The Real “New Industrial Revolution.”

Chris Anderson is at it again. Just when you thought he couldn’t top Free’s counterintuitiveness (and let’s not forget his plagiarism and outright theft of Wikipedia entries to pad out his word count), he’s back with “atoms are the new bits.” Read it now before he charges you $26.99 for it in 2012. Finished? Good.

Now read Joel Johnson’s first-rate takedown of the idea on Gizmodo. The scenario Anderson sketches ignores agglomeration economies and increasing returns to scale. He also treats China and the Pearl River Delta as a black box or robotic factory rather than a mega-city where the sheer concentration of skilled labor (yes, it’s there!) is accelerating its march up the value chain. Factories originally moved to China because it was cheap, but it’s gotten more expensive since then. They stay because the cost/quality curve (especially in small batches, as Anderson rightly identifies) can’t be beat. And what it made it possible for them to move there in the first place was air power. Or as Johnson puts it:

To marvel that you can convince a Chinese company to make a small batch of electronics for you? In many cases, that’s when conditions are worst. Try to get something that is more than a greenboard made and you’re back to standard manufacturing issues like making dies for stamping parts. Why? Because real 3D printers don’t exist yet.

Using the web to communicate with Chinese factories is an improvement…over the fax machine. But the real revolution is that it only costs a few bucks to ship a part from Shenzen to Sunnyvale. You want to talk revolution? Thank FedEx.

Arguing that “this time, it’s different,” as Anderson does, is to argue the case Nicholas Negroponte and George Gilder made in Wired fifteen years ago—that infinite bandwidth means we can all live on twenty-acre spreads in the Canadian wilderness with no need for face-to-face contact. That’s what “being digital” was supposed to be all about. If atoms are the new bits, then Anderson has fallen victime to the same fallacy.