motors, sensors, processors, and memory that will not fail soon after they encounter high heat and pressure. Venus’s average surface condition is 475ºC and 90 Earth atmospheres—if it works on Venus, it will work in all but the most demanding geothermal applications.

Third: we need to mature non-rotary drilling technologies. While polycrystalline diamond compact drill bits are now enabling next-generation geothermal applications for the first time, non-rotary concepts could allow us to cost-effectively go deeper through even harder rock. Non-rotary drilling concepts include water hammers, plasma bits, lasers, mm-wave, and even a highly speculative tungsten quasi-“rods from God” idea from Danny Hillis.

Fourth: technologies to support the use of supercritical fluids. Turbines need to be specially designed for supercritical fluids. While turbines already exist for supercritical water, new designs are necessary for lower-temperature fluids like supercritical CO2. In addition, supercritical fluids tend to be more corrosive than their subcritical counterparts, as well as under higher pressure, and so new coatings and casings may be needed to contain them in the subsurface.

There are other possible improvements, but if we can solve several of the above issues, my expectation is that we would generate a robust and self-sustaining industry that can self-fund the further development needed to make next-generation geothermal energy an absolute game-changer.

What’s next?

In an industry ruled by learning curves, what matters most is gaining experience in the field. We need all the companies working on innovative geothermal concepts to drill their demo wells and learn from them, so that they can move on to full-size wells and learn from those, so that they can operate at scale and learn from doing that, so that they can drive down costs (eventually) to almost nothing.

The rest of us should help them.

I have argued that the policy barriers, especially relative to fission, are not dealbreakers. But I continue to work to find policy solutions, because even non-dealbreaker problems can slow down progress. Policymakers who read this and want to learn more are welcome to reach out to me.

Adam Marblestone and Sam Rodriques have proposed Focused Research Organizations to tackle technological development problems not suited for either a startup, an academic team, or a national lab. Often, these problems arise when there is a high degree of coordinated system-building required and when the solutions are not immediately or directly monetizable. Some of the technology problems I described above, like producing a comprehensive dataset of subsurface conditions, developing temperature-hardened drilling equipment, or building systems to support supercritical fluids, may fit that bill. A geothermal-focused FRO supported by $50–100 million over the next 10 years could significantly accelerate progress.

If you want to learn more about progress in geothermal, I highly recommend registering for the upcoming PIVOT2021 conference, being held virtually July 19–23. It’s a comprehensive overview of the entire industry, and totally free. Yours truly is moderating the panel on regulatory and permitting challenges.

If we play our cards right, human civilization could soon have access to a virtually inexhaustible supply of cheap and clean energy. Shouldn’t we pull out all the stops to get there?

Start with a simple electoral model: two strong, instrumentally rational parties; one dimension of political discourse (a simple left-right axis); and a simple majority voting rule where each voter selects the party closest to his location on the axis. How do the two parties behave? It’s simple, they each adopt a position very close to the view held by the median voter.

If one party deviates from the 50th percentile view, it will earn fewer votes than the other one. Suppose one party tries to shade a bit right, running on a platform equivalent to the view of the 60th percentile voter. This party will win the 40 percent to its right, but it will lose the 50 percent of the vote to the left of the other party and some of the vote in the middle, ensuring a victory for its opponent.

Under the assumption of simple majority voting, the system is stable against new parties. If a new party emerged on the right, it would split the vote on the right side of the spectrum and the voters on the left side of the spectrum would be unified. Because a new party only strengthens its polar opposite party, two parties continue to dominate. Because both of the stable parties espouse views close to those of the median voter, no matter who wins, policymakers adopt policies favored by the median voter.

This state of affairs—two parties, a policy status quo that is generally centrist—actually exists in the United States. Consequently, the median voter theorem is often taken to be a good first approximation of American politics, despite that some of the assumptions are too strong (e.g., single-dimension issue space).

But actually, American politics have been changing, and a slight tweak to the model can help us see how. Let’s weaken the assumption that the parties are strong and instrumentally rational. Perhaps (and I’m just spitballing here) a technology like the Internet comes along that empowers activists at the extremes of each party. No matter the cause, assume that it becomes harder to maintain party discipline. For concreteness, let’s say party bosses lose control over who runs in primary elections.

Because parties select candidates through a primary vote, simple application of the median voter theorem in the primary dictates that the left party selects a candidate at the 25th percentile of viewpoint and the right party selects a candidate at the 75th percentile of viewpoint. If the most extreme voters are more likely to be engaged during primary season, it could be worse. If at least some voters are strategic and concerned about electability, it might not be so bad. The winning primary candidates might still moderate their views a bit in the general election, because the battle then is still for the centrist voters. But the bottom line is that we are no longer in an equilibrium where both parties run on a median-voter platform. There is now daylight between the parties, purely as a result of the parties becoming weaker.

This change in party strength doesn’t create any long-term policy victories. Sometimes the left wins, sometimes the right wins. No political victory is ever permanent. Long-run policy continues to be near the preferences of the median voter, but now we get there by ping-ponging back and forth between left administrations and right administrations. A culture war develops. Left and right start to hate each other. But from a policy perspective, it is all pointless—however painful the culture war, the median voter still wins on policy in the long run.

These two models are only models—the assumptions are unrealistic in some ways. And yet, they are illuminating. In both cases, the median voter theorem holds in the long run—the policy outcome remains near the 50th percentile of the distribution. But in the second model, the way we arrive at this policy equilibrium is much more unpleasant. When party discipline breaks down, we don’t converge on median voter preferences as quickly as we do with strong parties, and therefore the culture war escalates.

Wouldn’t it be nice if we could have stronger parties again? Elites within each party could select candidates in smoke-filled rooms once again, choosing them based not on how ideologically pure they are, but rather on how likely they are to win. Returning this instrumental rationality to party politics would indeed be welcome, but it seems unlikely. The genie is out of the bottle. Power has shifted. Party elites are no longer in charge.

If we want to rapidly converge on moderate policy platforms but we can’t have strong, disciplined parties, another approach is to change the voting system. The discussion above assumes a simple majority voting system, but that is not the only option. Some voting systems do not systematically disfavor third parties and could therefore increase competition between parties. We can converge quickly on a moderate position due to strength and discipline within parties, but or we can do it due to weakness and competition between parties.

Consider a race between a candidate on the far left candidate and one on the far right. Instead of a simple majority election, we allow voters to express preferences in rank-order format. With this format change, a moderate candidate can enter the race, and voters can support her without splitting the vote and making it more likely that their most disfavored candidate will win. There are many ways of tabulating rank-ordered ballots, and Arrow’s theorem says no voting system is perfect. But let’s first examine social preferences in pairwise form.

Because every voter ranks candidates in his or her preferred order, we are able to use ballot data to say who would win in a two-way race between any pair of candidates. In the race between far left and far right, when a third moderate candidate enters, the moderate candidate will be preferred by most voters to the far-right candidate, and the moderate voter will be preferred by most voters to the far-left candidate. When a candidate beats all others by pairwise comparison, the candidate is called the Condorcet winner, and a voting method that always selects as the victor the Condorcet winner if there is one is called a Condorcet voting method.

The advantage of a Condorcet method is that the Condorcet winner will always be a moderate close to the median voter. The disadvantage of a Condorcet method is that there isn’t always a Condorcet winner. Just as in rocks-paper-scissors there is no option that beats all the others, in a three-or-more-way race, no candidate may be socially preferred to all others. This can happen if the issue space is not one-dimensional as we have been assuming, or if voter preferences are not single-peaked. A Leninist, for example, may support either a far-left socialist or a far-right hypercapitalist more than a centrist candidate.

The possibility of such circular ambiguity requires a way to resolve it when it exists. There are dozens of proposals for how to do so. Often, they take the set of candidates to whom the ambiguity applies, known as the Smith set, and apply some secondary criterion. For example, one could conduct an instant-runoff election between these candidates. This is known as Smith/IRV.

Another interesting method, perhaps my current favorite, is applying approval voting to the Smith set. In addition to ranking candidates on their ballots, voters could draw a horizontal line on their ranked list. Above the line, they approve of the candidates; below, they disapprove. If the Smith set has more than one candidate in it, select the most-approved of these candidates. This method, called Smith/Approval, is attractive because approval voting itself tends to favor moderate candidates. This approach piles a moderate-favoring method on top of another moderate-favoring method.

Other voting methods don’t try to find a Condorcet winner and instead go with a concept that is easier to understand and that does not require an ambiguity-resolving procedure. The FairVote organization supports the adoption of instant-runoff voting. The Ranked Choice Voting Act, supported by FairVote, would require instant-runoff voting in all federal House and Senate races. Like Condorcet voting methods, instant-runoff voting would also increase competition between parties and tend to favor moderates, although it does not always select the Condorcet winner if there is one.

It is important not to let the perfect be the enemy of the good. Any of these systems that allow voters to rank candidates in order of preference would generate a more moderate political culture. In addition to favoring the most moderate of a given set of candidates, the system would also influence what kinds of candidates enter politics in the first place. Given the distastefulness of our political discourse, many decent Americans have no interest in entering politics. That could change if the voting system removed a major cause of the culture war, the widening chasm between the two dominant parties. With a more civil politics, more decent Americans might consider running for office.

Often, people propose voting reforms because they will move the political equilibrium in their preferred direction. Proposals to elect the president by popular vote or to give statehood to the District of Columbia, for example, whatever their merits, are favored by the left and opposed by the right because they would shift political outcomes a bit leftward. It is worth emphasizing once again that any of these rank-ordered voting methods would be unlikely to shift long-run policy. They would simply cause more rapid convergence to the moderate policies we are likely to end up with anyway. Under our current system, the median voter wins on policy in the long run. This voting reform would merely end the ping-ponging between relative extremes that undergirds our culture war.

This culture war is dangerous. Even after the violence at the Capitol on January 6 ended, a majority of House Republicans voted to challenge the certification of electors. I found it sickening. While these members of Congress have no excuse for their actions, if circumstances were different we could see similar extremism on the left. If we do nothing, our culture war will continue and we will invite more instability. With a relatively small change to the way we vote, we would reduce extremism in both/all parties and stabilize our country. Have you had enough yet?

What would constitute an end to the Great Stagnation? Any precise cutoff will be arbitrary, but for the sake of discussion, let’s say sustained growth in utilization-adjusted total factor productivity of 2 percent per year. By comparison, mean utilization-adjusted TFP growth from 1947 through 1972 was 2.1 percent. Since 2005, it has been 0.17 percent. (Note: it is important to use the utilization-adjusted series, as this corrects for the business cycle.)

Whatever your cutoff for TFP growth, one of my convictions is that scientific breakthroughs alone are not enough to drive an end to the Great Stagnation. TFP only budges when new technologies are adopted at scale, and generally this means products, not just science. Science lays critical groundwork for new technology, but after all the science is done, much work remains. Someone must shepherd the breakthrough to the product stage, where it can actually affect TFP. This means building businesses, surmounting regulatory obstacles, and scaling production.

With that caveat firmly in mind, what will the next decade bring in terms of meaningful technological change? Here’s what I’m watching.

Biotech and health

We are coming off a huge win: two new mRNA COVID vaccines, conceived and brought to market in less than a year. The ability to encode and deploy arbitrary mRNA in our bodies sure seems like a game changer—it allows us to essentially program our cells to make whatever proteins we want. In the case of the COVID vaccines, the vaccine payload instructs our cells to make the coronavirus spike protein, which our immune system then learns to attack. Bert Hubert has a fascinating write-up of the “code” in the vaccine.

Bringing a brand new vaccine to market in less than a year—using a never-before-applied-in-humans-at-scale technology no less—is a world record, but it could have been even faster. As David Wallace-Wells emphasizes, Moderna’s vaccine was designed by January 13. We had it the whole time. Some delay was necessary to determine effective dosing. Some further regulatory delay may have been warranted to ensure the vaccine was safe and to ascertain its efficacy. But as Wallace-Wells indicates, the regulatory outcome was never really in doubt. “None of the scientists I spoke to for this story were at all surprised by either outcome,” he writes. “All said they expected the vaccines were safe and effective all along.”

What should we make of the fact that all of the scientists knew all along that Moderna’s vaccine would work? The question in my mind is: what other mRNA treatments do we have the whole time? What if I told you Moderna has an HIV vaccine candidate? HIV lacks SARS-CoV-2’s telltale spike protein and thus may prove a more challenging foe—but don’t you wonder, if we treated the problem with real urgency, whether new mRNA technology could wipe out the AIDS epidemic this decade? I do.

And mRNA technology can be deployed against more than just viruses. Both Moderna and BioNTech have personalized vaccine candidates targeting cancer. Although called a “cancer vaccine,” the treatment is only administered once the subject has cancer—it isn’t preventative. The companies use an algorithm to analyze the genetic sequences of the tumor and the patient’s healthy cells and predict which molecules could be used to generate a strong immune response against the cancer. “I was actually witnessing the cancer cells shrinking before my eyes,” said Brad Kremer, a melanoma patient who received the BioNTech treatment. So let’s milk mRNA technology for all it’s worth this decade. It can save us from more than just a pandemic.

What about CRISPR? It is a great example of a technology that has not yet made a meaningful economic contribution. Although the technique for editing DNA was discovered in 2012—and a Nobel Prize was awarded to its two discoverers this year—no treatment using CRISPR has been approved outside of clinical trials. So far, its impact has been limited to making researchers more productive—not a bad thing, to be sure, but not close to CRISPR’s full potential. As trials progress, however, I do think some CRISPR treatments will come online in the next few years, especially those targeting genetic disorders that we have very limited means of otherwise treating.

DeepMind’s protein-folding breakthrough signals a promising decade for the science of proteomics. Most directly, being able to predict protein shapes will enable us to discover drugs more rapidly. Buuuut, because drug trials take many years, we might expect this technology not to really be felt by the general public until the 2030s.

What DeepMind’s achievement indicates to me the most is that machine learning is actually useful. This might seem obvious, but consider: most applications of machine learning so far—excluding autonomous vehicles, which have themselves not really arrived yet—are toys. I love watching AlphaZero crush Stockfish on YouTube, but chess is literally a game. GPT-3 produced some fun demos. AlphaFold heralds something different—non-toy superhuman performance is now here, and I am interested to see what else it can do. Aside from the aforementioned AVs, I expect it to be applied widely in other areas of biology. Again, it will take a long time for the breakthroughs to trickle down into products, but at least the 2030s should be sick. I mean, not sick. Healthy.

Let’s talk about life extension, one of my favorite biotech topics. 2020 was a big year for the Conboy Lab at Berkeley, which proved that all the weird past findings about “young blood” extending life were not actually due to any elixir in the blood of children (thank goodness). Rather, the rejuvenating aspects of young blood experiments were due to the dilution of harmful factors in old blood. By mechanically removing plasma and replacing it with saline and enough albumin to replace what was taken out, they diluted aged blood factors in both mice and humans and were able to rejuvenate germ layer tissues and improve cognition by reducing neuroinflammation.

These findings are exciting not only because they represent a scientific advance in understanding aging, but also because they herald the first real anti-aging product that could come to market. Therapeutic plasma exchange is FDA-approved (not for aging, but for a bunch of other conditions). I imagine there remain prohibitions on advertising that it can add years to your life, but it is safe, and a doctor can prescribe it off label. It’s also cheap. An automated plasmapheresis machine—which lets you do treatment after treatment—can be bought online for under $3,000. That is less than the cost of a single transfusion of young blood sold by the startup Ambrosia. How long until someone opens a clinic offering plasma dilution? I bet someone tries it in 2021. If it works, people will get over the weirdness, and it could be commonplace by 2030.

Another longevity product that is about to get hot: aging clocks based on DNA methylation or proteomics. Do you want to know how biologically old you are? Today, for a few hundred dollars, you can get a test that will tell you. As these tests become better and cheaper, self-experimenters are going to have a field day. Doing before-and-after aging tests, anyone who can get their hands on human growth hormone could replicate the protocol used by Fahy et al. to rejuvenate the thymus. As the thymus is a critical element of the immune system, decline of which is a critical factor in aging, this is non-trivial rejuvenation. The Fahy study found that 12 months of treatment created about 2.5 years of epigenetic rejuvenation, with results accelerating in the last quarter of the trial.

There is a lot more in the Rejuvenation Roadmap—dozens of possible life-extending treatments are at various stages of development. There’s a good chance a few senolytic drugs will be approved by the end of the decade. As I noted yesterday at Fortune, we spend less than 1% of the NIH budget on aging biology—we should raise that by a lot.

Unlike others, I am not-so-bullish on metformin. It does seem to reduce all-cause mortality in Americans, but it may do so because 88% of Americans are metabolically unhealthy. If you are one of the 12%, and you should strive to be, I don’t think metformin will do much for you.

One final biotech observation: every year, the Apple Watch gets a new health-related sensor. This year it was blood oxygen, pretty good for detecting if you might have COVID! Fast forward to 2030 and wearables will have at least 10 more health-related sensors than they do today. Some no-brainers are body temperature, blood pressure, and blood glucose sensors. What will the other 7 be? At some point, it becomes possible to replace a lot of primary care with continuous monitoring. A few smart algorithms to provide simple medical advice could improve population-level health without much cost. More data could also yield faster, more accurate, and of course more remote diagnoses when you do have to see a doctor.

