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There's No Such Thing As a Free Cloud

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With every new leap of technology, we hear cries that the Age of Abundance is dawning and that we must reject the old economics of scarcity for the new economics of abundance. At the tail end of the technological boom of the the 1920s, John Maynard Keynes foretold that his contemporaries’ grandchildren would be living in an era of abundance as long as interest rates were driven down to zero to overcome the artificial scarcity of capital. During the postwar prosperity of the 1950s, John Kenneth Galbraith proclaimed the advent of the Affluent Society, promising abundance for all if only government spending on public goods was expanded at the expense of frivolous private sector production and consumption.

The adaptation of ”Space Age” technology to everyday uses and the spreading commercialization of electronic data processing in the 1960s led writers such as sociologist David Riesman, architect and systems theorist Buckminster Fuller and “futurist” Alvin Toffler to preach that the “post-industrial society” and the end of scarcity were near at hand. The New Left seized on these writers as gurus and argued that what was barring humanity from entering the Post-Scarcity Age were evil social institutions and ingrained bourgeois morality. Get rid of capitalism and suppress the Protestant work ethic and we all would be showered with free goods from this technological cornucopia.

The notion of a world without scarcity is thus usually propagated by leftist social theorists–but not always. There were some libertarian futurists around in the early 1970s. But lately many libertarians are among the vanguard of those who, dazzled by the marvels of the Digital Age, argue that many goods have become costlessly and, therefore, infinitely producible. Without government interference, they contend, humankind will be able to satisfy more and more of their wants using the resources freely available inside the Cloud.

Our Post-Scarcity libertarians should tell this to the owners of the 500,000 data centers, which contain the hundreds of millions of servers worldwide that constitute the real and indispensable infrastructure of the Cloud. According to a recent article in the Harvard Business Review Blog, these data centers take up space equivalent to 6,000 American football fields. As of 2007, their annual consumption of electricity was 623 billion KWh. Taken as a unit, these data centers rank behind only the U.S., China, Russia, and Japan in total annual electricity consumption. They rank ahead of Germany, India, France and Great Britain.

So enormously costly is electricity use that Ebay has begun moving to renewable on-site energy sources to power its data centers. Its new data center in Utah will be partially powered by renewable energy sources while some old ones are being equipped with on-site power cells and moved completely off the grid . It has also integrated its facilities and IT to save on costs, with one executive in charge of purchasing hardware and paying the power bills for the data center.

Facebook meanwhile has moved to a “vanity-free approach” in equipping its data centers to cut its power bill. It is stripping its data centers to the bare bones. Anything not related to a work function in the building, servers, and cooling system is being ruthlessly eliminated. For example, the company has even gotten rid of its logo on the front of its servers. The logo is typically displayed on a six-pound plastic bezel provided by the manufacturer and mounted on the front of each server. Not only did this eliminate the direct cost of the extraneous plastic it also improved the energy efficiency of the server because the plastic hindered air flow to cool the server and made the fan work harder.

Once again, common sense observation of the real world reveals the ceaseless struggle of human actors to economize on the use of resources and vindicates the old and true economics of scarcity.

Joseph Salerno is academic vice president of the Mises Institute, professor emeritus of economics at Pace University, and editor of the Quarterly Journal of Austrian Economics.

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