3D Printers – An Exciting New Technology

3D printers are a new-ish technology that has received a lot of interest. This blog post is here to explain a few things about 3D printers and what sort of economic impact they might have, as well as what sorts of economic impacts they will not have.

To start, we must first discuss the idea of a production function. A production function shows amount produced as a function of certain inputs. The usual inputs in most situations are capital and labor. Labor represents the work of individuals, while capital represents ownership of equipment and other things essential to production.

In a very rough sense, capital represents sunk labor costs. That is, most things that are considered capital had to be produced by the input of labor and capital, and that capital had to be produced by the input of labor and capital. Eventually, you move back to things that were produced solely by labor, although that would take an incredible number of steps backward in most cases.

Moving from this rough idea, we encounter 3D printers. With a 3D printer, you can take the appropriate raw materials and schema for some item and the printer will produce the item for you with little to no labor costs. This essentially means that the production function for use of a 3D printer almost entirely disregards labor, and is focused entirely on capital.

For a 3D printer, capital comes in two major forms – the printer itself and the schema. Without some unforeseen new technology, you will also require raw materials to input into the printer, usually of a specific type.

We then examine the cost function of a 3D printer. It contains only three variable costs – the raw materials that go into the item you are producing, possible repairs to the printer from use, and your time in operating the printer. Everything else required – the schema and the printer – is fixed.

So what we have with a 3D printer is a method of production with little variable cost, high fixed cost, and an intensive focus on capital over labor. This sort of production is almost always characterized by economies of scale – that is, it is more efficient to produce many units than to produce few units.

From this, I can then say that, barring a gross misunderstanding or some new development, 3D printers will probably never become something that is used in every household. This, of course, depends on the price of the printer, but in any case where the price of the printer remains even slightly high, the low usage rate by a single household will make it impractically expensive.

There are, of course, exceptions. People looking to do things such as fix the family car or keep up with the latest technology would probably purchase them. They could even be of use to IT support companies who could, theoretically print spare parts in the office. Beyond simply do-it-yourself-ers, there might also be a slew of potential uses for miniature, specialized 3D printers for doing things such as creating pencil lead or erasers for mechanical pencils.

In addition, I can say fairly safely that the 3D printer will not take over the mass production of large, expensive items, such as cars. While 3D printers may be used to create the pieces for the production of cars, the facilities for putting those pieces together without the use of labor already exist, and will not be replaced, even if they could be, without some large number of benefits, which I do not see a 3D printer providing.

The place I see for 3D printers is in small businesses that require production of simple parts, either for internal use or for creation of products that require some assembly. For instance, a cheap furniture store might simply turn into a 3D printer with a selection menu, that would then print both the directions and the parts for the furniture directly for the consumer. Or a diesel generator repair shop might print the part it needed to fix a specific car, rather than worrying about shipping the part from elsewhere.

This possible new paradigm will result in a high value being placed on the schematics for producing certain things via the use of a 3D printer. I would suspect them to be either held secret by businesses or fall under a new sort of copyright protection, as otherwise anyone would be able to print an important part if they were able to obtain the necessary raw materials. Similarly to how movies and music are treated today, I would expect them to be legally protected but pirated on a regular basis, using many of the same means.

And that, then, is my take on 3D printers. They’re not magical, they won’t be able to fix all the world’s problems by printing people whatever they want wherever they wish it. They probably won’t even be highly adopted outside of highly developed nations, as the cheap cost of labor elsewhere in the world, i.e. China, makes labor-intensive production methods much more attractive. They have uses, but they won’t be radically altering the fundamentals of how the world works anytime soon.

Anyways. Hope that was an interesting read. I’ll start looking into more technology-related economics topics for later posts.