The GDP Handbrake
Global GDP is restricted by several “but we’ve always done it this way” technologies that are technologically inferior to other solutions, and their only moat is “but this very old supply chain is reliable” even though said supply chain is not.
So what are they?
1. Transformers, ancient technology that has no moat whatsoever other than no buyer ever needs more than one. And so it’s never worth making your own, even though it’s not even difficult. It’s one of those pieces of equipment where accountants just accept that is has a 36 month lead time, and never ask “what is it made of?”.
2. Steam Turbines, 18th Century technology that was long ago surpassed by the Brayton cycle which is more compact, more efficient, can be closed loop… but steam is simple and old. So old simple people still buy it. But seriously we only use it because the supply chain is so calcified and the newer alternatives are seen as “too fancy”, even though they are actually very simple too.
3. Marine Diesel Engines, heavy, maintenance heavy, load, slow, dirty, heavy, loud and heavy. We haul the world’s bulk freight and dry cargo with engines that run on carcinogenic sludge. Their main benefit is a politically acceptable / discrete way to dispose of extremely nasty petroleum fracking tower byproducts.
4. The AC Power Grid, moving AC power over longer distances has significant reactive power losses. HVDC convertor stations made HVDC more economical a long time ago. HVDC is today vastly superior and still improving but we are locked into a 19th century decision that limits transmission to <400 miles.
5. Lead Acid Batteries, there are more lead acid batteries in operation than Li-Ion. They live on because the lead acid recycling infrastructure is highly circular which means they are extremely cheap to recycle now that they are in circulation. They are very difficult to economically dislodge.
6. Portland Cement, the way we make concrete hasn’t changed in 200 years. We should be using geopolymer cements. There are cements that scrub the air clean, are stronger and cure faster. But building codes lock in crappy technology.
7. Non-Isomodal Pallets, it sounds boring but a whole lot of pallet standards do not neatly fit inside isocontainers. This is a huge P.I.T.A. But their mere existence locks in their existence.
These technologies are holding back maybe 1,000 basis points of GDP. Maybe $10 trillion a year.
They are all mostly crap.
They were all eclipsed decades ago, and major capital projects are just too weakly run to move beyond them.
Oh I can’t get a transformer for 3 years? Four years lead time on a steam turbine? Oh well, we will just place an oder and wait in line, whilst the discount rate totally destroys our NPV.
There is locked in junk everywhere, this is by no means an exhaustive list.