THE ECONOMIST

"Do you mind if I smoke?" he asks, as he begins stuffing an old-school pipe with tobacco.

I start to answer, but he interrupts: "At first, I started smoking this thing because I thought it'd make me look enigmatic," he says. "Then I realized that it just makes me look like an asshole. But I can't quit now. I got hooked on the damn thing."

He lights the pipe and winks at me.

"Life is full of little surprises that—in hindsight—should've been perfectly predictable. Don't you think?"

It was the U.S. Congress putting together the commission, so they thought they were moving lightning fast, giving us a deadline of only one month to put our report together.

They had no fucking clue how fast this thing was going to go.

All of the economists and math people on the panel tried to tell them. The moment we saw Kobek use a replicator to make another replicator on live TV, we knew the gig was up. This shit was going exponential.

But congresspeople... they're just regular dipshits in suits, you know. They don't understand the power of exponents. That you could have two unlocked replicators turn into two hundred million unlocked replicators in just a couple of weeks.

We knew that by the time we turned in our report, it would be too late.

But being on the committee had its perks—we had full access to all the government's intelligence services. The full data-collecting capacity of the most powerful government in history.

That was still worth something, in those first few weeks.

The first thing that happened was the collapse of the dollar, and the markets along with it. That started the moment Kobek showed off how he could create perfect counterfeit bills, but it took about a week for the full extent of the damage to become apparent.

Everybody knew right away that no cash could be trusted. Banks stopped accepting deposits of bills within just a few days, and even businesses run by complete luddites had done the same before the week was out. No more cash!

Gold was now completely worthless too, and along with it its absurd status as a "haven" asset. Even now, if you listen closely at night, they say you can hear Ron Paul screaming in agony about that one.

The only thing that anybody could trust was the one value store that couldn't be replicated: crypto. Bitcoin surged way past its previous all-time high record from December of '18. But so did a lot of the other coins. Ethereum, Trumpcoin, all the rest.

The ones who got in and out early were the lucky ones. The crypto crash that followed as everybody tried to convert their cryptocurrency into real estate was absolutely brutal. Haven assets aren't weren't shit in a liquidity crisis, even if they can't be replicated.

It was actually incredible to me how long it took for the markets to really bottom out like they did. You know, it took five full days after the Kobek demonstration before the markets closed down.

I guess there was something so utopian about the technology that some investors had trouble believing it. They couldn't accept that all food trade was over, that consumer electronics were over, that energy was over.

I feel for the energy guys. I mean, it genuinely doesn't make sense that you can use a little bit of electricity to replicate a fully-charged battery. I mean... it's like... a violation of all three of the laws of thermodynamics, right?

One of the scientists on the committee tried to explain how it's not, because of quantum mechanics or whatever. He couldn't figure out how to make us get it, so he just kept saying "They draw energy from systems that are technically separate from our own!"

We were like yeah, okay.

Still doesn't make any fucking sense.

The major indexes only fell about 6% that first day, which was a Friday. Over the weekend, futures trading was wild, spiking up and down. But the next Monday the DOW and S&P 500 started out down only 5%. At one point it was looking like it would bottom out, but the SEC didn't step in to pause trading until it went below 7%. That was just a 15 minute halt, as per their usual policy, and I think the day still ended another 11% down.

The next day it plummeted the maximum allowed, 20%. That's the threshold before they shut down markets for the day.

By Tuesday night, major analysts were going on primetime TV and saying that maybe they shouldn't re-open the markets. Better to just lock it down, they said, then just try to figure out some way to divide the few remaining spoils.

I think that argument is what caused the real panic.People whose entire retirement funds were locked up in the market finally realized that they might get fucked.

But somebody with friends high up in the SEC must've stepped in and told them to open up one more time, because they did. They let it run for just long enough to drop another 20% on Wednesday morning.

Then they closed it for the very last time.

If you were a publicly traded company on the New York Stock Exchange, you were officially worth nothing. Or, at least, your shares were worth nothing.

A lot of the companies still had solid property valuations on the books and maybe some had big, useful construction equipment that'd be tough to replicate in parts. But even those companies were suddenly close to worthless. They couldn't figure out a way to persuade their employees to keep coming into work, much less turn a profit.

It's still crazy to me that it took so many people a full five days to accept the new reality.

The people more directly involved in global trade... they were the ones who figured it out faster.

The morning after the Kobek demonstration, a lot of these guys just started directing their men to turn boats away at port. These ships were coming in from China and Japan with a bunch of plastic crap. Clothing from Bangladesh. Computer parts from Thailand. All of it completely worthless.

The importers realized pretty quickly that if they kept paying people to bring them stuff, they'd go broke within days. So they bailed out, started trying to sell off shit and convert their capital into irreplicable assets.

That led pretty much immediately to food shortages in the major cities, which led to riots.

You wouldn't think that, right? That the introduction of a machine that can make infinite food would lead to famines?

Those of us on the panel knew how dependent some of these cities were on food imports, so we saw it coming. Gave congress a heads up. But only about 24 hours before it hit.

Time was the scarcest resource of all.

Not enough time for anything.

Certainly not enough time for Congress to digest what was happening and react appropriately.

That's sort of an understatement, isn't it? I mean, Congress didn't react at all, appropriately or otherwise.

Yeah, that's right. It was regular people who actually took action and stopped mass starvation from happening.

People figured out pretty quick that the only way to end the famine would be to hasten the spread of the replicators.

Churches in particular became ground zero of the replicator movement.

You know, there's exactly two things that every small town in America has, and that's a church and a McDonalds.