There is a lot in biotech that is promising right now, but in more than any other field, it is important not to be seduced by the sexy headlines showing rapid scientific progress. Don’t get complacent. Biology is proceeding faster than medical productivity because a lot of the wonderful discoveries are not being translated into approved treatments and products at a decent rate. Let’s salute and cheer for the discoveries, but spare many thoughts for the entrepreneurs trying to bring treatments to market.

Energy

The 2010s were the wind and solar decade. We observed stunning declines in the cost of both, although total deployment of wind and solar remains small—in 2019, wind and solar represented less than 9 percent of utility-scale electricity generation in the US. In the 2020s, cost declines will likely stall—wind and solar are already pretty cheap, so the declines of the past decade are not reproducible. Deployment, on the other hand, will accelerate.

Mass deployment of wind and solar will bring challenges. These sources are highly intermittent. When the wind suddenly stops blowing—which happens—we need a way to quickly make up the deficit. Each of the three electricity grids in the continental US—east, west, and Texas—has to remain in supply-demand balance every second of every day. We can use grid storage to smooth out some of the bumps, but storage remains expensive. To reach a grid powered entirely by today’s renewables, we would need storage at a price of $20 per kWh (with caveats).

That storage doesn’t all have to come from batteries, but let’s talk about batteries for a bit. Using Tesla’s grid-scale Powerpack as data, a 232 kWh battery today costs $125,793. That is a price of over $542/kWh. Through innovation, that pricetag will come down over the course of this decade, but improvements on the supply side could easily get swamped by increases in demand. After all, this decade will also include a huge shift toward electric vehicles, which I will discuss below. When demand outpaces supply, prices tend to stay high, even when there is impressive innovation.

With increased deployment of intermittent power generation, increased total demand for electricity due to electric vehicles, a high cost of grid storage, inadequate electricity transmission (have I mentioned that we often neglect to build in this country?), and strong political support for decommissioning fossil fuel plants, the 2020s may be a time of electric grid instability. This could be tempered to some extent by using car batteries as grid resources and through (politically unpopular) variable electricity prices.

Ultimately, we need scalable zero-carbon baseload energy, which means nuclear or geothermal. The problem with nuclear is the high cost. If you look at NuScale’s small modular reactor technology, they are targeting 6.5¢/kWh. That is baseload power, so not directly comparable to wind and solar’s intermittent generation costs, but even so, it isn’t the most competitive in today’s market. Furthermore, NuScale’s flagship project was just delayed three years and is now not scheduled to come online until 2030.

What is more plausible this decade is enhanced and advanced geothermal systems. The legacy geothermal industry is sleepy, tapping energy at traditional volcanic hydrothermal hotspots—forget about it. The next generation of the industry, however, is a bunch of scrappy startups manned by folks leaving the oil and gas industry. The startups I have spoken to think with today’s technology they can crack 3.5¢/kWh without being confined to volcanic regions. With relatively minor advancements in drilling technology compared to what we’ve seen over the last decade, advanced geothermal could reach 2¢/kWh and scale to become viable just about anywhere on the planet. Collectively, the startups are talking about figures like hundreds of gigawatts of generation by 2030. I’m watching this space closely; the Heat Beat blog is a great way to stay in the loop. As I wrote last month, permitting reform will be important.

Fusion continues to make technical progress. I expect we will get a demonstration of energy-positive fusion in this decade from one of several fusion startups or perhaps Lockheed Martin’s compact fusion reactor. But again: a demonstration is far from a change that transforms society. It will take further decades to deploy reactors onto the grid. By the time fusion gets there, the energy market will be quite different from when we started working on fusion reactors in the 1940s. Wind, solar, and hopefully geothermal will make electricity pretty cheap, and fusion will struggle to compete.

Consider: around half the cost of an advanced geothermal plant is drilling, and half is conversion equipment. Suppose the plant is amortized over 30 years (although many geothermal plants last longer), and after that period the conversion equipment needs to be replaced. But the hole in the ground does not need to be replaced! That means for the next 30 years, electricity can be generated at half the initial cost. Geothermal wells we dig this decade could be producing at less than 1¢/kWh by the 2050s. That is a tough market for fusion to break into. But fusion will still be a great source of power in applications where other sources aren’t available, such as in space.

The 2020s will be a big decade for sustainable alternative fuels (SAF). Commercial aviation can’t electrify—batteries will never match fossil fuels’ energy density. Given political realities, aviation has no choice to decarbonize, which means either hydrogen fuel or SAF. Hydrogen fuel is much better than batteries, but still not as energy dense as fossil fuels or SAF, and so my money is on SAF, and particularly on fuel made from CO₂ pulled from the atmosphere. It is easy to convert atmospheric CO₂ to ethanol in solution; and it is easy to upgrade ethanol into other fuels. But it is hard to separate ethanol from water without using a lot of energy—unless you have an advanced membrane as Prometheus Fuels does. I have written about Prometheus before and continue to follow them closely. Their technology could decarbonize aviation very suddenly.

One final note on energy: there may be very interesting geopolitical consequences in the decade ahead to America’s newfound energy independence. I could easily see, for example, the US deciding we actually don’t need an alliance with the Saudis after all, considering they are journalist-dismembering savages. If the US pulls out of Saudi Arabia, war between the Saudis and the Iranians becomes likely. Which means oil shipments to Asia get disrupted. Which means global chaos. This Zeihanesque scenario is only a scenario, but I’m watching for it.

Transportation

Here’s the thing about electric cars: they are better than regular cars. They have lower fuel costs. They have fewer moving parts and thus lower maintenance costs. They have higher low-end torque and faster acceleration. If you mainly drive to and from work and have a charger at home, you never have to stop for gas. Electric cars will win because they are better, and the shift will happen suddenly.

California will require that new cars purchased after 2035 have zero emissions. For most people, this will be a non-issue, as by 2035 most Californians would not dream of getting an internal combustion engine vehicle. I say this even as a relative battery price pessimist—or more accurately, I am a relative battery price pessimist because I think demand for batteries will be off the charts.

One area where batteries may not work (aside from aviation, already discussed) is trucking. Towing really heavy loads requires a lot of energy—hydrogen fuel cells will be more suited to interstate trucking. The transition from diesel to hydrogen in trucking will likely not be as automatic as the transition from gas to batteries in cars. It’s possible that truckers will need a bit of a push.

As cars shift to electric and trucks shift to hydrogen, air pollution will plummet, especially the currently unregulated ultrafine particles less than 0.1 μm in diameter which cause the worst health harms. There may still be larger particles from tires degrading and so on, but my view is that these do not cause serious health problems. Getting rid of the smallest particles, particularly from diesel fumes, will create health gains which may seem to appear out of nowhere. Fewer premature births, fewer cases of asthma, fewer cancers, fewer mystery illnesses.

Autonomous vehicles could finally happen at scale. Waymo is already in production with a driverless fleet in Phoenix. Tesla has a “full self-driving” computer which might not yet live up to the label, but is nonetheless very cool. Although we have all been continually disappointed by the promise of autonomy right around the corner, it does seem like it has to happen at some point. As sensors and computing power get cheaper, and machine learning algorithms get better, autonomy is inevitable. A decade is a long time, so I am reasonably confident it will happen in the 2020s. It could save a lot of lives. Autonomy, too, will accelerate the adoption of electric vehicles, as fleet companies will prefer the low maintenance costs of battery or fuel cell vehicles.

Let’s do aviation. As everyone knows, I am a huge fan of supersonics. I continue to cheer for my former colleagues at Boom, who will legitimately fly a supersonic aircraft in 2021. Supersonics will have an enormous impact on global business when it arrives at scale, but it’s looking like that won’t be in the 2020s—Boom’s most optimistic timeline per a recent article is a first full-scale airliner by 2026, then several years of certification tests, then a ramp in production to make it matter.

Other contenders: Aerion has a Mach-1.4 business jet design ready to enter production. The key question is whether they can raise the money to build the factory. The business jet market is small, so as an investor you really have to believe they will be able to parlay success on the AS2 into a future airliner program. Hermeus is working on a Mach-5 design point with 20 passengers. Exosonic is targeting Mach 1.8 with low boom technology that could allow it to operate over land. Gulfstream seems to have shuttered their supersonic business jet program, which was never announced in any case.

In addition to Boom’s XB-1 flight test program commencing in 2021, I’ll also be watching two other supersonic flight programs in the early 2020s. NASA’s X-59 will start flying over select cities in 2023 to collect data on acceptable levels of sonic boom. This will pave the way for new standards that unlock overland supersonic flight. NASA is literally making America boom again! In the next couple years, I also expect an unmanned demonstrator flight from Hermeus reaching as high as Mach 5. Awesome, right?

Aside from supersonics, the other exciting development in aviation is the proliferation of urban air mobility companies. Check out Joby, which recently acquired Uber’s Elevate division. Or Wisk, a joint venture between Boeing and Kitty Hawk. Both of these projects could enter service in the first half of the decade. Hyundai also has a new UAM division—look for their product to enter service near the end of the decade.

A key question in my mind regarding urban air mobility is whether regulations will allow autonomy. The business model doesn’t seem like it will work if you have to pay a pilot and lose the space associated with the pilot’s seat, which could otherwise serve an additional passenger. The FAA has been very incremental about allowing even small drones to fly beyond line-of-sight of the operator. In order for urban air mobility to compete with, say, Uber Black, FAA needs to adopt rules for low-altitude air traffic control (called UTM) and figure out a way to certify autonomous operations. Wisk seems pessimistic—they are targeting New Zealand as a first market.

Drone delivery is likely in the 2020s. FAA is about to issue a rule incrementally expanding drone operations, this time allowing operations at night and flights over crowds of people. This is how the FAA operates: use waiver authority to expand the scope of drone operations, and then once they are comfortable with that, make it into a generally applicable rule. I expect the process will incrementally allow bigger and bigger drone delivery programs until they become normal. Those of us who live within five miles of a Class B airport, however, may be out of luck the entire decade.

Let’s talk about tunnels. An efficiently governed country would need some tunnels, but perhaps not very many. China has added 25,000 km of (mostly non-tunnel) high-speed rail since 2008, and there is no technological reason why we couldn’t have done the same. But with a promiscuous distribution of the veto power, building long rail lines above ground becomes challenging. It may therefore be worth the high cost of tunneling to build new high-speed transport options.

The Boring Company has a small, near-operational “loop” under construction in Las Vegas. The project will whiz people around the convention center at up to 155 mph. Expansion plans include the Las Vegas Strip, the airport, and eventually connecting to Los Angeles. Another Boring project, currently mired in environmental review, is the DC-Baltimore Loop, which would connect the two cities’ downtowns in 15 minutes. All of Boring’s loops are designed to be compatible with hyperloop requirements, which would eventually enable 600-mph travel between major cities.

Although the full realization of this technology—a nationwide hyperloop network—is unlikely by 2030, even the 150-mph version is worth following. The time and hassle cost of travel is an important input into the gravity model of trade. I expect the DC-Baltimore Loop to significantly increase economic activity between the two cities—especially helping to revitalize Baltimore, as it would become easier to live there and work in DC.

Space

The big story in space technology for the next 10 years is Starship, as it will enable just about everything else. Let’s compare some launch costs. The Space Shuttle entered service in 1981 and launched successfully 134 times. Each launch cost an inflation-adjusted $1.8 billion. The payload cost to low-Earth orbit (LEO) was $65,400/kg. Today’s workhorse launch vehicle, the Falcon 9, can send cargo to LEO for $2,600/kg. That is a staggering decrease in launch costs.

Starship promises to take this trend much further. On Falcon 9, only the first stage is reusable, whereas on Starship, the entire system—both the booster and the space vehicle—is reusable. Starship runs on dirt cheap liquid methane instead of expensive rocket fuel. It is made out of stainless steel instead of more expensive traditional aerospace materials. SpaceX is talking about churning out Starships at a rate of one every 72 hours for a cost of $5 million each. Operating costs come down with a high flight rate, so Elon is figuring a $1.5-million fully burdened launch cost for 150 tons to LEO. That is $10/kg, more than 100 times cheaper than a Falcon 9 launch today.

It gets even more insane. Because Starship is designed to be refuelable on orbit, its 150-ton payload capacity to LEO equals its payload capacity to anywhere in the solar system. You will be able to launch 150 tons to LEO, load up on fuel while orbiting Earth, and then fly the same payload the rest of the way to the moons of Jupiter. The whole thing could cost less than one Falcon 9 launch—which is limited to 15 tons to LEO in a reusable configuration or 4 tons to Mars in an expendable configuration.

Let’s apply the gravity model of trade once more, this time to commerce between Earth and LEO. Meta-analyses have found that trade (on Earth) is roughly inverse-linear in transport costs. If that holds for space, a 200x cost reduction in travel between Earth and LEO should increase “trade” between Earth and LEO by 200x. Commerce between the Earth and the moon, or between the Earth and Mars, starting from a base close to zero, would be stimulated even more.

It’s worth noting a second-order effect of cheap launch costs. When launch is expensive, more engineering has to go into the payload to ensure reliability. You don’t want to spend $1.8 billion on launch, and then find out, as NASA did with the Hubble Space Telescope, that your new satellite needs repairs. This dynamic has caused over-engineering of space payloads. With launch for a new low price of $10-20/kg, companies and research agencies will be able to reduce engineering expenses by simply taking on the risk of paying for another (cheap) launch.

Since my guiding star is economically noticeable technological progress, let’s talk about that. SpaceX first landed a rocket booster five years ago. They have been undercutting all other players in the medium-lift launch market ever since. But in the grand scheme of things, launch is still a small market. Aside from getting to watch cool livestreams of boosters landing, Falcon 9 has probably not made a noticeable impact on your life (unless you work in the space industry).

That is finally beginning to change with Starlink. As of this month, there are 955 Starlink satellites providing Internet access to thousands of users in a “better-than-nothing” beta test. The constellation size could go as high as 42,000 satellites. Internet speeds are already over 100 mbps down—they seem to be only somewhat attenuated by bad weather. For many rural customers, the service is indeed much better than nothing—better than any other available alternative. With more (and more advanced) satellites in operation, speeds could reach a gigabit. With Starship, the cost of launching these thousands of satellites, and the speed at which the company could do so, will improve. Plan on a full buildout of the network this decade.

Starlink could be a cash cow. The service is not a good fit for most customers—urban populations are too dense and have too many alternative service providers for Starlink to be viable. Elon has said Starlink will serve the 3–4 percent hardest-to-reach customers. In addition to rural customers, it will presumably serve other niches like in-flight wifi on airplanes and Internet access for the crew on container ships.

Let’s call global telecommunications revenue $2.4 trillion. Assume Starlink can capture 3 percent of that. That is $72 billion per year in revenue, faaaaar more than SpaceX makes in launch. In 2019, the company had only $2 billion in revenue. Starlink is a money printer. And it makes you wonder, if SpaceX’s success so far has come on a budget of $2B in annual revenue, what would a $72B-per-year SpaceX do?

How about colonize Mars? I have a bet with Robin Hanson that a human will set foot on Mars by end of Q1 2030. I am not totally confident that this will happen (Robin gave me odds), but the scenario I think is most likely is the following: Starlink prints a lot of money, and SpaceX uses the money to pay for Mars colonization on Starship at a breakneck pace. That results in a human launch to Mars no later than January 2029, landing in September 2029. SpaceX President Gwynne Shotwell has said it will be a “major company fail” if humans are not flying on Starship (presumably just to LEO) by 2023. With Starlink revenue, SpaceX will be able to do the work on life support systems and mission planning to enable a human mission by 2029. NASA could be involved as a partner, but SpaceX would tolerate zero government obstacles.

Starship is also still in the running to be the landing vehicle for NASA’s Artemis missions. If it is not selected, that seems like a colossal error. To be sure, choosing Starship would represent a huge change of plans for NASA, which had been assuming a congressionally supported boondoggle relying on the Space Launch System, the Orion capsule, and a moon-orbiting Gateway. While Artemis’s goal is a human mission to the moon’s south pole by 2024, the schedule could easily slip. But by leveraging the new opportunities afforded by Starship, a permanent moon base by the end of the decade seems highly plausible.

With lower launch costs, what else is possible? Varda is a new company working on in-space manufacturing. Microgravity means that structures can be used that would collapse under their own weight on Earth. As a result, certain pharmaceuticals, fiber optics, semiconductor wafers, and nanotube materials can be manufactured in space that can’t be made on our planet. Lots of people want to bring manufacturing back to America, but putting manufacturing in orbit is much more exciting.

How about asteroid mining? I think this is still a ways off. There’s no question that it could be profitable someday. The street value of the materials on 16 Psyche back on Earth is $10 quintillion—even allowing for the inevitable hefty price slippage, space resource extraction could make a few trillionaires. I would love to be proven wrong, but I don’t think serious space mining will happen until the 2030s at the earliest. Again, however, cheap launch costs could be a game changer.

Information technology

Custom silicon is going to be huge. The rave reviews for Apple’s new custom system-on-a-chip platform demonstrate its inevitability. For machine learning, Cerebras has a full wafer-sized SoC. Tesla’s “full self-driving” computer likewise uses custom silicon. Almost all computer hardware—anything that has any scale to it—will move in this direction, because the performance benefits are so large. In a way, it’s a repetition of what happened before in semiconductors: individual transistors gave way to the integrated circuit. This change is simply taking integration another level further. Note: we lack the capability to manufacture these SoCs (at least good ones) in North America. Given their strategic importance, it may be worth remedying that.

