Friday, April 15, 2011

I, Toaster

It’s easy to get across to students that the theory of Romer’s endogenous growth suggests that people and their interconnections are important to growth.

It’s more difficult to get across the practical implication of this: that huge amounts of technological advancement are made conditional on the existence of ideas that are brought together in a completely decentralized way.

The classic example of this is the essay “I, Pencil” by Leonard Reed. The updated version of this, dubbed “I, Toaster” by some, is Thomas Thwaites undergraduate project to build a the equivalent of a $7 toaster … from scratch. He really doesn’t even come close to doing it from scratch, and the final product looks appalling.

I, Toaster

But, that’s the point really: the world is full of objects like the $7 toaster that are put together efficiently by decentralized, voluntary, exchange.

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