The Mickey Dees shut down. The churches stepped up.

One church would give two machines to another parish, they'd load up its memory banks with local cuisine, and then they'd send members out on trips to deliver machines to the local population.

This started even before the Kobek demonstration, by the way. The Mormons had already been on it. Everybody got in on it after Kobek.

According to the best numbers I've seen, within no more than two weeks after the Kobek demonstration, 98 percent of American homes had a replicator installed.

That's a higher penetration rate than televisions.

In two weeks.

And it was that sudden shift that guaranteed the collapse.

That part—that the sudden and nearly ubiquitous spread of the replicators triggered the collapse—is just about the only thing most economists today agree on.

Of course.

One of the big disagreements is about the sequence of things. You know, which industries collapsed in what order, that sort of thing.

That's easy. We had a better view of it than anyone.

The first things to go were anything involving commodities. Really, anything that could fit into a rep. Toilet paper, hand soap, kitty litter, trash bags, that sort of thing. Anybody selling food of any sort, including restaurants, coffee shops, and liquor stores, all toast. Same for other local retail, like consumer electronics dealers, pharmacies, dollar stores, make-up boutiques, clothing outlets, you name it.

We came up with an easy rule of thumb to identify which things would lose their value the quickest: "Wal-Mart's Razor." If you could buy it at a Wal-Mart, it can be replicated. And thus, it's now worthless.

I came up with the Razor as a communication tool to help congress understand the severity of the issue. But when I went public with the phrase, and people started repeating it to each other, it had a funny side effect of tanking Wal-Mart's share price even before other retailers' stocks collapsed. This, despite the fact that Wal-Mart still owned hundreds of thousands of square acres of land across the United States, making it more valuable than most of the other publicly traded retail stores out there.

I suppose that didn't matter too much, though. The Razor was helpful for congress, actually, because it allowed them to take the next logical step and predict that everything connected to Wal-Mart's supply chain would be next. So there went everything that remained of the trucking industry, including the self-driving trucks. Then international shipping, as previously mentioned. Relatedly, the demand for oil dropped to near-zero, but that was okay because the price of oil dropped to zero too once people realized that you could rep small canisters of gasoline.

The next phase of the collapse was a little harder to predict.

First, we noticed new car sales screeching to a halt. At first we thought that might be because people were intending to just rep individual car parts and build new ones.

But the truth became more apparent just a couple of weeks into the crisis. People weren't driving anywhere anymore. At least, not really. The main reason people had driven before was to go to work or purchase commodities. The introduction of reps removed the vast majorities of those incentives.

The few cars that were still on the road were being driven by people distributing reps or fleeing cities.

This, the thing with cities, is still the thing that I would've least expected. There's so much research from before the crash that told us that people move to cities, rarely away from them. Of all the trends begun since the beginning of industrialization, this was one of the easiest to prove. Somehow, reps were changing the trend, and they were changing it overnight. People were fleeing cities in droves. Moving closer to their family. "Hyperlocalization" is the term the sociologists have come up for it. We still don't know how far that one is going to go.

In the meantime, one of the big political questions of our time seems to be what to do with the armies of poor people who've moved into the middle class homes and apartments that were left behind by the people fleeing the cities. As a rule, none of these people are willing to pay rent, and so far nobody has shown a willingness to order violent evictions. We'll see how that one plays out.

Simultaneous with the mass exoduses of people from cities, a lot of industries that we thought would be fine actually began collapsing almost solely because their workforce stopped showing up. Hollywood is the classic example people point to here. Sure, the actors were still game, but the guy running camera #2? Not so much. Nor the people whose job it was to set up the equipment. All professional film production basically fell apart.

Within a few weeks, examples like Hollywood started to make more sense to those of us on the commission. As industries like construction, industrial equipment production, and air travel collapsed, we realized that the common thread was that each of these industries produced a ton of low-paying, low-satisfaction, shitty jobs. Jobs with heavy physical labor were the first to go, but a lot of the so-called "easy," desk jobs went too. With their basic needs met by the reps, people weren't willing to sacrifice their bodies or their dignity to do these sorts of jobs anymore. So those industries fell apart too.

It was surprising, then, to see which industries people stayed in. Given how quickly Hollywood collapsed, I was really surprised by the staying power of the video game industry. The game developers seemed to see themselves as doing incredibly meaningful work by building worlds that the listless, restless, and jobless could escape into.

Then, of course, there were the industries that we're pretty sure are still here to stay. Healthcare is the obvious one—with pharmaceuticals out of the picture, costs have come down, and patient satisfaction is way up. A lot of doctors dropped out of the workforce, of course, but the vast majority of the nurses stayed in. Same with so many of the teachers and childcare workers.

Aside from health care, child care, and education, anything involved with "keeping up appearances" seems to be fine. Lawncare is thriving. Local plumbers and electricians seem to be totally unaffected by the crash as well. Same with barbers and hairdressers.

Other fields involving personal aesthetics are also thriving. Paintings that are too big to fit into a rep are more valuable than ever. Tattoo shops are having a heyday.

What, for you, was the biggest surprise of the whole thing?

You mean, other than the existence of the reps, I assume?

Ha. Yes.

To be honest, the biggest surprises had nothing to do with the economy.

I was most shocked by how people reacted.

I'm not really talking about the violence, here. Man's capacity for evil should shock no one, in my opinion. So all the shit that went down in Los Angeles, and in the other major cities on Bastille Day II… it was gruesome, but it was predictable.

The thing that I didn't predict—the thing that's most stuck with me—were all the people who were good to one another, even as the whole world fell apart around them.