The 2020s will be the decade that makes or breaks cryptocurrency. Well, nothing will ever break cryptocurrency—true believers will run the networks forever no matter what. But for cryptocurrency to have long-run value, I still hold that it needs to have mainstream uses. This means it needs to scale, it needs a good user experience, and normal people need to actually use it to transact. If it can’t reach that point by the end of the decade, I think it will have failed to have lived up to its promise. I am still cautiously optimistic. I think migration to proof-of-stake, lower transaction costs, more refined tools, and mature standards could lead to mainstreaming.

By the middle of the decade, augmented reality will be widely deployed, in the same way that smart watches are today. Glasses will be computing devices. Every big tech company has a glasses project at a relatively mature stage in the lab today. The need for the glasses to understand context could result in much smarter digital assistants than today’s Siri, Alexa, and so on.

Miscellaneous

I have an irrational love of vertical farming. The combination of LED lights, cheap electricity (for water pumps), direct-use geothermal heating, and smart machine learning algorithms that determine optimal nutrient distribution could yield better produce than conventionally farmed vegetables at competitive prices. By removing pesticides, optimizing varieties for nutrition and flavor instead of hardiness on the supply chain, and ensuring quick delivery to market, vertical farms could supply a healthier and more delicious future of food. Speaking of food, I predict plant-based “meat” will flop, but lab-grown real meat is worth keeping an eye on. Until then, eat humanely-raised grass-finished cows.

Construction tech is another area to watch. Whether it’s 3d-printed homes as imagined by Icon, or advanced manufactured housing as designed by Cover or Modal, there has to be a better way to build than our current stick-built paradigm. Housing costs have skyrocketed largely due to zoning rules, but construction technology is another lever by which we can increase housing productivity. This is another area where the barriers don’t seem to be primarily technological.

Collectively, these technologies add up to a lot of possibility. If we cure a bunch of diseases, slow down aspects of aging, realize cheap and emissions-free baseload energy, and deploy new modes of transportation and better construction technologies, we will almost certainly exceed 2 percent TFP growth. But we might not do these things.

It all depends on execution. The underlying science is there. The engineers are willing. Even the funding is available in most cases. But, as a society, how much urgency do we feel? Our culture does not prioritize progress—it fights, destructively, for status. And our politics reflects our culture.

I want to go faster.

2011 also marked the end of the Space Shuttle program, which was already 15 years beyond its planned life. The cancellation of these two programs brought demand for a new program to absorb the newly unemployed engineers. Senators from Alabama, Texas, and Florida pushed to create the Space Launch System using engineering and parts from Constellation and the Space Shuttle. This ensured that jobs in those states could stay there for another decade or more.

The core stage was doled out to Boeing on a cost-plus contract. It is now more than three years late, and costs are about 2x what they were when the contract was first approved. Yet these delays and cost overruns didn’t stop NASA from giving Boeing extra money.

The IG also found that despite multi-year delays in the SLS schedule and ballooning costs, NASA paid Boeing millions of dollars in award fees, which the agency grants based on performance. NASA contract managers subjectively rated Boeing performance as very good to excellent every year from FY2013 to FY2017. This made the company eligible for $234 million in award fees out of a possible total of $262 million.

Yet even when the SLS is developed, it will be too expensive to operate, except when Congress mandates it to create more jobs for Boeing.

“At an estimated cost of over $2 billion per launch for the SLS once development is complete, the use of a commercial launch vehicle would provide over $1.5 billion in cost savings,” wrote OMB.

That $2 billion figure appears to include around a $900 million marginal cost of the rocket plus the facilities needed to produce more than one rocket per year, as the Europa mission would require. As OMB emphasizes, this estimate excludes all development costs. Including development costs, the cost per launch could be $4–5 billion.

The SLS compares unfavorably to SpaceX’s Starship, to say the least.

Even assuming you have to launch two Starships to take advantage of on-orbit refueling, that amounts to a cost of $110 million to take 150 tons of cargo to the moon. This $110 million price tag is less than an eighth of the cost of an SLS launch, while transporting a payload of three times as much mass, a 24-fold improvement in launch efficiency.

The SLS is economically obsolete before it is even completed. Congress’s behavior is absolutely shameful, but they persist because not enough people understand what is going on. This post is my attempt to change that. Please do read and share the whole thing.

In a few decades when the reward gets too small, the transaction fee will become the main compensation for nodes. I’m sure that in 20 years there will either be very large transaction volume or no volume.

— Satoshi Nakamoto

Since the early days of Bitcoin, we have known that one day Bitcoin would need to rely on its transaction fee market for security. For the first 210,000 blocks, Bitcoin rewarded its miners with 50 shiny new coins every 10 minutes, on top of any transaction fees they were able to include in the blocks they mined. This reward, also called a block subsidy, introduced new bitcoins into circulation and incentivized miners to commit costly hashing power to the security of the system.

To prevent the total number of bitcoins from ever exceeding 21 million, the non-fee mining reward halves every 210,000 blocks. The block subsidy has already halved twice, first to 25 bitcoins and then to 12.5 bitcoins. In May 2020, it is due to halve again, to 6.25 bitcoins.

The past two “halvenings” have passed without incident. Bitcoin’s price has increased consistently over the past two reward eras, so that the dollar amount of the block subsidy is now higher than it ever was in either of the earlier eras. The price has also grown about as fast or faster than overall transaction volume.

The next halvening may be more interesting. With the block reward falling to 6.25 bitcoins, Bitcoin may need for the first time to rely on fee revenue to provide adequate security. Let’s run some numbers to see how this could play out.

Running the numbers

First, we need to decide what we think of as adequate security. Josef Tetek suggests that daily mining revenue equal to 1 percent of daily transaction volume is a good baseline. Over the past couple years, Bitcoin has averaged 1.5 percent. Let’s use Josef’s suggestion of 1 percent as our threshold.

During the current era, the block subsidy is 12.5 × P₿ × 144. There are 144 blocks per day, each block earns 12.5 newly minted bitcoins, and bitcoin is currently around $8,250, so the daily block subsidy is around $14.9 million. Over the last five months or so, daily transaction volume has hovered around $1.4 billion. This means that even without transaction fees, bitcoin miner revenue has exceeded 1 percent of daily transaction volume.

Let’s (for a moment) hold prices and volume constant as we look at the next reward era. The block subsidy will fall to 6.25 × P₿ × 144. At today’s prices, the daily block subsidy would be around $7.4 million. If daily transaction volume stays at around $1.4 billion, the block subsidy on its own would be 0.53 percent of daily transaction volume. If we take 1 percent to be the safe level, then for the first time we need transaction fees to make up a significant chunk of the block security incentive, the remaining 0.47 percent.

The number of transactions that can fit in a block varies based on the transaction sizes in bytes that happen to be in that block. In recent blocks, the median transaction size has been around 250 bytes and the average transaction size has been around 450 bytes. Let’s use the average size and say that blocks will contain around 320,000 layer-1 transactions per day.

After block subsidies, we have a notional security deficit of around $6.6 million per day. To make up that deficit in transaction fees, average fees need to rise to around $20 per transaction. Another way to put it is that as of May 2020, to maintain one idea of what is considered adequate blockchain security, transaction fees need to rise at least 16-fold while maintaining full blocks.

Let’s also look at the far future, when block subsidies are zero or negligible (blocks will receive less than a ₿1 subsidy beginning in 2032, so it’s really not so far away). Using an admittedly increasingly tenuous assumption of today’s bitcoin prices and volume, Bitcoin would need to make up the entire $14 million security budget out of transaction fees. This works out to a per-transaction fee of around $43.75.

Higher bitcoin prices don’t solve the long-term problem

In the short run, higher bitcoin prices may or may not help to remove reliance on the fee market for security. Let’s say that by next May, the price of bitcoin rises to $16,000, not outside the realm of possibility. That would make the block subsidy equal to $14,400,000, enough to secure $1.4 billion in daily transaction volume at our chosen security level of one percent.

However, with the assumption that bitcoin prices are nearly doubling in the next year, shouldn’t we also assume that transaction volumes go up? Let’s suppose that transaction volumes go up proportionally to prices, or that the number of bitcoins transacted per day remains at around 150,000. If total transaction volume goes up to $2.4 billion, then our block subsidy of $14.4 million remains inadequate. We would need $9.6 million in transaction fees to cover the notional security deficit. That works out to $30 per transaction, higher than our earlier assumption of $20 per transaction.

A more general way of thinking about it is that in the current reward era, 12.5 × 144 = 1800 new bitcoins are minted per day. That is enough to cover notional security costs for 180,000 bitcoins worth of daily transactions. In next reward era, 6.25 × 144 = 900 new bitcoins are minted per day. That is enough to cover security for 90,000 bitcoins worth of daily transactions. The number of daily transactions varies but is usually between 90,000 and 180,000. This means that no matter the price of bitcoin, today’s block subsidy is enough to ensure adequate block security, but next year’s block subsidy is not, at least not on the assumption that transaction volume remains above 90,000 bitcoins per day.

The influence of bitcoin price on block security goes away completely over time. In the long run, all of block security must be bought with transaction fees. This means that if we stick with our notional security target of 1 percent of transaction volume, average transaction fees will need to be 1 percent of average transaction size in the very long run to maintain proper security.

There isn’t an equilibrating mechanism to ensure fees are high enough to maintain adequate security

In the fee market, the supply of transactions is perfectly inelastic at 1 MB’s worth per block, around 320,000 transactions per day at current average transaction sizes. We can debate the exact elasticity of demand, but demand for transactions is a function of fees. Suppose at a fee of $1 per transaction there are 500,000 transactions demanded per day. Blocks can’t accept 500,000 transactions per day at current average sizes, so fees will be bid up until the quantity of transactions demanded equals block capacity and the per-transaction fee equals the willingness to pay of the 320,000th transaction (making some simplifications about byte-size per transaction).

At a fee of $20 per transaction, demand may be much less than 320,000 transactions per day. Say there are 100,000 such high-value transactions that are worth settling for $20 per day. If miners could agree to accept only such transactions, they could earn $2 million per day in fee revenue. However, since there is extra space in the block, it will always be in a selfish miner’s interest to accept an additional transaction at a lower fee. If a miner has a half-full block of $20-fee transactions and I submit a $1-fee transaction, why would the miner leave that extra $1 on the table? If he doesn’t take it, the next block’s miner will.

Of course, if some transactions are getting in for a $1 fee, why would 100,000 other transactors pay $20? The empty space in the block would enable them to lower their fee bids. This means that the fee market will tend to walk down the demand curve until blocks fill up. Price in the fee market equals whatever fee results in 320,000 transactions per day being demanded, i.e., the willingness to pay of the 320,000th transaction. Today, we know that the marginal willingness to pay for the 320,000th transaction is about $1. That means that instead of the $2 million miners could get from restricting the number of transactions to 100,000, they would only earn $320,000 per day in fee revenue.

In addition to being a function of price, demand for transactions is a function of the level of security provided. If equilibrium fees are not enough to provide adequate security, then demand will fall further and the price in the fee market will fall further, resulting in even less security. This is a potentially unraveling market, and I think it is what Satoshi meant when he said, “in 20 years there will either be very large transaction volume or no volume.” The fee market is only stable when block sizes are sufficiently small and demand is sufficiently inelastic to sustain full blocks with high-enough fees to be secure. We know that given today’s prices, volumes, and subsidies the market doesn’t unravel and security is maintained. But we also know that the subsidy is going to zero in the long run and is halving next year.

The big caveat

A big assumption in the above is the one borrowed from Josef Tetek that 1 percent of daily transaction volume is the “safe minimum” level of security. That assumption easily may not be valid. Bitcoin Cash, for example, has much lower levels of security and seems to be a going concern. I think the most likely scenario is that beginning in May 2020, miner revenue falls below 1 percent of daily transaction volume and Bitcoin keeps going. If miners generate 900 new bitcoins per day and daily transaction volume is 150,000 bitcoins per day, then with subsidies alone miners will earn 0.6 percent of daily transaction volume. That may be enough to satisfy users that transactions are safe. Fees can stay low and the market won’t unravel for the time being.

The bottom line

But we know that the halvenings will continue. At some point, the block subsidy will not be enough to guarantee security, whatever you think the right level of security is. The as-yet untested fee market will then have to kick in to provide security guarantees, which it may or may not do. This will be a real-time economic/security experiment on a live multi-billion-dollar institution. Should be interesting. Backwards induction has not happened yet.

The problem Bitcoin faces in a potentially unraveling fee market is a function of the design decisions Satoshi made and the community continues to support. If the community decided the 21-million bitcoin cap was not sacrosanct, it could in principle continue block subsidies forever. This would ensure adequate security because miner revenue would remain high even without fees. Alternatively, the community could move to proof of stake, where incentives afforded by slashing measures can increase security without a large fee market. Neither solution seems likely to me.

It’s possible that in the long run, then, we face a choice: Fixed money supply. Proof of work. Adequate security. Pick two (at most). How Bitcoin addresses this trilemma will be fascinating to watch. If not in 2020, then at some point.

A lot of people have responded to Patrick and Tyler’s article, covering different aspects of the challenge. In this post, let me bite off just the economic, forward-facing portion, recognizing that this is only a small part of the overall “progress studies” objective. Starting from where we are now, what would it take from an economic perspective to move the needle on growth?

To answer this question, we need to know where to focus. I think there are three criteria we can use to select focus areas.

The first criterion is economic significance. Obviously, progress in an area that is a huge component of GDP is one way to achieve progress overall. But not all of human welfare is captured by GDP or spending. Let’s also consider stuff we spend a lot of time on; after all, we have limited time budgets just as we have limited money budgets. We also need to consider undercompensated factors, stuff the full economic value of which isn’t reflected in the money or time we spend.

Not all technological advances are equally valuable. For example, imagine a technology emerged that revolutionized the lemonade industry. Lemonade simply isn’t that economically important. We don’t collectively spend a lot of time or money on it, and its value is not systematically excluded from our existing economic metrics, so we can ignore lemonade technology for this exercise.

A second criterion is low productivity over the last few decades. We aren’t going to move the needle on economic growth by focusing on industries like television manufacturing that have already experienced massive productivity gains. We need to address the laggards, those with low relative productivity gains. Fortunately, Mark Perry has already done a bit of homework for us by looking at BLS data to show areas where we see relative price increases versus decreases. These relative price increases are essentially relative productivity declines.

To move the needle on human welfare, then, we need to focus on items like hospital services that have gone up in relative price. Combining this criterion with the economic significance criterion helps us prioritize. For example, college textbooks have gotten a lot more expensive over the last 20 years, but one can hardly say that’s a cause of overall economic stagnation. If college textbooks suddenly received a massive productivity boost (“textbooks too cheap to meter?"), that would maybe save US consumers a few billion dollars per year, which is less than 0.1% of GDP. That isn’t important my purposes in this post.

A final criterion is the existence of a path to much higher productivity. I don’t think there are many parts of the economy that will permanently suffer from what Helland and Tabarrok call the Baumol effect, but childcare may be one of them for the foreseeable future. Robots could plausibly be designed to care for children, but it seems far-fetched to think we would deprive our children of human contact for, say, a whole work day. We should focus instead on industries where there are plausible large productivity gains to be had.

We are looking for economically significant sectors with lagging productivity and a plausible path to improved productivity in the future. So what meets these three criteria? I think a careful look at the economic landscape reveals four areas from which we could derive massive increases in human welfare: health, housing, energy, and transportation/logistics. If we want progress, we need a relentless push for innovation and dynamism in these sectors.

Health

The health sector is the epitome of economic significance. According to the Centers for Medicare and Medicaid Services, health care spending in the US is around \$3.5 trillion per year, almost 18 percent of GDP. More than one in six dollars goes to the healthcare-industrial complex. As Perry’s chart shows, medical care and hospital services are two areas where relative productivity has stagnated.

More broad than healthcare is health itself. What we are really after is wellness—a long life without illness and maybe without even needing treatment. Think about the amount of time a seriously sick person spends worrying about her illness. Or about the cost of the disruption in one’s life of even a minor illness—when my kids get a cold and have to stay home from school, someone needs to stay home with them. These are undercompensated elements of health, factors not fully accounted for in the GDP spending data.

These economic impacts of health are pretty mainstream. But there is even more scope for progress when we bring in the possibility of life extension and rejuvenation technology. The monetary value of a quality-adjusted life-year is often estimated to be on the order of \$100,000. With more than 300 million people in the US, every QALY we add to average US lifespan adds around \$30 trillion in value. There’s a debate among scientists over whether we can extend lifespans much beyond 120 years, but even if we “only” raise today’s life expectancy from around 80 to around 110 (and keep people in good health during the extra years), that’s 30 QALYs per person, or \$900 trillion in possible welfare gains for people in the US who are alive today, and \$3 million for every new person born from now on. At around 4 million births per year in the US, that’s \$12 trillion/year or an extra 57% of GDP in welfare produced on an ongoing basis after the one-time \$900 trillion gain.

Given the scope of the potential gains to improved health, we are remarkably complacent about improving health productivity. Politically, nearly all of the discourse is centered on from whose pockets today’s 18 percent of GDP spent on healthcare will come. To make progress, we need to get much more aggressive on reducing costs and improving outcomes. There is a lot of room for progress.

Perhaps the first element of any plan to generate progress on health should be radical consumer empowerment. Today, we are largely held hostage to the health establishment, but at least some of today’s routine medical care is or could be made obsolete if we tried. When I get my annual physical, my doctor listens to my heartbeat. I also have a computer on my wrist all day every day monitoring my heart for an irregular rhythm, and capable of doing a quick and dirty ECG. Given that my primary doctor is not a cardiac specialist, maybe the watch actually provides better medical diagnosis.

