Pic by Getty Images "What does it mean to 'raise the ceiling' or the 'floor'?"I just observed a lot of projects that set out to 'raise the floor.' Meaning: 'Gosh. "We" are fine, but "they" are not, and we need to go help them with our superior prosperity and understanding of their situation.'"Many of those projects fail. For example, there were a lot of attempts to bring the internet to Africa by large and wealthy tech companies and American universities. I won't say they all had no effect, that's not true, but many of them were far short of successful."There were satellites, there were balloons, there were high altitude drones, there were mesh networks, laptops, that were pursued by all these companies -- and, by the way, by perfectly well-meaning, incredibly talented people who in some cases did see some success, but overall probably much less than they ever hoped."But if you go to Africa, there is internet now. And the way the internet got there is the technologies that we developed to raise the ceiling in the richest part of the world, which were cell phones and cell towers."In the movie 'Wall Street' from the 80s, he's got that gigantic brick cell phone. That thing cost like 10 grand at the time. That was a ceiling-raising technology. It eventually went down the learning curve and became cheap. And the cell towers and cell phones, eventually we've got now hundreds of millions or billions of them in Africa. It was sort of that initially ceiling raising technology and then the sort of force of capitalism that made it work in the end. It was not any Deus Ex Machina technology solution that was intended to kind of raise the floor."There's something about that that's not just an incidental example. But on my website, I say 'probably.' Because there are some examples where people set out to kind of raise the floor and say 'No-one should ever die of smallpox again.' 'No-one should ever die of guinea worm again.' And they succeed."I wouldn't want to discourage that from happening but, on balance, we have too many attempts to do that. They look good, feel good, sound good, and don't matter. And in some cases, they have the opposite of the effect they intend to."~ Nat Friedman, transcribed from an interview with Dwarkesh Patel on the Lunar Society podcast [hat tip Jason Crawford]
Friday 28 April 2023
Why it’s more important to “raise the ceiling” rather than the “floor”
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That's entirely right and often unappreciated. New innovations are often luxuries only the well off can afford at the start. But being able to sell at a high price is necessary for the product to become established in the first place. Eventually we get product refinement and cost efficiencies causing prices to drop, until we reach a point the majority can afford it too. The wealthy are effectively subsidising (voluntarily) the initial product development, allowing it to become accessible to the masses.
A similar, and even less appreciated principle applies to affordable housing. Building big new houses for the wealthy allows the 'churn' you've described in previous posts which enables affordable housing. Someone upgrades to the higher value house, someone below that upgrades into their old house, and so on right back to a new lowest value houses being made available.
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