How Much "Abundance" Could AI Bring to Physical Goods?

Some observers do not like the idea that wages and productivity are related in a fairly important negative way. Which is to say, lower labor costs are one measure of higher productivity. So, crudely, lower prices for most consumer goods hinge on lower production costs, which in turn are dependent on lower costs of all inputs required to produce those goods. 

The promise of artificial intelligence is that it will help reduce production cost, and therefore lead to retail price advantages. “Abundance,” in other words, is the hoped-for end result. We already have seen this trend for all manner of digital goods. 

The issue is whether we might see it in the realm of physical goods. To put matters another way, if product prices fall to near zero, it also will be true that the costs of creating those goods must be correspondingly near zero. 

Of course, most observers would say that raw materials, manufacturing, transportation, warehousing and marketing costs are far from zero. As a rule, the more value in any product is driven by virtual or non-material sources, the easier it will be to push out costs using AI. 

And the point, for physical goods, is not necessarily any actual approach to near-zero costs. All that has to happen is that costs change so dramatically that the ability to use the product as much as desired is enhanced. In other words, cost is low enough that a user or customer will not be deterred by such cost. 

Think search, social media, e-commerce, content streaming or home broadband. The cost to use these products is low enough that there is no barrier to widespread use. 

One might argue that all past general-purpose technologies have achieved some measure of greater abundance in large part because they are broadly horizontal in their impact: they enable virtually all industries.

AI should have that same horizontal effect, increasing productivity in virtually all industries.

General Purpose Technology	Impact Across Industries	Examples
Electricity	Revolutionized manufacturing, transportation, communication, and daily life.	Factories with electric power, electric lighting, household appliances, electric vehicles
The Internet	Transformed communication, information access, commerce, and social interaction.	E-commerce, online education, social media, cloud computing
Artificial Intelligence	Automates tasks, provides insights from data, and enables new forms of interaction.	Self-driving cars, personalized medicine, chatbots, fraud detection
Biotechnology	Advances in medicine, agriculture, and materials science.	Gene editing, disease-resistant crops, bioplastics
Nanotechnology	Creates materials and devices at the atomic and molecular level, with applications in various fields.	Stronger and lighter materials, targeted drug delivery, advanced electronics