In addition to heart rate data, my devices collect data on my exercise, weight, body fat, and more. What is the evolution of this trend? Imagine consumers empowered by more advanced medical devices with comprehensive real-time medical data and software. Such equipment would spot health issues early. You could eliminate much routine care and reliably address non-routine problems before they become acute and more expensive to treat.

What is more, let’s not discard all the data being produced by these devices or even by today’s medical records. What could happen if you pooled all this data and made it available for research? Today, we don’t share medical records because of medical privacy concerns. But what if we got over ourselves? What if we gave researchers access to every consumer’s comprehensive real-time medical data, including outcomes? How much faster could medical science progress?

We should also be doing more to disintermediate medical treatment. For example, most hormonal birth control medication is quite safe, but we still make women see their OB/GYNs every year to get a prescription. The OB/GYNs like this because it keeps women in the system and doctors' paychecks coming. Moving birth control over the counter would eliminate expense and hassle from the system for millions of women.

More generally, we could consider moving most prescription drugs over the counter. Philosopher Jessica Flanigan argues that giving patients the right to choose their own drugs is morally obligatory. But aside from being the right thing to do from a moral standpoint, it could also lead to much lower medical costs, as doctors would have to compete with nurses, pharmacists, and yes, the Internet and apps for medical advice.

To disintermediate further, 3D chemical printers could make custom pharmaceuticals in exactly the right dose based on consumer-owned biomarker data. If we are sharing medical records in a public database available to researchers, the response to these printed drugs could be studied in detail to determine how safe and effective they are with statistically-constructed control data, reducing the need for costly clinical trials.

We should also seek progress on public health. The evidence is mounting that air pollution, especially from diesel vehicles, is worse than we thought. The electrification of trucks and school buses and construction equipment could therefore pay large dividends in terms of a healthier population. And there continues to be well-founded concern that federal nutrition advice has been motivated by agricultural interests rather than or in addition to health. How many health problems could be averted with more nutritious diets?

Funding for medical research needs to be improved. Top medical researchers spend up to 50 percent of their time writing grant proposals. This fact has led some to propose distributing grant money by lottery. It is not a crazy idea. If we could divert the time spent applying for grants to time spent doing research, we could double research output.

Lastly, given the overwhelming value associated with life extension, more of our research dollars should be focused on aging. In addition to diverting existing medical research funds to aging, we might consider spending less on heroic treatments for patients who aren’t likely to survive in order to spend those medical resources on aging research. Cut Medicare dollars from today’s elderly in order to make the future elderly live much longer and healthier lives. The payoff in terms of human welfare to cracking aging could be unimaginably high.

Housing

Another big ticket item with lagging productivity is housing. Between rent, imputed housing services, and new construction, we spend about 16 percent of GDP on housing, just below healthcare’s 18 percent. Most of the variation in annual spending is due to construction, which is highly sensitive to the business cycle.

Aggregate statistics understate the scale of the problem, however, as low housing productivity is concentrated in a handful of otherwise-productive cities in the US. For example, housing prices have roughly doubled in San Francisco (median home price \$1.35M) in the last decade, while in the US as a whole (median home price \$229k) they have only gone up 40 percent.

Aside from high expenditure in a pure accounting sense, high housing prices also distort all kinds of other markets. They increase commute times. They make people risk averse. They affect job decisions. They delay childbearing age.

It’s useful to divide housing prices into two components: land and structures. The division in value between land and structures varies according to market conditions of course. There are some key economic differentiators: for example, land doesn’t usually depreciate while structures do, and supply elasticity for land is zero, while it is positive for structures. This latter factor means that in areas with lots of housing demand, it is the land component of housing that is going to be the bigger factor in driving up housing prices.

This elasticity analysis matches reality. Consider this property, currently listed for sale in Palo Alto. The asking price is \$1.65M. The house, built in 1931, has 636 square feet, and the lot is 1,942 square feet, or 0.04 acres. As hard as it is to fathom that a 0.04-acre lot could be worth well over a million dollars, it’s certainly clear that a 636-square-foot structure could not be driving the price here, as the replacement cost of building another 636-square-foot dwelling.

Since housing costs in the most problematic markets are driven by land scarcity, there is an obvious solution. We can stack dwellings on top of each other so that they use less land. From a technological standpoint, we know how to do this. Many cities around the world have engaged in such dwelling-stacking.

The cost of housing in the most expensive cities is an entirely self-imposed problem. If we built a large number of apartment buildings in Palo Alto we could enable many more people to live in an area that is so otherwise productive that people today are willing to pay 7 figures for a cottage. In addition, by soaking up demand for housing into apartment buildings, we would lower the price of land so that the cottage wouldn’t be as expensive in the first place.

The free market would certainly build higher-density housing in high-rent cities. The reason it isn’t happening is zoning, permitting, parking requirements, and other land-use regulations. Not everybody wants high-rises in their city, preferring the charm of the million-dollar cottages or of whatever else happened to be there first. Challenging this NIMBYism is an enormous opportunity to generate economic progress, and I am pleased to say we have seen some limited success lately. Much more reform is needed.

Because of the inertia imposed by NIMBYism, it may be politically impossible to put residential high-rises in every expensive housing market. It is worth, therefore, figuring out how to the package greater density with the charm that NIMBYs seem to want in order to make density less of an uphill battle. It’s certainly possible to combine density and charm. Paris’s Haussmann buildings are up to six stories tall, and contribute to the city’s quaintness while affording greater density than the buildings they replaced in the mid-1800s. NIMBYs would still oppose new, more palatable options for density, but perhaps they would not oppose them quite so hard.

City governments should liberalize land use regulations like zoning and permitting. But they should also incentivize density by replacing today’s property taxes with land value taxes. Instead of taxing the value of the land and the structure as we do today, tax only the land. Change the rate of the tax to ensure that total revenues stay the same. On average, tax bills stay the same, but at the margin, the incentive to improve homes and neighborhoods increases, as does the incentive for the city to provide higher amenity value and more efficient services.

Although construction costs are not the major culprit behind today’s high housing costs, it’s worth thinking about how they could be reduced through technology. Through better use of robotics, new materials like self-healing concrete, more advanced production techniques like 3D printing and greater use of pre-fabrication, and drones for job site inspection, it’s possible we could get the cost of structures down, too.

Pre-fabrication is particularly promising for tall buildings, leading to cheaper buildings that can go up dramatically faster. As José Luis Ricón points out, the Chinese firm Broad Sustainable Building is capable of “insane building rates” through the use of factory-produced modules. This video shows them putting up a 57-story mixed-use building in 19 days, for an average of 3 stories per day.

There are more exotic building ideas that remain fictional. I for one have always wanted to see an arcology after playing with them in SimCity 2000. Neal Stephenson’s short story Atmosphaera Incognita features a 20-km-high tower with active stabilization using airfoils (and even turbofans in one section).

Although I will discuss transportation and commuting in a later section, it’s worth noting here that remote work is a popular solution to the housing crisis. By living in cheaper parts of the country, remote employees can pocket the gains from working in a big city while incurring lower living expenses. Remote work has clear benefits when housing markets are dysfunctional, but I am not so bullish on it in general. We are still very interpersonal beings, with finely honed microexpression detection skills. It remains impossible to fully replace in-person interactions. Maybe with computer-brain interfaces that will change, but for now I think we should focus on getting housing markets working again.

Energy

The Energy Information Administration tallies energy expenditures at only 5.8 percent of GDP, a much lower share than health or housing, which we examined above. But unlike healthcare or housing, energy is an intermediate good, and it features high complementarity with other production goods.

Another way to look at the significance of energy is through energy intensity of the economy. In the US, we use about 1.5 kWh to produce \$1 of GDP. Looking only at electricity, the average price across residential, commercial, and industrial uses in May 2019 was 10.43¢/kWh. A gallon of gasoline embeds 38.7 kWh of energy content, so at today’s price of \$2.66/gallon, that’s 6.87¢/kWh. Let’s average the electricity and gasoline numbers and say a kWh costs about 8¢ on average. That means energy counts for about 12¢ out of every dollar of GDP produced in the US, or 12 percent of GDP.

An undercompensated factor in this analysis is pollution. Fossil fuels made up 92.7 percent of the US’s primary energy mix in 2016. Burning fossil fuels produces both particulate matter that harms local public health (and is especially crippling in a number of Asian cities) and carbon dioxide emissions that warm the planet. Globally, although energy prices have fallen modestly over time, we are not yet making much progress on moving away from fossil fuels.

The goal for energy progress is actually pretty easy to define: electrify all the things and produce unlimited clean energy too cheap to meter. In such a world, people would use significantly more energy than they do today. In the past 50 years, energy consumption per capita has gone up, which means electrons are doing more stuff for us than ever before. And when cheap electricity exists, we should expect the energy intensity of the economy would increase rather than decrease. For example, thanks to abundant geothermal and hydroelectric power, Iceland has some of the cheapest and cleanest energy on the planet, and they use it in energy-intensive industries like aluminum smelting. Their economy is three times more energy-intensive than the US’s based on kWh/\$ GDP.

Achieving our energy goal requires electrifying ground transportation. The US uses around 9 million barrels of gasoline per day. I am fairly convinced a transition to electric cars will happen eventually, as they are superior to gasoline cars in terms of maintenance costs, operating costs, and performance characteristics (especially acceleration and torque), and they are still improving rapidly. But to get there faster we need to overcome the inertia associated with inadequate charging infrastructure and the scientific and engineering challenges of improving battery performance (energy density, charging time, durability, stability). And of course, lower electricity costs can only help as they would further reduce electric vehicle operating costs relative to gasoline or diesel vehicles.

Progress means producing a lot more clean energy, enough to equal current electricity usage, replace 9 million barrels a day of gasoline energy content, and grow our energy budget. Most sustainable energy investment is going into solar and wind development. Even coupled with batteries for addressing intermittency, these sources are increasingly providing electricity at competitive rates. Ramez Naam notes that new solar and wind (combined with storage) plants are getting to be cheaper than operating existing fossil fuel plants.

That’s great, but it might not be enough. To produce clean electricity at the scale we’ll need, we will also need to look at non-solar and non-wind sources of clean energy. The elephant in the room, of course, is nuclear energy. In the US, nuclear power provides less than 20 percent of our electricity. France, which invested heavily in nuclear power plants, gets more than 70 percent of its electricity from nuclear power. Nuclear power has several advantages. As Hannah Ritchie demonstrates, relative to fossil fuel sources, it is dramatically safer, despite assuming conservatively that the nearly discredited linear-no-threshold model of radiation exposure is true. The nuclear fear-mongers are wrong.

Relative to solar and wind power, nuclear doesn’t have the intermittency problem. It can consistently provide base load energy to the grid. Nuclear power plants are also available at much higher scale than solar power plants. The largest solar plant in the world, Tengger Desert Solar Park in China, has only a 1.5 GW power output. That’s the capacity of a smallish nuclear plant; larger nuclear plants produce 5 GW or more. (Wind power plants are usually below 1.5 GW, but the world’s largest wind farm is Gansu in—where else?—China, with a current output of 8 GW and a planned output of 20 GW. China also has the world’s largest hydroelectric plant by far, Three Gorges Dam, which produces 22.5 GW).

The US consumes 24 PWh of primary energy (i.e., including gasoline) per year. With 8,760 hours in a year, that is 2.7 TW of electricity at a constant load. If we restrict ourselves to plants that produce 1.5 GW, the size of the world’s largest solar farm, we would need 1,800 of them to fully decarbonize. If we combine that with rooftop solar, the total number of solar farms needed would be lower. There are some advantage to generating power on rooftops, where it doesn’t have to be transmitted to retail customers. But solar power is still much cheaper when it is produced at scale than when it is produced on roofs, so rooftop solar only gets you so far.

Nuclear power has the advantage of being safer and cleaner than fossil fuels, while being non-intermittent like solar and wind, and able to deliver energy at a significantly greater scale than solar and all but one (Chinese) wind farm in the world.

New kinds of reactors would only sweeten the nuclear deal. Thorium reactors would be safer and produce less waste while producing a lower risk of weaponization. Nuclear fusion could be an even safer and cheaper technology, if we can get it to work. I cannot evaluate the merits of these claims, but smart people say we are likely to achieve energy-positive fusion reactions in the next five years, with commercialization in the next 15. Lockheed Martin in particular seems to be getting close, and there are also today a number of fusion startups, something that was unheard of a decade ago.

Aside from nuclear, one underrated energy source is geothermal. 62 percent of Iceland’s primary energy comes from geothermal, including both electricity generation and home heating. Another 19 percent comes from hydroelectric. I was in Iceland in June, and I can tell you they have abundant wind resources as well. As Iceland has abundant clean energy, it is a great place to locate energy intensive industries like aluminum smelting.

Iceland is fortunate to be sitting on a volcanic hotspot, which makes it easy to tap into geothermal resources, but lots of other countries have untapped geothermal reserves. In Yellowstone alone, according to a NASA study mainly focused on supervolcano risk, there is enough geothermal energy to power the entire continental US. Unfortunately, §28(c) of the Geothermal Steam Act of 1970 essentially bans geothermal energy leases in national parks, ostensibly to protect their natural beauty. This is bananas. Iceland too has lots of natural beauty, almost none of which is marred by their geothermal investments. If in a misguided fit of 1970s regulatory zeal they had banned geothermal energy in their beautiful landscapes, they would not be the clean energy powerhouse they are today.

Another underrated aspect of geothermal energy is that it doesn’t have to use volcanic heat. Dandelion is a home heating and cooling company that graduated from Alphabet’s X lab. The company’s key insight is that ambient temperature in the ground 10 feet below the frost line is a stable 55º F, regardless of the time of year or outside temperature. Instead of using a heat pump to exchange energy with outdoor air, use one to exchange it with the ground, which is relatively cool in the summer and warm in the winter. The system is cost-effective, saving homeowners on average \$2,250/year, according to the company. We need more of this kind of entrepreneurial innovation to achieve our goal of clean energy too cheap to meter.

Transportation, logistics, and infrastructure

Transportation and especially aviation are near and dear to my heart. There is no single line in the National Income and Product Accounts that captures the value of transportation to the economy. If you add up some of the relevant transportation components, you get to a number around 9 percent of GDP.

There are a number of reasons why the 9 percent figure understates transportation’s importance. The first one is mathematical, a wonderful insight from Nick Szabo. Starting from a central point, the number of places that you can economically travel to is an inverse square function of the transportation cost. We can consider the cost to include both time and money costs. If you could travel in half the time and for half the money, the number of places you can access given your time and money budgets goes up by a factor of four. Think $A = \pi r^2$, where $A$ is your travel opportunity set and $r$ is how far you can afford to go in any one direction. What Szabo points out is that the value of transportation networks, like other networks, increases according to Metcalfe’s Law, proportionally to the square of the number of nodes in the network. The social gains to lower travel costs (or higher speeds), therefore, are doubly quadratic. The social welfare from transportation technology is an inverse fourth-power function of transportation costs. A halving of transportation costs, therefore, raises the value of the transportation network 16-fold.

Additionally, there is a strong undercompensated component to transportation. Transportation takes up a large amount of time, which is particularly relevant when we consider transportation of human cargo. The American Community Survey says workers spend on average 26.4 minutes commuting in each direction. That’s 52 minutes per day, 5 days per week, or more than 5 percent of your waking hours on workdays. In a survey, Kahneman and Krueger find that commuting is one of our most unpleasant experiences. Happiness research suggests that although you can adapt to most negative shocks in your life, you can’t adapt to a long commute. Long commuters are more likely to divorce and less likely to exercise. Adding 20 minutes to your commute leads to as much job dissatisfaction as a 19-percent pay cut.

The time and money cost of travel also has an unseen effect in the form of trips not taken. Think about the job you don’t take because it’s just out of commuting range. Or the friendships that wither when one person moves away. Or the places that you don’t go on vacation because the trip is too long. We have not seen a meaningful speedup in car or plane transportation in decades, so the unseen effect of trips not taken is not usually top of mind, but it is a big one. Research shows that high-speed rail in China leads to more research collaboration across cities, that international travel facilitates international business relationships, and that the switch from sailboats to steamships caused the first wave of globalization in the 1800s.

Because they are so interlinked, it’s worth discussing logistics and infrastructure in the same section as transportation. Logistics services (food or grocery delivery, packages from Amazon) are a substitute for traveling somewhere yourself, and of course they often include a cargo transportation component. According to the American Time Use Survey, we spend on average 1.78 hours per day (11 percent of our waking hours!) on household activities, many of which could be replaced by logistics services if the price would only fall. Cheap laundry pickup and drop off, instant availability of high-quality food options, and faster package delivery would reduce the time we spend on chores and errands.

And what can we say about infrastructure stagnation? We have it. Americans are spending \$2.2 billion per kilometer to expand New York’s subway system, while Paris expands theirs for \$230 million per kilometer. The United States seems completely incapable of deploying high-speed rail, keeping the DC Metro from catching fire, or making money on Amtrak. Projects spend years in environmental review.

Transportation, logistics, and infrastructure in the US could be enormously improved. Progress would naturally mean going faster, bringing back supersonic travel and then going further to hypersonic speeds.

China is killing us in high-speed rail, having added the lion’s share of its 18,000 miles of high-speed track in the last decade. Progress would mean replacing our current rail lines with the faster trains available in China, or even leapfrogging that technology and building out a Hyperloop network.

