For the past 200 years, every time society thinks humanity has reached its limit, technology propels us forward. When trains driven by steam engines headed west, they averaged an amazing (at the time) 15 to 20 miles an hour. That meant people could travel as far in an hour or two on a train as a horse and wagon would take them all day. Before long, trains were going 60 or 70 mph. Now we drive that fast without a second thought.
Within 50 years of the Wright Brothers taking off, Chuck Yeager broke the sound barrier, something that was once considered a limit. Less than 20 years after that, we had men in space. Spaceflight was not just a limit, it was once a wild dream. (In an 1865 Jules Verne novel, a gun club built a giant gun and launched a bullet-like capsule with three men inside to the moon. In 1928, Dr. Doolittle flew a lunar moth to the moon.)
When cities ran out of land, they built upward, with the first skyscrapers built in the late 1800s. When there was fear that we could not produce enough food to feed a rising population, modern farm implements, techniques, and the introduction of fertilizer lead to a rapid uptick of productivity, with the yield per acre climbing dramatically in the past 60 years.
This technological growth was what made the American Dream possible. Anyone with a good idea could capitalize on it. Build a better mousetrap, it was said, and the world will beat a path to your door. That was then. Today, we find ourselves limited.
Reaching our Limit
What happens to progress when we reach our limits? What happens when we can no longer make microchips any smaller, send more data through fiber, or come up with a battery chemistry that stores more power? Progress stops, and we plateau. The technological leaps that have propelled our wealth and our wellbeing slow to a crawl until the next breakthrough or paradigm shift. Americans are innovative and companies sponsor research and development because they knew they can turn each advance into profit. It’s part of capitalism.
But what happens when we have not reached our limit, but our limits are lowered by government fiat? What happens when laws prevent the trapping of mice?
We are living through that now. We can no longer provide food to our citizens because of a man-made crisis. The demand for electricity or natural gas exceeds the capacity. People will go hungry and grow cold because of artificial limits.
In a free market, market forces would produce more food or more natural gas. Capital would flow towards these projects because they would have a good return on their investment, and within a few years, production would increase and the limit would have expanded.
But we no longer have a free market. We have a heavily regulated market, where governments interfere with the smooth flow of capital. We no longer enjoy unfettered capitalism, because we have socialism. The socialists want to control the markets and get the outcomes they want, even if it isn’t the best thing for the country.
Government incentives, fines, lawsuits, permitting delays, and burdensome regulatory requirements force capital to be spent not where it wants to go, but where the government wants it to go. The result of this interference is our limits no longer expand like a balloon. Instead, they shatter like a glass lightbulb. (You know, the old incandescent lightbulbs that are now prohibited by government decree.)
Artificial limits bring a halt to innovation because it is no longer profitable. Why invest in developing and testing a better nuclear reactor if the environmentalists won’t let anyone build a nuclear reactor? Why invest in developing new ways to drill for oil if its primary market will be cut in half in a decade and non-existent by 2050? Who will raise cows if they can’t sell them at a profit?
A regulated market also causes businesses to leave the market. As a result, we don’t see a plateau; we see contraction. That leads to supply imbalances, which contribute to higher costs and inflation. A country that had plenty of oil three years ago must look for it on the world market where costs are higher.
Pushing our Limits
When oil companies stop developing new gas and oil wells, production falls as wells age and their peak productivity is behind them. If government taxes discourage drug development, the development of new drugs slows and more people die. When taxes make it expensive to operate in a country, business move their headquarters to another country. When costs are too high in one market, they move manufacturing to another, causing job losses. If workers want too much money, fast-food restaurants get kiosks and robots while stores go with self checkout.
Because lawsuits stop pipelines, people in the affected states face supply limits and pay more for energy than the rest of the country. This leads to new laws requiring that new furnaces must be electric instead of gas or oil. That causes more market disruption.
When the government’s behavior forces the market to adapt to it, companies make decisions they would not otherwise make. For example, farmers are selling prime cropland to companies that want to put up solar panels. That’s smart of the companies (who get flat land that is already cleared), smart of farmers who want to raise some cash, but bad for a country that needs to feed its populace. Right now, there are alternatives to solar power, but there are no alternatives to eating.
The free market works because it is free. It can adapt to minimal regulation, but there is a limit to how much it can withstand.
When the limit is reached, when too many of those lightbulbs break too quickly, the people reach their limit. That’s where we are today. The frog knows the water temperature is increasing, and he’s growing agitated. At some point, the frog is going to jump out, and he’s going to be pissed. One pissed frog isn’t a big deal. Millions of them, however, would be.