More For The Masses

Commentary, Disruption, Frontier Centre

The explosion of goods and services in our productive private sector knows no historical parallel. All news is bad news, runs the journalistic adage, so most people hear nothing about this modern miracle.

One corrective for this oversight comes from an unlikely source, the Federal Reserve Bank of Dallas. You might expect the annual report of such an august institution to litanize statistics interesting only to accounting geeks. Once again, however, the Bank has used its report to enlighten us about our good fortune.

Two economists on the Fed's staff, Michael Cox and Richard Alm, have written another in a series of essays that look into a neglected topic, consumer products. Information on the subject abounds, and the numbers amaze on their own. But Cox and Alm crunch them in a unique way and explore a very interesting theory about trends in the modern economy.

The industrial revolution, they explain, brought us the advantages of mass production. By lowering costs through the increased efficiency of assembly lines, manufacturers were able to widen markets for their output. A cornucopia of incredible diversity brought products previously unavailable to the masses into every household.

There's no doubt that free markets have been phenomenally successful in delivering the goods, and they are still expanding. Ten years ago the average superstore had 20,000 products on its shelves; now it has 30,000. Many food and drug combination stores now contain a staggering 50,000 separate items, almost double the average in 1989.

But mass production created its own problems, the main one being conformity. Social critics warned about a rubber-stamp society, with a stifling lack of individuality. We had more to buy as prices fell, but the advantage came at the expense of discrete tastes. Even housing during the post-war boom took on the faceless tone, with monotonous rows of tract houses. One size fits all.

The information revolution, Cox and Alm explain, is changing that rapidly. "Mass customization", the central theme of their latest piece, now enables people to buy goods and services tailored to their specific needs, without sacrificing the price advantages of mass production. It's possible because the cost of collecting and transmitting the mass of information necessary to cater to individual preferences has fallen far and fast.

For example, shoes. Who hasn't suffered the pain and blisters from breaking in off-the-shelf footwear? Eventually that agony will be a thing of the past. A company in Washington State measures its customers feet with 3-D scanners, and creates an electronic model around which any shoe style can be molded for a perfect fit.

Forget about hemming that new pair of slacks, too. Just stroll through a body scanner, in which lasers measure you from head to toe and encrypt the data on a card that fits in your wallet. When you've picked out what you want, your order whizzes off electronically to a factory where computerized cutting and sewing machines churn out a piece of clothing exactly tailored to your body's contours.

You can already hear the enlightened among us carp about using cutting-edge technology to create crass material products. But what can they say when the same personalization improves our health? A California company makes devices that decode individual DNA. Doctors and drug companies can use the information to make pills that fit an individual's age, symptoms, and hereditary makeup. Personalized drugs make sure you get the correct dose with far fewer side effects.

All this is possible because microprocessors have lowered the cost of information transfers to a price that approaches zero. Close to a million companies on the Internet now allow customers to communicate individual preferences, shifting market power in our economy from producers to consumers.

In the near future, we'll live in a world of our own design. That's not half bad.