For intra-city travel, we need fleets of autonomous cars and urban air mobility. Robotaxis would save us from the inefficiencies of car ownership—your car is a wasteful capital asset, sitting idle 95% of the time. With all the investment going into autonomy, we will actually probably get them some time soon. Even more exciting than robotaxis is urban air mobility technology, which would provide the first major speed up in getting across town since the introduction of the car. UAM could provide a benefit even if only a few people use it. Ground traffic is highly nonlinear with the number of cars on the road, so taking even 10 percent of the passengers and putting them in the air could dramatically reduce ground traffic.

Lastly, we need progress in cargo services. Drone delivery seems ready to go once FAA allows it. Without a waiver, current regulations still restrict drone pilots to operations within visual line of sight, which makes drone delivery uneconomical. If you have to have a human close enough to see the drone, why not have the human just deliver the item? When fully allowed, drones may be great for short cargo hops, but we also need new long-haul cargo technology. Unmanned airships could come back for this purpose, beating today’s cargo ships on speed, and not being limited to coastal ports. China is investing heavily in airship technology.

Concluding observations

My aim in this post has been merely to think through what it would take, economically speaking, to generate dramatic progress. If we had large productivity gains in health, housing, energy, and transportation, I think we could safely declare that progress had arrived. Human welfare would be significantly higher.

Progress studies, as Patrick and Tyler have defined it, goes way beyond what I’ve done in this post and into the study of cultural and historical factors that lead to progress. I don’t claim to be an expert on these factors, but we can make a few observations that are useful to this expansive version of progress studies.

First, health, housing, energy, and transportation are all highly regulated sectors of the economy. It is simply impossible to take significant steps toward progress without addressing regulatory obstacles. We are not going to get progress by tweaking the tax code or by business as usual. In some cases, regulators will need to allow more safety risks to be taken.

Second, the US tech industry as represented by Silicon Valley venture capitalists dramatically underinvests in highly regulated sectors. A lot of the disinterest may actually be due to the limited partners, not the general partners. The LPs, perhaps pension funds or university endowments, want exposure to “tech stuff,” but not really to hard technology with potential regulatory barriers. This leads many VCs to focus on pure software companies, or on companies that simply apply better software to do something that is otherwise clearly legal and straightforward. We need new companies operating in regulated spaces so that regulators feel a sense of urgency to reform.

A third observation is that China is killing us in all the areas where we are stagnating. China is still a middle-income country, yet they already have longer healthy lifespans than Americans do. They are killing us on housing construction, putting up 57-story mixed-use buildings in 19 days. The world’s largest hydro plant, solar farm, and wind farm are all in China, and they are investing more in renewable energy technologies than Europe and the United States combined. China has newer and better infrastructure than the US, with gleaming modern airports and thousands of miles of high-speed rail. Of the areas I’ve discussed, the main one where China clearly lags is air pollution, which is still intolerable.

Fourth, the progress described in this post represents an agenda that should appeal to the entire political spectrum. It is difficult to see how we could achieve massive productivity gains in these four key areas and anyone could be left behind. It doesn’t matter whether you are rich or poor, urban or rural. Everyone’s living standards would rise if we could achieve the milestones I have set out.

I am grateful to Patrick and Tyler for being strong advocates of progress. Their article got a lot of people to think more seriously and systematically about how to overcome our present stagnation. I hope this post can also contribute to their burgeoning movement.

Between bickering over which country is paying the bill, the fact that the major costs of climate change are decades away, and countless more urgent political problems caused by the sudden surge of populism around the world, it’s possible sensible policies like carbon taxes won’t be fully adopted in time.

Fortunately, technology and entrepreneurship are contributing solutions. Solar and wind energy is plummeting in price. Transport is electrifying because it turns out electric cars are simply better than conventional ones.

But also, there is still a chunk of humanity with the determination, audacity, and ingenuity to succeed on a massive scale where political coordination has so far failed. Meet the geoengineers.

Here are four of my favorite large-scale projects to improve Earth’s environment.

Pleistocene Park

I’ve been following the effort to bring Mammoths back to Siberia since 2017 when I read Ross Andersen’s spellbinding feature on the subject in The Atlantic (highly suggested).

The core idea is delightfully counterintuitive: Siberia has too many trees. In ages past, Siberia used to be grassland, and today it is mostly forest. Although trees can sequester carbon in their trunks and branches (at least until they burn or decompose), Siberian forests have significant drawbacks with respect to climate change.

First, forests don’t reflect a lot of solar radiation. A treeless, grassy Siberia would increase Earth’s albedo, reflecting more solar energy back into space. Forests absorb more solar radiation and put it into the ground as heat.

Second, forests are poor habitats for snow-trampling herd animals. In the winter, a thick layer of snow acts as an insulator on the permafrost, preventing frigid above-ground temperatures from reaching deep into the Earth’s crust, where they can shore up the frozenness of the permafrost. When large herds of grazing animals trample the snow, its insulating properties are reduced and the permafrost can hard freeze. Forests reduce these snow-trampling grazing populations.

These effects matter because Arctic permafrost is potentially a carbon bomb. Legions of microbes lay in suspended animation in the frozen soil. If the temperature of the soil rises only 3 more degrees (C), the microbes will come to life, eat, reproduce, and start generating carbon emissions. Arctic permafrost contains more carbon than all the planet’s forests and the atmosphere combined. Thawing permafrost could therefore be a tipping point, leading to significantly more carbon in the atmosphere and a runaway warming scenario. An increase in albedo from converting the terrain to steppe would mean that the Siberian permafrost would absorb less heat, allowing it to stay frozen longer. And the trampled snow from the return of herding animals would allow Siberia’s frigid winter air to keep the permafrost deep-frozen.

So how do we convert Siberia to grassland? Nikita Zimov is already doing it. He is director of Pleistocene Park, a 144 km² grassy Siberian reserve founded by his father, gonzo scientist Sergey Zimov. The Zimovs have spent the past two decades ripping up trees and reintroducing grazing herds, including bison, moose, wild horses, yaks, and reindeer.

The plan is working. Nikita Zimov says the permafrost, which is at around –3º outside the park, is 17º colder (!) inside the park. The question then, is how to expand the park as efficiently as possible.

Here’s where the project gets really audacious: the plan is to bring back woolly mammoths. Like much other megafauna, mammoths died out around 10,000 years ago, hunted to extinction by our human ancestors. Mammoths provided the Pleistocene with the valuable services of grazing, trampling snow and moving it around to get to the grass below, and uprooting trees. Nothing will make a mammoth happier, it is thought, than ripping a tree out of the icy ground, just as modern elephants enjoy doing the same in the warmer ground of Africa. Based on everything we know, mammoths were a critical part of the Siberian Steppe ecosystem, and their extinction at human hands is what caused the forests to take hold.

To bring back woolly mammoths, we don’t need mammoth DNA perfectly preserved in amber as in Jurassic Park. Instead, geneticists are starting from mammoths' closest living relative, the Asian elephant, and adding genes that provide traits that could help them to survive in cold climates. If we give Asian elephants a nice layer of subcutaneous fat, a thicker coat of hair, smaller ears (so that the extremities don’t freeze), and some hemoglobin adapted for the cold, that may be enough to allow them to survive in the cold, Siberian winter. Modify perhaps as few as 50 genes. From there, it is thought, evolution will resume and make them more mammoth-like.

This genetic work is going on at the Wyss Institute at Harvard, led by ubiquitous geneticist George Church. There, scientists are identifying genes that could aid winter survival of Asian elephants, CRISPRing them into living elephant fibroblasts, and reprogramming the fibroblasts into pluripotent stem cells. These stem cells, with luck, will be used to produce new “mammoth” embryos. Once enough likely-to-survive mammoth-like elephants are incubated (artificially, because Asian elephants are endangered) to form a herd, they can be released into Pleistocene Park to help transform, maintain, and expand it—and, over a few generations, to transform themselves into better mammoths.

Humans have had a significant impact on the climate by deploying fossil fuels. But the key insight of the Zimovs is that our climate impact started much earlier, during the Paleolithic era, when we hunted megafauna to extinction and therefore altered critical ecosystems. Some environmentalists don’t like geoengineering because it seems too easy: perhaps it ignores the sins of humanity, for which we must atone. But in fact, using genetic engineering to revive megafauna that we wiped out to restore ecoystems that benefit the climate also atones, if that is the right way of looking it at. Hunting these magnificent creatures to extinction was our original climate sin.

Project Vesta

Earth has a built-in geological system for removing CO₂ from the atmosphere. It’s called the carbonate-silicate cycle, and it is the reason volcanic carbon emissions did not burn Earth to a crisp long before humans even domesticated fire. The only problem with this cycle is that it operates over a period of millions of years, too long to absorb the high rate of anthropogenic emissions. The aim of Project Vesta, based on scientific research led especially by Dutch geologist R. D. (Olaf) Schuiling, is to dramatically shorten that time frame.

The carbonate-silicate cycle is fairly simple to understand. As volcanic rock is broken down by water, the reaction’s byproducts combine with atmospheric CO₂ to form bicarbonate, which (in addition to deacidifying the ocean) is used by marine life to produce carbonate-rich sediments that fall to the ocean floor. These sediments stay there until they are absorbed into Earth’s crust and emitted again as volcanic lava many millions of years later. Unlike planted trees, which release stored carbon when they burn in forest fires or decompose after dying, the process of transforming atmospheric CO₂ into undersea limestone which is then subducted back into the Earth’s core can well and truly sequester carbon for eons.

This process happens naturally, but to move the needle on climate change, we need to accelerate it. What Project Vesta proposes is to mine large volumes of a (usually) green mineral called olivine, crush it up, and spread the resulting green sand on beaches all over the world, especially in the tropics where the water is warmest. Tumbled in warm, fast-moving water, this green sand would rapidly weather, essentially undergoing millions of years of the natural carbonate-silicate cycle in a few months or years.

It’s a little strange to think of turning our beaches green, but on reflection that isn’t a major objection. Papakōlea Beach in Hawaii is one of four beaches in the world that naturally features green olivine sand. And Project Vesta estimates that to offset all the world’s annual emissions, only 2% of the world’s shelf seas are needed.

Logistically, the plan seems at least plausible. One ton of olivine applied in Vesta’s process removes around 1.25 tons of CO₂ from the atmosphere. Olivine is superabundant, making up about half of Earth’s upper mantle, and currently costs around $25/ton to mine. At greater mining scale, mining and crushing olivine could be done for around $7/ton. Add around $3/ton for transport and logistics and you still have 1.25 tons of CO₂ removed from the atmosphere for about $10, or $10.62 as the detailed Project Vesta model has it). The Vesta team admits that a full life cycle analysis would lose up to 6% of the CO₂ saved, due to mining, milling, and transport. Even so, that works out to around $9.04 per ton of CO₂ removed from the atmosphere and ocean.

Are Project Vesta’s assumptions regarding economies of scale in mining realistic? Maybe. As organizations in the Netherlands such as greenSand have started to promote olivine weathering as a climate solution, the volume mined has gone up and the price has gone down. And the mining model Project Vesta points to for its $7.32/ton estimate is based on similar volcanic rocks and assumes US labor costs, which may actually be higher than what is realized if Vesta succeeds.

Let’s run some numbers assuming the $9.04/ton figure based on Project Vesta’s estimates. Say we wanted to offset 40 gigatons of CO₂, close to the average global annual level of CO₂ emissions. Per Project Vesta’s at-scale model, that would cost around $360 billion. That is a lot of money, but it’s less than, say, US annual defense expenditures, around one tenth of what the US pays for healthcare annually, or 0.4% of global GDP (which is around $88T and growing).

And how about if we wanted to offset cumulative anthropogenic emissions since 1751? As of 2017, that was close to 1.6 trillion tons of CO₂. 1.6T × $9.04 = $14.46T through 2017. Adding $360B for each of 2018 and 2019, we arrive at a one-time cost of $15.18T for offsetting all human emissions since the dawn of the industrial revolution, which if done over 10 years, would cost 1.7% of global GDP.

If Project Vesta’s estimates are right, humanity would completely solve the problem of climate change. To my eyes, it seems dirt cheap compared to many other proposals to respond to climate change (YC estimates direct air capture costs are $94/ton), and it is feasible using only technology that exists today. Even the skeptics among us should be intrigued.

Prometheus Fuels

Not all geoengineering megaprojects have to be non-profit. In October of last year, YCombinator put out a call for carbon removal startups to fund. One of my favorite companies that came out of this batch of startups is Prometheus Fuels.

The proposition Prometheus offers is simple: zero-carbon gasoline, for around $3/gallon. The company literally takes air and clean electricity and turns it into ethanol, butanol, or propanol, which can then be transformed into other fuels.

Turning atmospheric carbon dioxide into something more useful, like ethanol, is a known chemical reaction. As founder Rob McGinnis noted in his Hacker News launch post, “We’re not the first to make fuel from the air—in fact Google, Audi, Carbon Engineering, Global Thermostat, Climeworks, and labs at universities and national labs have all done it before us.” The process is essentially, as a story in Science put it, combustion in reverse: CO₂ and water react to form carbonic acid, and exposing carbonic acid to electricity and a copper catalyst can yield ethanol in a solution of water. From ethanol, we know how to upgrade the carbon chains to something like gasoline or jet fuel.

The big problem is that this process produces ethanol in water. The traditional way to separate ethanol from water is known as fractional distillation. You raise the temperature of the mixture beyond the boiling point of ethanol (173.3 ºF) and below the boiling point of water (212 ºF). This means the ethanol is in gas form and the water is in liquid form, and you can separate them. It takes energy to raise the temperature of the mixture, and this makes the whole process uneconomical.

Prometheus’s innovative ethanol/water separation mechanism, in contrast, operates at room temperature. The company has a proprietary way to produce filters from carbon nanotubes that let ethanol through but block water. As a result, no significant energy input is needed to isolate the ethanol. This means that Prometheus can produce ethanol from atmospheric CO₂ cheaply. The company estimates that gasoline made with their process, once equipment manufacturing is scaled, will be available for $3/gallon. Other liquid hydrocarbons like jet fuel would presumably cost a similar amount.

Assuming that only clean energy is used in Prometheus’s process, the resulting fuel is zero-carbon on a net basis. It is chemically identical to conventional fuel, so when it is burned CO₂ is released into the atmosphere. But the carbon atoms in the CO₂ molecules came from atmospheric CO₂ in the first place. Over the lifecycle of the fuel, the net effect on atmospheric CO₂ levels is zero.

Prometheus launched targeting the gasoline market, worth about $2 trillion per year. “We want to replace all fossil gasoline,” says McGinnis. But with cars perhaps on the cusp of rapid electrification, whether in the next 5 or 15 years, I am most excited about their technology in aviation.

Aviation is much harder to electrify than cars because of its extreme weight-sensitivity. Batteries simply can’t beat liquid hydrocarbons on specific energy. Due to improvements in battery specific energy, there is now a huge amount of investment in electric urban air mobility. And there are a handful of electric short-haul airliner projects like Eviation’s Alice and Heart Aerospace. But the math just doesn’t add up on long-haul.

Let’s take the Boeing 787-9, which has a range of up to 7,635 nmi. Its fuel capacity is 33,384 gallons (or 101,456 kg) of Jet A. Jet A has specific energy of 43 MJ per kg. This means that a fully loaded 789 carries 4,362,608 MJ or 4.36 TJ on board. The best lithium-ion batteries have a specific energy of less than 1 MJ/kg. Experimental lithium metal or lithium-sulfur batteries can yield up to around 1.8 MJ/kg. Assuming the better experimental battery technology, the aircraft would need 2,423,671 kg of batteries to replace the energy from Jet A. Considering the 789’s maximum takeoff mass is 254,011 kg, that is not close to possible. And even if you somehow could fit all the batteries on board, it would take yet more energy to fly with all that added weight.

So long-haul aviation will rely on carbon-based fuels for many decades to come. Aviation accounts for only around 3 percent of the world’s carbon emissions, but it is also one of the hardest applications to get off of liquid hydrocarbons. With Prometheus fuels, zero-carbon flights would be possible in only a few years. That is important because the world has already agreed to cap the industry’s (international) emissions to 2020 levels under the CORSIA framework, offsetting any overages. And Prometheus’s zero-carbon fuel would go a long way toward reducing (misplaced) guilt over travel due to flight shaming. The industry will gladly pay for zero-carbon fuels; the problem so far has been getting them at scale.

Another advantage for using Prometheus fuels in aviation is that ASTM, the standards body, has already developed a standard for alcohol-to-jet drop-in sustainable fuels. This means that Prometheus jet fuel could—right now—be used as a drop-in substitute for any aircraft that accepts Jet A in its flight manual, in a blend ratio up to 50%. In a safety-obsessed industry, there are no regulatory barriers to using this new, zero-carbon fuel. Over time, the allowed blend ratio is expected to go up to 100%, as the fuels really are chemically identical.

Although I expect cars and truck to go fully electric in a matter of years, the jet fuel market is pretty big too. Commercial airlines use 97 billion gallons of jet fuel per year, and that is not going away soon. If in our lifetimes we get zero-carbon aviation, it will be due to technology like Prometheus’s.

The Billion Oyster Project

Oysters are incredible creatures. Not only are they delicious on the half shell, during their time in the ocean each one filters between 30 and 50 gallons of water per day. They are also a keystone species, providing enormous benefits in terms of maintaining the structure of their ecosystem, forming reefs that provide habitats for other aquatic life, and otherwise supporting marine biodiversity.

New York harbor used to brim with oysters. When Henry Hudson first entered the harbor in 1609, it had 220,000 acres of oyster reefs. And they were large oysters too—the Lenape tribe had been plucking oysters out of the harbor for centuries, and we know from Lenape middens that the oyster shells were up to 10 inches in length. Some biologists estimate that New York harbor once contained half the world’s oysters. The water was pristine, the harbor teemed with life.

For most of New York’s history, it was known for its oysters. The Big Oyster is an entire book by Mark Kurlansky on the history of oysters in New York. Forget hot dog stands. Oysters were the original New York street food. And the oyster cellar was a ubiquitous eatery for most of the city’s history. Some catered to the affluent, and some to the working class. Everyone ate oysters.

What changed? Despite some problems with overharvesting, oyster populations were still strong into the 1800s. Around 1880, New York City was producing 700 million oysters per year, both for consumption and export. Pollution dealt the biggest blow. By the early 1900s, 600 million gallons of untreated sewage were dumped into city water per day. That was bad. Then came the industrial pollutants like heavy metals and polycholorinated biphenyls, many of them dumped into the Hudson River by General Electric. By 1927, the government shut down the harbor’s oyster beds, saying the oysters were no longer safe to eat. Soon after, the oysters died out.

In 1972, the Clean Water Act put an end to the worst polluting practices, and today the harbor is clean enough to sustain new oysters. The Billion Oyster Project, founded by Murray Fisher and Peter Malinowski and based out of the New York Harbor School, aims to reintroduce and foster a billion oysters in New York harbor. Thousands of middle and high school students have participated. Already, they have restored 28 million oysters, 2.8% of the way to their final goal. The project aims to reach its goal of one billion oysters by 2035.

It is fascinating to think about what a billion oysters in New York harbor could do. There are around 74 billion gallons of water in New York harbor, so a billion oysters could filter the entire harbor every two days or so. Because of lower pollution levels, we are already starting to see whales and dolphins return to the harbor. That is hardly attributable to the 28 million oysters restored so far, but it is fun to imagine a pristine harbor, fully cleansed by a billion bivalves, teeming with all kinds of sea life.

Oyster reefs have an additional benefit, one that relates to climate change: they serve as breakwaters to prevent storm surges. A billion oysters in New York harbor would restore some of the city’s protection from hurricanes.

A warmer climate is expected to increase the impacts of hurricanes, mainly by affecting their intensity. Model predictions are highly uncertain, ranging from a 39 to an 87 percent increase in the frequency of category 4 and 5 storms in the Atlantic basin, but the basic idea makes sense: warmer waters provide storms with more energy and more rain, making storms more destructive.

In 2012, New York City got slammed with a doozy of a storm called Hurricane Sandy. The subways flooded. NYU Hospital had to be evacuated because a backup generator failed due to flooding. All but one road tunnel into Manhattan flooded. People died. The economic losses in New York City alone were estimated at $19 billion ($65 billion in the tri-state area).

After Sandy, the need for breakwaters became obvious, and officials recognized the potential for the Billion Oyster Project to help provide that capability in Tottenville, Staten Island. And if the whole harbor could be restored to its former oysterfull glory, perhaps the next hurricane would not be as damaging for the city as a whole.

The Billion Oyster Project is not totally unique—there is a similar project in effect for the Chesapeake Bay, which also has fewer oysters and dirtier water than it once did. That’s OK. The more oysters the better, in my book.

Conclusion

What I love about these projects is not just their effects—improvement of the environment and climate—but their ambition, scale, and creativity. The world needs megaprojects.

My hope is that we can get to a point where more people think at megaproject levels of ambition, even when there isn’t a crisis to which to respond.

So far, three cryptocurrencies—Bitcoin, Ripple, and Ethereum—have hit a market cap of $100B. Notably, they all did so within three months of each other. These cryptocurrencies first hit market caps of $10B in 2013, 2017, and 2017, respectively. Bitcoin reached the $10B milestone almost four years before any other cryptocurrency, but the $100B milestone only three months before its competitors. At least by this one admittedly imperfect metric, Bitcoin is losing its lead.

Bitcoin losing its lead makes sense to me. What doesn’t make sense is that Bitcoin still has a lead at all and that it still has so many proponents. In terms of actual utility, Bitcoin is inferior in almost every way to several other cryptocurrencies, most dramatically Ethereum. I find myself inexorably drawn to a position not publicly articulated or even necessarily held by Ethereum’s founders and most active developers—Ethereum maximalism. My cryptocurrency portfolio is invested accordingly, and I don’t need to justify my beliefs, but I am writing out my rationale for the benefit of friends and followers who are interested. Take it for what it’s worth.

The economics of cryptocurrency competition

My mental model of cryptocurrency competition is still the one Jerry Brito and I developed for our 2014 article on cryptocurrency in the New Palgrave Dictionary of Economics (here’s an ungated version, related blog post). One question this model addresses is whether you can simply clone a cryptocurrency and expect it to have much value. Our answer was generally not, because the cloned cryptocurrency will have the same technical feature set as the original currency but with inferior network effects and likely inferior governance.

More generally, you can think of each cryptocurrency as being characterized by a multi-dimensional set of attributes: security, transaction cost, network size, governance quality, robustness of scripting languages, and several others. My mental model is that when one coin is better than another on some attributes and no worse in any other, then it dominates the other coin. A dominated coin can have no value in equilibrium. The market is roughly winner-take-all between dominating and dominated coins (roughly because equilibrium isn’t achieved instantaneously).

This doesn’t necessarily imply the market will be winner-take-all generally. There may be coins that neither dominate nor are dominated by certain other coins. This can happen if cryptocurrency characteristics reflect tradeoffs between the set of attributes. It can also occur if certain characteristics are not unambiguously good. For example, more of one characteristic may be considered better for one application and less of that characteristic may be considered better for another.

These complications imply that single-chain maximalism is not a necessary outcome. But winner-take-all-ness between dominating and dominated coins used for the same application is a sure thing unless you want to bite the bullet and say that the value of all coins should fall to the marginal cost of creating them, i.e., zero.

Governance: a special feature

One especially important characteristic of a cryptocurrency are its governance institutions. How do cryptocurrencies decide to add new features? How do they decide to change network parameters in response to changes in computing technology? How do they address bugs that are discovered or crises that occur?

Hilariously, here is what Jerry and I wrote back in 2014 about Bitcoin in our New Palgrave piece:

Bitcoin currently has high quality governance institutions. The core developers are competent and conservative, and the mining and user communities are serious about making the currency work. An exact Bitcoin clone is likely to have a difficult time competing with Bitcoin unless it can promise similarly high-quality governance.

Since 2014, a lot has changed. Bitcoin has been unable to seriously address its on-chain scaling problems. Its community has alienated, marginalized, and purged dissenting voices, notably Mike Hearn, Gavin Andresen, and Jeff Garzik. Its core development team has been captured by an ideological faction committed to only off-chain scaling in the name of decentralization. This faction has undermined consensus scaling agreements and trashed the reputation of anyone who points out any of the above. As early as September 2015, I was concerned about Bitcoin governance quality, but still—mea culpa for that 2014 paragraph. I really got it wrong. (n.b., I have not consulted with my coauthor Jerry Brito on this post, and my views should not be attributed to him.)

Governance institutions are especially important for cryptocurrencies because they can’t be simply copied. You can perhaps copy the institutional structure, and you can copy the outcomes and decisions, but when a crisis occurs, you want the A team to handle it as calmly, reasonably, and professionally as possible. Source code and technical parameters can be copied. Adoption and network effects can be replicated over time. Good governance—like good culture at a company—is a challenge to develop, and once you lose it, it’s hard to get it back.

Ethereum vs. Bitcoin: Where do we stand?

Does Ethereum dominate Bitcoin? Not yet, but it seems likely to me that it soon will, at least in most important respects. Let’s look at some indicators.

Market cap

Bitcoin still leads in market cap, which I take to be a good indicator of adoption and network effects, by a factor of more than two.

Number of on-chain transactions

Ethereum currently processes more than 3x the number of on-chain transactions than Bitcoin does. This metric might be considered a proxy for the amount of real-world use.

Trading volume

Bitcoin still has about 3x the daily on-exchange fiat-currency trading volume that ether does. It seems fair to say that Bitcoin is still more liquid with respect to fiat currency than ether is.

Mining reward

Mining reward is a good indicator of how secure the core function of a blockchain is, as it correlates with the cost of conducting a 51% attack on the network. Mining rewards over a 24-hour period are about equal between Ethereum and Bitcoin, indicating that at least with respect to the core function (hashing) of the networks, both are for now about equally secure.

Number of full nodes

The number of full nodes is sometimes viewed as a measure of decentralization of the network. The reason some Bitcoin developers are averse to a block size increase is they fear it will increase the resources required to run a full node, resulting in fewer full nodes and more centralization. Currently, Ethereum has more than twice the number of full nodes as Bitcoin does, even with bigger block payloads per unit time.

Transaction fees

Other things equal (e.g., mining reward), it is better for a cryptocurrency to have lower transaction fees. Ethereum has dramatically lower transaction fees than Bitcoin does, despite processing more transactions and having an equal overall mining reward (which leads to overall security). Even so, in my opinion Ethereum needs to do the work to ensure on-chain scaling continues so that transaction fees remain low.

Block frequency

Bitcoin processes blocks according to a Poisson process with a mean frequency of 10 minutes. Ethereum’s mean frequency is on the order of 15 seconds. This means you can have some certainty that your transaction will clear much sooner with Ethereum than you can with Bitcoin.

Robustness of scripting language

Ethereum features a Turing-complete instruction set with several normal-ish, expressive programming languages, while Bitcoin has only limited, gobbledygook op codes. This means that Bitcoin can only represent a ledger or some very basic conditional payments, while Ethereum can represent an entire computer state. I say this is a clear advantage for Ethereum, while some critics try to twist it into a point for Bitcoin. I will address the critics in the next section.

Governance quality

Bitcoin’s governance quality is abysmal, as discussed above. Meanwhile, the Ethereum community is practical and congenial. Both teams have talented computer scientists, but Ethereum’s culture is infinitely better. I am consistently impressed with Ethereum founder Vitalik Buterin’s maturity, humility, and leadership skills. Sometimes Vitalik is absurdly criticized as a dictator, but this accusation has no basis in reality. He seems to intuitively understand the need to build a broad consensus within the community, and this consensus in fact exists.

Sometimes Ethereum’s governance institutions are criticized for the 2016 bailout of the DAO investors. I will address the critics in the next section.

Final score

Bitcoin continues to have a clear lead in market cap (network effects) and trading volume (liquidity), and it is tied with Ethereum in block rewards (chain security). Ethereum leads in every other dimension: number of transactions, number of full nodes, lower transaction fees, block frequency, scripting capability, and governance quality.

If Ethereum were to appreciate enough to pull ahead in market cap (the “flippening”), it would also pull ahead in block rewards. And it’s hard to imagine that liquidity would be far behind. In other words, if ether doubled in price and bitcoin halved in price, Ethereum could pull permanently ahead of Bitcoin on every or almost every dimension that matters. This seems not only plausible to me, but likely.

Many of the criticisms of Ethereum are overstated or even unhinged

Bitcoin absolutists often spout criticisms of Ethereum that I will partially address below. The criticisms vary in terms of plausibility, and they are all repeated with tribalist fervor. Let’s take a closer look.

Ethereum has a greater attack surface

Ethereum’s instruction set is Turing-complete, while Bitcoin’s is not. This means that you can write complex smart contracts on Ethereum, and you generally cannot on Bitcoin. Bitcoin does whitelist some basic smart contracts as op codes, but it will probably never have as robust capabilities as Ethereum.

The other side of this coin is a concern raised about security. The fact that you can do more on Ethereum leads to some challenges, which are often called “a greater attack surface” by critics. There are two ways this criticism could be valid, one of which seems not to matter in practice at this time and one which isn’t a fair apples-to-apples comparison.

The first is related to setting the gas cost of operations on the Ethereum network. If some operations are underpriced in terms of gas relative to their computational cost, then it becomes possible to flood the network with underpriced but computationally costly operations. This brings legitimate activity to a halt, a denial-of-service attack. These kinds of attacks occurred several times in 2016, resulting in a repricing of certain operations. Presumably, as underlying computing technology changes, operations will need to be repriced again in the future. But this kind of attack only denies access to the network until gas values are recalibrated; no coins are at risk. Once recalibration is done, the issue basically goes away. While this is an issue the community needs to remain on top of as computing capabilities change in the future, it’s not a serious concern right now.

The other way in which Ethereum has a larger attack surface relates to individual smart contracts. With a more robust programming language, there are more ways to screw up. Bugs in complex code lead to debacles like the DAO fiasco. Yet, on an apples-to-apples basis, Ethereum transactions are every bit as secure as Bitcoin’s are. Bitcoin does not allow the kinds of complex smart contracts that are likely to have some of these bugs. If your goal is only to do the kinds of transfers on Ethereum that are allowed on Bitcoin, there is no reason to believe that the attack surface is any bigger. The code to transfer value on Ethereum is even simpler than it is on Bitcoin.

It is true that irrational exuberance about smart contracts on Ethereum has led to some projects launching poorly reviewed code that was ultimately insecure. But for the kinds of applications you might use Bitcoin for, Ethereum appears to be as secure as Bitcoin is.

What about the DAO fork?

In general, my prior is to oppose bailouts, and there is no denying that the hard fork that followed the DAO debacle was a bailout. Although I did not actively support the bailout at the time, I’ve arrived at a relatively agnostic perspective. Looking only at the consequences, it’s clear that the sky did not fall because the DAO investors were bailed out. Ethereum has proceeded quite successfully since July 2016. It’s possible that ether would be worth even more today had they not bailed out the DAO investors. It’s difficult to know. I would say that it is a plausible view, by no means certain.

What is an implausible view is the continual carping about bailouts on Ethereum, the implication being that the Ethereum community will hard fork to bail out everyone else who is careless with their smart contracts. Even if you think the DAO hard fork was misguided or wrong, there are numerous differentiating factors that make it separable from current activity. First, at the time of the DAO attack, Ethereum was still a young, immature system, less than a year old. Second, the DAO held approximately 15 percent of all ether that had been issued up to that point. Nobody wants an attacker to hold 15 percent of all tokens on any chain.

Finally, in recent coin loss events (like the Parity multisig bug), virtually nobody proposed hard forking Ethereum. It’s fine to continue to oppose the DAO hard fork that occurred 18 months ago. It’s unhinged and dishonest to pretend that Ethereum is bailout central for all time.

Vitalik is a dictator

Bitcoin was started by “Satoshi Nakamoto,” a pseudonymous founder who later disappeared. Ethereum was largely spearheaded by Vitalik Buterin, a Russian-Canadian twenty-something who is still around and actively contributing to the project. Vitalik exercises an intellectual leadership role within the community, which in my opinion he completely deserves on the basis of his contributions, temperament, and demonstrated strong judgment.

Some bitcoiners argue that Vitalik’s outsized influence means that Ethereum development is centralized. This is bananas. Vitalik is influential because he has a strong track record. As far as I can tell, technical dissent is extremely well tolerated among the Ethereum development community. And although Vitalik supported the DAO hard fork, to my knowledge he has not so much as said one negative word about those who chose to avoid the fork and continue with Ethereum Classic.

Meanwhile, Bitcoin core development is extremely ideologically centralized (and cynically, one might add centralized around the financial interests of Blockstream). There are purges of technical dissenters. There is widespread censorship on /r/Bitcoin. In contrast, Ethereum development has an extremely tolerant culture with plenty of room for back-and-forth and compromise.

Hard forks are unsafe

It has been an article of faith among some in the Bitcoin community that hard forks—introducing backwards-incompatible changes—are dangerous. Yet, somehow, Ethereum has hard forked on several occasions—mostly to add features—and everything has worked out just fine. How can this be?

Hard forks surely can be unsafe. If they are executed without adequate preparation, testing, notice, or consensus, they can result in chain forks or other debacles. But hard forks are also a necessary tool for adding features to existing blockchains. When executed properly, they do not appear to be unthinkably dangerous—hence Ethereum’s successful track record of hard forking.

One’s view of hard forking appears to depend on where you see blockchains in the development and adoption cycle. Some people think that blockchains are like the early World Wide Web—we’re in the “Netscape days.” I think more accurately we are in a state like the early Internet—we’re in the “ARPAnet days.” We are a loooooong way from reaching the full potential of blockchain technology, and therefore, upgrades to current functionality are vital. Inevitably, these upgrades will be provided through hard forks.

The belief that all new functionality will come through Layer 2 services or through soft forks is wrong. Knocking Ethereum for embracing and successfully executing hard forks is wrong-headed and counterproductive.

The store of value function of Bitcoin is overrated and can be accomplished with a token on top of Ethereum

“OK, sure,” I have heard some people say. “Ethereum is a better medium of exchange, especially since it has lower transaction fees. But Bitcoin is a better store of value.” Bitcoin has a hard cap of 21 million coins that will ever be issued—it is digital gold, the story goes.

This story is a retreat from the original Nakamoto paper, which clearly envisioned Bitcoin as a payment system. But even if we accept this change in scope, it’s not clear a) that Bitcoin can accomplish its store of value mission without also being a medium of exchange, b) that storing value on a blockchain with minimal possibility of transferring it is very valuable, or c) that a better store of value could not be achieved by creating a scarce token on top of Ethereum.

Bitcoin security is paid for with mining rewards, which consist of block subsidies and transaction fees. Because Bitcoin has a hard cap of 21 million coins, the block subsidy will go down over time and eventually reach zero. This means that to maintain a given level of security, transactions are necessary and there is a need for fees to be non-trivial. Yet if fees are high, transactions will move to other blockchains. The limit to the mining reward is determined by transaction demand—price × quantity—and therefore blockchain security is also limited by transaction demand. The commitment to have a fixed supply of coins potentially implicates a security parameter of the network, meaning bitcoins might not actually be a great store of value on a network where transactions are discouraged by high fees.

In addition, Bitcoin as “digital goldbuggery” has all the same problems that regular goldbuggery does—it stems from a misunderstanding of monetary economics which holds that all inflation is bad or even theft or fraud. I hold zero real gold—so why would I need digital gold, especially digital gold that is ridiculously expensive to transfer? While there is an interesting possibility for cryptocurrencies to supplant traditional monetary policy, that opportunity is not by fixing supply but by establishing a token that offsets changes in the spending level with increases or decreases in the supply of coins to keep nominal spending constant in a given geography. That is an interesting concept. But gold is dumb, and digital gold is also dumb.

Finally, even accepting arguendo that there is a need for a fixed-supply digital token, it’s not clear why that mission could not be better accomplished by establishing a fixed-supply token on top of Ethereum. You could have a token that has a supply of 21 million, that can be transferred for Ethereum’s lower network fees and with its faster blocks, and that takes advantage of its built-in zk-SNARK capability so that transfers are not traceable. Such a token would dominate Bitcoin even as a “digital gold” store of value. Historically, you might have argued that Ethereum’s mining rewards were lower than Bitcoin’s, and consequently, such a system would not be as secure as Bitcoin. But as discussed above, that is no longer the case. Therefore, the continued existence of Bitcoin is unnecessary even by the terms set out by digital goldbugs.

The Ethereum ecosystem is developing rapidly

As I wrote above, we are still in the early days of cryptocurrency technology. The future belongs to the ecosystem with the most rapid development and maturation trajectory, as well as the most willingness to safely adopt changes to the core network to support these advances. Here are a few areas where I think Ethereum is leading.

Scaling

Most of Bitcoin’s scaling effort has gone into adopting SegWit (which reduces on-chain transaction size) and enables Lightning as a level-2 solution. Ethereum also has a Lightning-like level-2 solution known as Raiden. Raiden will work not just with ether, but with any ERC20- (or successor-) compatible token. In addition, developers are working on Plasma, which I understand to be like Raiden but allowing not just transfers but generic state changes, doing for smart contracts generally what Lightning and Raiden do for payments.

In addition, the Ethereum community is exploring additional scaling solutions like proof-of-stake and sharding. You may or may not believe these solutions will work. Presumably, they will be fully tested on secondary networks before implemented on the Ethereum mainnet. If they don’t work, then Ethereum will be no worse off than other coins. If they do work as expected, Ethereum will have a major scaling advantage.

Subprotocols

Some of the most exciting parts of the Ethereum ecosystem have little to do with payments. For example, the Ethereum Name Service is an alternative to the existing Domain Name System. At a time when sites like Sci-Hub are being brought down through the centralized DNS, decentralized ENS has the potential to be a killer app.

Swarm is an Ethereum-native content-based addressing system like IPFS. If a critical mass were to use Ethereum for ENS access, they could also easily have access to decentralized storage and content delivery through Swarm. A site like Sci-Hub could even go without a webhost!

Unlike Bitcoin, which treats SPV clients as an afterthought, Ethereum is doing a lot of work to enable light clients. This will allow mobile clients like Status to exist. Status makes use of the entire Ethereum ecosystem, including ENS and Swarm, and also the Whisper messaging protocol.

Ethereum also has the most advanced token standards. People have been talking about “colored coins” in the Bitcoin community for years, but no one has really made them work. On the other hand, of the top 30 tokens listed on coinmarketcap.com, 28 are on Ethereum. While ERC20 is the basic standard, the community is working on extending the standard in backward-compatible ways.

In addition, work is being done to enable atomic swaps of ether and ERC20 tokens on the Ethereum blockchain. This will enable fully decentralized exchanges that can solve a major headache associated with the cryptocurrency ecosystem, the security of centralized exchanges (remember Mt. Gox?).

Useful apps

One of the most exciting applications that can be potentially achieved with Ethereum but can’t with Bitcoin is decentralized prediction markets. The Ethereum ecosystem features two such apps, Gnosis and Augur. Prediction markets have the potential to change the world.

Importantly, prediction markets could even be used to help make decisions regarding cryptocurrency governance. Imagine that the DAO heist happened in the presence of a fully functional combinatorial prediction market. The community could have launched a prediction market for the price of ether at a particular date conditional on there being or not being a hard fork to reverse the heist. The community could take the path most likely to raise the price of ether. Such Futarchy is a fascinating idea, but there’s only one blockchain that is likely to support it any time soon.

Bonus section: Why Ethereum will beat Ripple

Ripple has been on a tear lately, and now ranks as the number two cryptocurrency by market cap. As far as I can tell, Ripple is feature-dominated by Raiden, Ethereum’s level-2 token transfer network. Ripple is not a fully open network, and although it can transfer tokens representing any assets, the vast majority of tokens in use today live natively on the Ethereum platform. As such, it seems natural to transfer them using Raiden rather than establishing secondary tokens on Ripple to transfer a representation of Ethereum tokens.

Ripple’s high valuation makes Ripple co-founder Chris Larsen one of the richest people in the world on paper. CNBC calculated his notional net worth at $59.9 billion, richer than Larry Ellison, Larry Page, and Sergey Brin. Given the actual level of Ripple usage, this seems likely to end in tears for XRP investors.

Maybe not permanent maximalism

For now, I am an Ethereum maximalist. I think it makes sense for the cryptocurrency market to be dominated by Ethereum and tokens built on top of Ethereum. I no longer believe there is a stable place for Bitcoin, Ripple, or most other cryptocurrencies that exist today.

But in the long run, I am open to the possibility that a handful of other cryptocurrencies could develop and circulate alongside Ethereum in a more-or-less permanent way (or even supplant Ethereum). Given my model of cryptocurrency competition, it is fairly clear how such currencies could operate—they could be better on specific, useful margins than Ethereum is, or they could be optimally designed for specific applications for which Ethereum is a poor fit. (Or, given the latencies involved, perhaps Mars will have a separate cryptocurrency.)

I will always be grateful to Bitcoin for what it represents—a revolutionary advance in computer science. But for now, the world has moved on. Markets just haven’t recognized that yet.

I spent a few days this week at my undergraduate alma mater, Furman University, to participate in a conference at the Riley Institute on national security versus civil liberties. The conference was unique in that all of the participants were Furman alums, including Lt. Gen. John Mulholland and V. Adm. Mike McConnell.

While I was on campus, I spent a few days chatting with current students. I enjoyed this more than I expected to. I found the students hungry for career advice, and so I obliged. Here’s what I told them.

1. The main benefit of getting a liberal arts education is that you don’t have to get on a career track. Therefore, resist career tracks. If you do find yourself drawn to a specific career track, there’s probably a faster way to pursue it than to go to a school like Furman.

2. You don’t need a 30-year plan. I have at no point in my career so far been doing what I had expected to do even five years prior. Something like a five-year planning horizon seems right to me.

3. The very best way to make career decisions is to be mission-driven. Have something you are trying to achieve. Then decisions about what job to take or whether to go to grad school become a lot less agonizing. They become straightforward—does this step advance the mission more than my alternatives?

4. Undergraduates very often do not have life missions yet. This is OK. You shouldn’t try to fake one. While you are still trying to sort that out, I think a good step is to ask two questions. First, what is the most interesting thing going on in the world right now? Second, how can I put myself at the center of that? For me in my twenties, the answer to the first question was GMU’s unique economics department.

5. When you find yourself at the center of what is most interesting to you, try to indiscriminately create value. It’s not necessary to get credit or be well paid right away. You’ll get a lot more opportunities for both work and relationships if you’re a positive externality machine. Hopefully, these opportunities will help you discover a personal mission.

6. One of my regrets as an undergraduate is that I was not as ambitious as I should have been. People are capable of a lot more than they think they are. Not everyone can be Elon Musk, but almost everyone can be more like Elon Musk. There’s joy and meaning to hard work—I have a growing sense of this now that I lacked nearly two decades ago when I started college.

This is my current thinking, subject to revision as I am not exactly an old man looking back at the end of my career. Your mileage may vary.

After five incredible years at Mercatus, this is my last week. I’m starting in a new role as head of global policy and communications at Boom in mid-April.

I’m thrilled to be joining Boom. Boom’s vision of routine and affordable supersonic flight is exactly what I had in mind when I started working last year to Make America Boom Again. While policy changes are not strictly necessary for Boom to succeed as a company, they are needed to fully realize Boom’s vision. Most obviously, the “speed limit” on flight over the United States prevents coast-to-coast supersonic travel, a trip Boom’s first production plane would be able to cover in about two hours.

My job at Boom will be to make the principled case for routine and affordable supersonic flight to policymakers and the public. Faster travel is like a superpower—it expands the capabilities of the human race. New business models suddenly become possible. New cultural experiences become practical. New romances. More time with loved ones. A richer and deeper experience of life and the world.

As Boom overcomes the technical challenges associated with this superpower—making supersonic flight more fuel-efficient and quieter than ever before—we can’t let policy barriers prevent us from realizing our full human potential. I’ll be based out of DC, working here as well as in foreign capitals to make the case for sensible rules that allow supersonic aviation—and humanity—to flourish.

I am enormously grateful for my time at Mercatus. The last five years have been the best of my life. It has been a special joy to work with my colleagues past and present in the Technology Policy Program. Together, I think we have made a real mark on the tech policy landscape in DC.

I also want to thank the numerous people at Mercatus working behind the scenes to support my work in countless ways. Many of the opportunities I have had would not have come about without their dedication. I feel incredibly fortunate to have worked with each of them.

Life at Mercatus is pretty good. It would be easy to be…complacent…and stay put. I will always look back on my days at Mercatus with nostalgia, but the work beckoning at Boom is too exciting to pass up. I hope that some day soon, when my former Mercatus colleagues board a cross-country supersonic flight, they will remember me fondly.

Boom is a Denver-based startup working on building a supersonic passenger jet.

Wednesday, the House Freedom Caucus released a list of regulations it wants to address in the first 100 days of the new administration. I was delighted to see that a repeal of the ban on supersonic flight over the United States made the cut.

This is an issue that Samuel Hammond and I have been working on for the better part of 2016. We wrote about the supersonic ban in the Wall Street Journal and in our Mercatus Center paper, “Make America Boom Again.” Our paper was covered by brad plumer in a nice, in-depth article at Vox.

But even if we all agree that it’s time to revisit the ban on supersonic flight, there are still thorny questions of exactly how to do it. What needs to be done? What does the timeframe look like? What kind of standards are needed? What steps should we take to harmonize international standards? Here’s how Congress should be thinking about these issues as it tackles the supersonic ban.

Repealing the supersonic ban itself

Repealing the supersonic ban itself is actually really easy. The ban on flying faster than the speed of sound is contained in one sentence in 14 CFR 91.817, which reads in part:

No person may operate a civil aircraft in the United States at a true flight Mach number greater than 1 except…[some exceptions].

Congress could repeal this regulation with one line of legislative text: “14 CFR 91.817 shall have no effect.” One good thing about this approach is that it is immediate and final. The FAA can’t squirm out of it, and its incentive to drag its feet on the other elements of supersonic regulation would be dramatically reduced.

If Congress took this tack, however, there would be no limitation for the time being on the amount of sonic boom airplanes could create over land. By default, takeoff noise standards for supersonic aircraft would be “Stage 2,” much laxer than today’s standards.

Because there are no civil supersonic aircraft in operation right now, this is not a huge problem. It will take several years for new supersonic aircraft, like Boom’s passenger jet or Aerion’s business jet, to come to market. The FAA would have plenty of intervening time to promulgate new supersonic noise standards.

Yet if policymakers see this problem as bigger than it really is, another approach would be to simply order the FAA to conduct a rulemaking jointly repealing the ban on overland supersonic flight and putting forth new noise standards.

What should the boom noise standard be?

In our paper, Sam and I discuss the problem of boom noise at great length. In our view, the boom noise standard should be restrictive relative to the booms that were generated by the planes of the past—the Concorde and the Oklahoma City sonic boom tests—but lenient relative to where we would like to end up, whisper-quiet booms.

The Concorde created a nominal boom of approximately 105–110 decibels. This was really loud! In addition, because we did not know much about techniques to prevent pressure signatures from decaying into a very sharp N-wave, these booms had a lot of shock to them. The Oklahoma City tests produced overpressures similar to those of the Concorde.

Today, NASA is working on getting booms down to as low as 70 decibels. In addition, advanced aerodynamics can make these booms “smoother” or less sharp than booms of the past. Think of these booms as the sound of a car door slamming down the street.

While we share NASA’s goal of getting booms to be as quiet as possible, given that we’ve missed out on years of hands-on learning about supersonic aviation engineering, we believe the noise standard should for the time being be significantly laxer than 70 decibels. We argue that booms of 85–90 decibels should be tolerated during daytime hours in the near term as we try to work up the supersonic learning curve. Over time, we will likely get better at producing quieter booms and then the noise standard can be tightened.

So what does 85–90 decibels sound like? It’s up to 3_00 times_ less sound pressure than the 105–110 decibel booms the Concorde made (remember, decibels are a logarithmic measure—85 decibels is 316.2 times softer than 110 decibels). And it’s similar to noise levels that we already tolerate in society in small doses. Motorcycles and lawnmowers operate at 85–90 decibels for considerably longer periods of time. Sonic booms are over in half a second.

At night, we think another 100-fold reduction in boom noise standards would be appropriate, putting the standard at 65–70 decibels. This would for the time being essentially ban supersonic flight at night. It would also create an incentive for aircraft manufacturers to keep pushing for quieter booms so that they could be first to market with a day/night supersonic jet.

Congress could pass a law specifying the level of tolerable sonic boom at 85 or 90 decibels. But more likely, they will delegate this task to the FAA. A key question, then, is how can Congress force the FAA to take a middle-road approach to sonic boom standards, rather than simply adopting standards that will effectively continue the ban on supersonic travel.

While there is no way for Congress to force the FAA to take a subjectively reasonable approach, in the past, Congress has stipulated that the agency must consider whether new noise rules are “economically reasonable” and “technologically practicable.” I think these are good phrases that capture what factors we want the FAA to consider as it designs boom noise regulations.

What about airport noise?

Airport noise is currently regulated in several categories of standards called “Stages.” As already mentioned, if Congress overturned the ban on supersonic flight and the FAA did nothing, airport noise standards for supersonic aircraft would default to Stage 2. This is a level of airport noise that hasn’t been experienced in the United States for about two decades.

Current operational standards for subsonic aircraft are Stage 3, and to get a new subsonic aircraft certified, it must meet stricter Stage 4 standards. As of 2018, that latter requirement is getting ratcheted up to Stage 5. That is, after next year, older aircraft will still be able to operate at Stage 3, but any new subsonic aircraft will need to be certified for Stage 5.

The FAA’s current stated policy toward supersonic airport noise standards is quite severe. As a 2008 policy statement says,

We anticipate that any future Notice of Proposed Rulemaking issued by the FAA affecting the noise operating rules would propose that any future supersonic airplane produce no greater noise impact on a community than a subsonic airplane.

If this statement means that the FAA will only certify supersonic aircraft at Stage 5 starting on January 1, 2018, that is completely unacceptable. Supersonic aircraft have different fuel-noise tradeoffs than subsonic aircraft do. A supersonic aircraft operating at Stage 3 will use on the order of 20 percent less fuel than one operating at Stage 4. The difference in fuel use between Stage 4 and Stage 5 is even greater.

These fuel efficiency differences are a big deal both for the economic viability of supersonic travel and for carbon emissions. Consequently, Sam and I believe that Stage 3 noise standards—what we currently tolerate for subsonic operation now!—should be applied to new supersonic jet certification.

Another alternative would be to create bespoke standards for supersonic jets that are significantly different than subsonic standards. There is a decent case for this. The Stage 3/4/5 standards allow different levels of noise depending on the size of the aircraft. But since supersonic jets will initially tend to be smaller than popular subsonic airliners, there may be a way to craft standards so that they do not impose new burdens on communities while also allowing more leeway than the existing subsonic standards. For example, if an airport currently serves widebody subsonic jets, it may be possible for it to serve new supersonic jets that make no more noise than those existing widebody jets.

Again, Congress should ensure that any regulations the FAA promulgates on airport noise are “economically reasonable” and “technologically practicable.” And Congress should be exceedingly aware of the distribution of airport noise complaints, the subject of a recent paper I wrote with Raymond Russell.

What should we do about ICAO?

Finally, how do we deal with the international aviation community? ICAO, the UN agency that coordinates aviation policy, has been studying supersonic noise standards since 2004 with little progress to show for it. In part, this could be because the FAA plays a key leadership role within the ICAO and its Supersonic Task Group, and the FAA is no more aggressive at ICAO than it is in domestic policy.

While it is best to have international standards for aviation, there is no requirement that individual countries wait for or abide by international standards. Indeed, Article 38 of the Convention on International Civil Aviation explicitly allows for countries to deviate from international standards and practices.

Congress should make clear that the United States will not wait for ICAO to come up with noise standards, which could take another decade or more. At the same time, it should direct the FAA to push hard for international supersonic standards that meet economically reasonable and technologically practicable criteria. The state of aviation will be most advanced when all countries are aggressively pursuing advances in supersonic flight. But even if other countries lag, it is better to kick-start the market for supersonic transport earlier than to wait for compatibility.

When I think about Congress addressing this issue in the first 100 days of the new administration, I have to pinch myself. It’s incredibly exciting that something I’ve been working on for the last year might come to fruition so suddenly. Rep. Meadows, who authored the list of regulations to be addressed and included supersonic flight on it, has my sincere admiration for his leadership in this regard.

Uber’s Elevate_ concept._

Aviation is not a big industry. According to the BEA, all of “transportation and warehousing” accounts for only 3 percent of GDP, and of course aviation is only a portion of that category. Despite the industry’s small economic significance in this respect, I’ve come to believe that working on aviation policy is one of the most valuable uses of my time as a policy researcher. Consider this post a defense of my decision to double down in this area for the next year.

What aviation looks like today

When most people think about aviation, they think mainly about commercial jet transportation. They are not wrong to do so. Large passenger airlines and air freight companies account for most of the value the industry produces. There is of course marginally more to it than that—there are helicopters and private planes and a nascent, limited commercial drone industry. But by comparison, these are small potatoes.

Today’s commercial jet transportation has a few peculiar characteristics worth noting. First, it is organized along a hub-and-spoke model. If you want to fly from a small city on the East Coast to a small city on the West Coast, you will almost certainly have to connect through a major hub.

Second, despite the fact that technology exists to fly supersonically, all commercial flights today are subsonic. The Concorde retired in 2003. No new supersonic commercial planes have entered operation.

Airplane Speeds Have Stagnated for 40 Years

Third, commercial transportation generally operates along a “common carriage” model. There are published routes and timetables; you buy a seat onboard a flight traveling a fixed route. If there is a sudden surge of demand of people wanting to fly a particular route, the system can’t really accommodate that.

Fourth, flights are still human-piloted. In fact, autopilot does most of the work, but there are still people behind the control stick who are ready to take control in the event of an emergency. Or, as in the case of Air France flight 447, to aggravate the emergency.

Fifth, air traffic control is still done by human beings. In the United States, these human beings still work for the government. US airspace lags that of other countries who have privatized their air traffic control operations, like Canada, the UK, Australia, and New Zealand. Raymond Russell has a great piece on this in Plain Text.

Sixth, aircraft designs are stagnant. Here is one of the ways that James Fallows describes the stagnation in general aviation in his book, Free Flight:

The most popular small [general aviation] planes, the high-wing Cessna 172 Skyhawk and 182 Skylane, are basically unchanged from the models first introduced in the early fifties. In 1997 the Beech Bonanza celebrated its fiftieth anniversary in more or less continuous production. Of course there have been changes over the years, mainly in instrumentation. But to see one of these planes is to have no doubt that it is an ambassador from a much earlier age.

It is possible to view such a venerable fleet as a sign that these were products built to last. This was the spin that an executive of the New Piper Aircraft company put on the situation in the nineties: “Our airplanes are well designed and well built, often remaining in service for thirty years or longer.” But almost any product — a car, a refrigerator, a 1981 original IBM Personal Computer — could also be kept going for decades, just like an airplane, if like airplanes it were subject to the federal requirement for top-to-bottom annual inspections, renovations, and repairs.

The only parts of the world where people actually try to keep cars going for decades, except when consciously preserving museum pieces, are places like modern Havana, where there’s no incoming supply.

The reason it’s not done elsewhere is that new products are better. With enough effort, you could keep that 1977 Gremlin running — but you wouldn’t, since the new models look better, are safer, run more efficiently, have new features, and are easier to maintain.

JFK disembarks from Air Force One in 1962 or 1963. It looks just like today’s planes, right? It flew at the same speeds, too.

Finally, between being forced to use overcrowded major airports and suffering the indignities of TSA inspection, the experience of air travel is fairly horrible. Many of us are pretty good at working within the current system—I have gotten from my front door to my airport gate in 16 minutes—but there is significant room for improvement.

How aviation could be better

The discussion so far suggests several margins on which the aviation industry could innovate. First and foremost, our uses of airspace aren’t scratching the surface of what’s possible. Airspace is a dramatically underused platform for innovation. In addition to humans ferrying humans and cargo around for long distances on giant tubes, we need (at least) drone delivery, 24/7 drone sensing and broadcast platforms, and “flying cars,” or in Uber’s words, “on-demand urban air transportation.”

But even regular air transportation has a lot of room for improvement. It could be made better with an emphasis on point-to-point travel instead of today’s spoke-and-hub model. Imagine countless direct flights on smaller planes using more convenient airports, with routes coordinated by software. Open your app, tell it where you want to go, and a service matches you with any other passengers traveling to the same city and a plane that’s exactly the right size. Of course, to make this vision scale and be affordable, the flights would need to be autonomous—there aren’t enough pilots in the country to fly all the point-to-point routes Americans would demand.

Human air transportation should be supersonic. Imagine flying to London in 3 hours instead of 7, to Tokyo in 6 hours instead of 11, or to Sydney in 7 hours instead of 15. That is all possible using known technology—Boom is trying to do it. If their Mach 2.2 jet were allowed to fly over land, you could cross the US in under 2 hours as well.

And, to be a bit greedy, Mach 2.2 is only the beginning. NASA and other science agencies are studying hypersonic (greater than Mach 5) concepts that would make anywhere on Earth accessible in under 4 hours. (Gratuitous sidebar: I like laser propulsion.)

To coordinate heavier and more heterogeneous use of our airspace, we would need smarter, more automated, and ultimately decentralized air traffic management. Aircraft should be able to communicate and coordinate separation with each other, whether they are manned or unmanned vehicles. Better air traffic management pays dividends with lower operational cost and more intensive use of the airspace.

And finally, we need to find a way to bring more dynamism to aircraft engineering. Cars today are radically better than cars of the 1960s. Why are aircraft not similarly improved? If aircraft had experienced the kind of transformation that autos have in the last half-century, we would be having a different conversation right now.

The bottom line is that flight of all kinds could become cheaper, faster, and more convenient. These improvements would have real benefits in terms of quality of life. Three times in the last two months I have taken 24-hour business trips that entailed a night away from home and my family (Austin, Denver, Waterloo). If aviation were better in the ways I am discussing, I could easily have made these into same-day trips. And with faster, cheaper same-day trip availability, I would be more willing and able to meet and talk to more people.

Imagine the benefits of being able to commute a much longer distance in less time through the air. Labor markets would become more efficient as we would all have wider job search radiuses.

Finally, as aviation brought the world together, more people would have the opportunity for significant international travel. Instead of going to Chinatown, more Americans could visit China. The benefits of these foreign cultural experiences are possibly substantial, providing a broader perspective for average people.

How do we get there?

To be sure, there are some technological hurdles to overcome before this vision of next-generation aviation comes to fruition. But a large percentage of the hurdles are regulatory. Here are some of the necessary policy reforms as I see them.

First, air traffic control privatization is probably necessary if we are to experience any significant modernization. As discussed above, other countries have privatized their air traffic management systems with great success. A proposal to privatize US airspace passed the House Transportation and Infrastructure last year but stalled because the Senate version of FAA reauthorization didn’t include it. The issue is almost certain to return in 2017.

Second, commercial drone operation is limited by regulations more than by the technology. The FAA is gradually relaxing the restrictions on drones by first granting waivers to certain elements of the rules and then slowly rolling the formal rules back. This process is likely to take years if the current approach isn’t challenged by Congress, as it should be.

Third, there needs to be a regulatory framework in place for autonomous flight. The drone portion of this is relatively straightforward. The hard part is rules for autonomous aircraft carrying human cargo (i.e., flying cars). The FAA should begin right now to draft rules, create test sites, and work with innovators to find out what kind of guidance they need. Flying cars seem like a fantasy, but we already have a pretty good idea in principle of how they might work. There aren’t any massive missing pieces. Consequently, now is the time to start working on a regulatory framework that would allow them to operate.

The Joby S2

Fourth, we should legalize supersonic flight over land. As Samuel Hammond and I explain in our recent paper, “Make America Boom Again,” the ban on supersonic flight should be replaced with a sensible noise standard for sonic booms. In addition, the FAA should use its leadership role at ICAO to push for economical takeoff and boom noise standards globally, so that supersonic R&D is able to have the benefit of a global market.

Fifth, aircraft type certification needs significant reform. It takes years for an aircraft to work its way through the FAA certification process. In part, this is because the FAA insists on using government employees to do all the certifying. In contrast, NHTSA, the automobile regulator, allows sophisticated car companies to self-certify that they meet regulatory requirements. This self-certification is combined with more direct agency oversight when cars reach the market. As a result of this less restrictive regulatory model, cars have experienced dramatically more improvement than aircraft have in the last 50 years. FAA should immediately move to the NHTSA model—they already have legislative authority to do so, but they just simply have decided not to.

In the long run, there are other models of ensuring that aircraft are adequately safe without requiring detailed regulatory oversight. One possibility that I want to explore is that of requiring the manufacturer to carry a large amount of insurance for its products. If this requirement were in place, insurers could substitute for regulators in a competitive, decentralized way to ensure that aircraft designs are efficiently safe. I think this sort of policy would lead to a flourishing of aviation engineering relative to the status quo.

Sixth, the FAA should allow greater experimentation for kinds of air transportation other than traditional airlines. Unfortunately, the FAA currently considers any air transportation that you can book online to be a common carrier, regulated in the same, heavy-handed way the airlines are. This has limited experimentation with forms of “flight sharing,” taking rides with private pilots who need hours in their plane to keep up their licenses. A case involving FlyteNow, a flight sharing service the FAA shut down, may soon be taken up by the Supreme Court. While I hope the Supreme Court rules for FlyteNow, nothing is stopping the FAA from lightening up on its common carriage definition on its own, and nothing stops Congress from defining common carriage less restrictively.

Seventh, it’s past time to legalize what is known as cabotage. You know how Europe has super cheap regional airlines that use smaller airports? What if they decided to expand to the US market? Wouldn’t that be cool? Turns out, they can’t, because it’s illegal. The US (and many other countries) ban foreign carriers from flying domestic routes. This is a strictly protectionist measure that enriches corporate interests at the expense of consumers. It’s ridiculous, and the ban should be repealed.

There are many more aviation policy issues that I probably won’t have time to get to in the next year. Alex Tabarrok had a great piece on Marginal Revolution about airport privatization, which is a great idea. Also, TSA reform or repeal is probably necessary if we want to make flying a truly pleasant experience. The Department of Transportation is considering rules for in-flight cellphone use.

Even with this limited subset of issues that I’ve highlighted, I have my work cut out for me. There are many billions of dollars in economic welfare on the line here, and almost no one outside of the aviation industry is working on these policy issues. The industry is hampered by their need to play nice with their regulator, so they are not the most ready messenger for the obvious conclusion that we need a fairly significant regulatory overhaul. My goal is to produce good evidence for most or all of these reforms by the time Congress reauthorizes the FAA in September. Wish me luck, or if you are a public interest policy wonk, join me.

In the aftermath of the election of Donald Trump as President of the United States, many of us are searching for an explanation for what happened. “Why are our politics so divisive? This is not the America I know!”

This is a worthy question, but I don’t think anyone has really nailed it yet. This year, I’ve heard many political reform suggestions, including some that I support: ranked choice voting and processes to prevent gerrymandering. These two reforms would tend to make our quotidian politics more moderate and post-fact campaigning a riskier strategy.

But I want to focus on something else. I can’t shake the idea that we’re way out of equilibrium in terms of optimal country size. If this idea is correct, then at least some of our problems could be the result of a mismatch between reality and the unexamined assumption that we all have to be in this together.

The theory of optimal country size

The classic economics paper on optimal country size is by Alesina and Spolare (1997). They advance a number of theoretical claims in the paper, but in my view the most important ones are on the relationship between political and economic integration.

Suppose that the world is full of trade barriers. Tariffs are high, and maybe also it’s just plain expensive to get goods across the ocean, so there’s not a lot of international competition. In this situation, there is a huge advantage to political integration: it buys you economic integration.

In a world of trade barriers, a giant internal free trade area is one of the most valuable public goods that a government can provide. Because many industries feature economies of scale, it’s better to live in a big market. If the only way to get a big market is to live in a big country, then megastates have a huge advantage over microstates.

On the other hand, if economic integration prevails regardless of political integration—say, tariffs are low and shipping is cheap—then political integration doesn’t buy you much. Many of the other public goods that governments provide—law and order, social insurance, etc.—don’t really benefit from large populations beyond a certain point. If you scale from a million people to 100 million people, you aren’t really better off.

As a result, if economic integration prevails, the optimal country size is small, maybe even a city-state.

The world is becoming more economically integrated

In fact, global economic integration is proceeding apace. 50 years ago, the World Bank estimates that the global volume of international trade was about 25 percent of GDP. Today, it’s more like 58 percent. Over the same period, global GDP (in current dollars) has grown from around $2 trillion to over $70 trillion, around five-fold when adjusted for inflation. So over 50 years, global trade has grown from half a trillion dollars to over $40 trillion, a factor of 12 or so when adjusted for inflation.

Tariff barriers have fallen considerably—in the UK beginning in the 19th century, in the United States in the late 1930s, and in the developing world more recently.

While tariff rates are a policy decision and can therefore be undone, a fall in shipping costs represents a permanent, exogenous increase in economic integration. David Hummels (2007) has noted that freight costs are perhaps more significant than tariffs. The cost of air freight (which Hummels argues is economically underrated) has plummeted since the 1950s. Ocean freight prices have also fallen, though not as substantially.

Furthermore, even though tariffs can rise in response to policy choices, the nature of the modern economy creates political pressure to keep them low. The optimal market size for modern goods is often infinitely large. Once you’ve invested the money to develop an iPhone, it doesn’t make sense to not try to sell it in as many markets as possible. Similarly, for small governments, it doesn’t make sense to think that you’ll be able to produce an acceptable smartphone competitor by keeping Apple out of your country. These two effects put pressure on everyone to keep economic integration going.

One key point here is that global economic integration has dramatically increased over the last several decades. A second one is that, given the state of technology (falling freight costs and infinite-scale, modern goods), we are unlikely to revert to the relative autarchy of a century ago.

Political disintegration is happening all over the world

It’s not just Brexit. Nor the near-miss on Scottish secession in 2014. Nor next year’s Catalonia referendum. The list of active separatist movements is so large that Wikipedia has to break it up by continent (it’s worth taking the time to browse these).

Between the decline of colonialism and the disintegration of the Soviet bloc, the number of independent countries has tripled in the last 100 century or so.

These data indicate that there is at least some movement in the direction of efficiency. The benefits of empire are falling. As economic integration proceeds, not only is the optimal country size smaller, political-economic forces seem to actually move countries closer to the optimal size, i.e., cause disintegration.

The United States is a huge outlier

Over the course of its history, the United States has grown from its humble origins on the Eastern Seaboard to encompass a large territory. That territory has rarely gotten smaller. The continental US is not much different than it was in the 1840s. In addition, we have added Alaska and Hawaii as states, and several other territories.

The Civil War aside, the United States has largely resisted the global trend of political disintegration. If optimal country size is smaller today than it was a century ago, then North American polities should also be smaller than they were a century ago, but they’re not.

The United States is not really one nation

In his book American Nations, Colin Woodard argues that North America is actually composed of 11 distinct cultures, each dominant in different parts of the continent. Many of our internal political divisions—over gun control, the death penalty, abortion, the welfare state, immigration, and more—may actually reflect these cultural differences.

These cultural differences mean we are working at cross purposes. Culture might lead directly to differing policy preferences. In addition, political discourse is one of the means by which we raise and lower the status of various groups. If culture varies deeply, it’s no surprise that basically everyone is offended by the discourse somewhere else in the country.

To be sure, there are differences of political opinion within each of the 11 territories Woodard delineates as well as across them. That’s beside the point. The issue is the cultural assumptions that prevail in a nation. In the United States, those assumptions are not widely shared.

Maybe we should partition the United States

Regardless of whether you think 11 is the right number or whether you otherwise agree with Woodard’s map, one has to wonder whether having heated political debates on sensitive topics with fellow Americans who have potentially wildly different cultural assumptions is productive. We can opt out of these discussions by agreeing to go our separate ways. It might seem far-fetched, but California could hold a referendum on secession as soon as 2019.

Given what we know about optimal country size, a monolithic America makes less sense today than it did a century ago. What made America into the superpower that it is today is its massive internal free trade area. Now that trade barriers have declined worldwide, this is less of an advantage than ever before. It’s not at all clear that this diminishing advantage outweighs the cost of our divisive politics based on unshared cultural assumptions.

To be sure, there may be good reasons not to partition the country. Who knows what it would do to international relations to have 11 mini-Americas running around? Who gets the nukes in the divorce? I can easily see partition being a mixed bag.

And I don’t think we should dissolve the Union based on sour grapes after one election. The point is much more macro. There are people on all sides of the political divide who have been unhappy for some time. We don’t actually have to all live together under the same government. We don’t have to have political battles that are this divisive. Maybe we should consider our options.