August 30, 2013
Iceland: The Ideal Country For Fully Robotic Factories
Thinking more about the idea that capital will migrate to isolated low population countries once factories become fully robotic. It dawned on me: Iceland is the ideal country for fully automated factories.
Why put factories in Iceland once factories no longer need people? First, the country has only about 320,000 Icelanders. It is a country so small in population that it has very few people who will demand welfare state services. This reduces the upside potential for taxes to support the state. The welfare state in Iceland really doesn't need that much money.
What else? Cheap electricity from geothermal power. Already, over 80% of the electricity in Iceland gets sold to Alcoa and other aluminum companies for smelting. The electricity in Iceland is so cheap that aluminum companies moved in en masse. Think about it. The energy-intensive manufacturing can be scaled up as the need for labor to staff it goes down.
Iceland wants to pull in more industries. They have very cheap electric power prices for long term bulk users.
The organization declines to give the prices that large energy-dependent companies likely will pay for power but say that a 20-year contract with power prices at US $0.04 per kWh is where the utility will likely begin negotiations.
Data centers are a natural fit. Ditto totally enclosed robotic vegetable farms. As more industries build lights out factories more industries could benefit from moving their manufacturing to Iceland. Cheap electric power will power powerful AI computers that will control robotic factories.
Stable government, peaceful country, island near major markets, really cheap electricity, plenty of cool water for cooling needs. If Iceland is willing to offer guaranteed long term low taxes it should be able to get a lot of companies to locate fully automated factories on the island.
Randall Parker, 2013 August 30 08:16 PM
Stable government? Not according to the banksters! Of course, that's precisely why locating critical capital equipment there is going to be safe: The populace was able to release the seismic pressures of rent seeking, unlike the rest of OECD countries. That's for the same reason that Rhode Island was able to deal with its war veterans problem peacefully after the Revolutionary War and had to be bullied into joining the newly constituted United States of America: It was small enough to have a responsive government.
Just as an aside, I once asked a knowledgeable energy specialist why the U.S. does not make much use of volcanic energy in the Pacific Northwest. (Our geothermal energy operations are small operations in California, and little else.) He said it had been tested, and the problem apparently was that the magma channels beneath volcanoes in the Pac NW must be very narrow, because some expensive test drilling through tough igneous rock failed to reach hot rocks. So they gave it up as an uneconomical idea. He didn't mention which spots were tested. So geologic dumb luck plays a role, which of course is obvious enough.
But anyway you put an appropriate emphasis on the other important factors -- moderate taxes, stable government, limited competing demand for the energy, etc.
Check seismic stability. Not so good. Also dust clouds from the volcanoes, not so good. They have a small population /now/, but are accepting more immigrants, from what I hear. It's also far enough north that a minor drop in temperature will glaciate the island. (IIRC, from what I was told while stationed there, the little Ice Age dropped the population from 100,000 to 10,000 in ten years. Or so I recall from 40 years ago.)
But... Iceland certainly has potential.
If they're accepting more immigrants than strike my comment about metaphorical seismic pressures of rent-seeking. They're doomed.
I'm curious, though, as to the forces behind the increased immigration there given the populist successes opposing the banksters. Prosperity is always a two-sided coin due to its attraction of virulent evolution via horizontal transmission.
Iceland has the world' cheapest energy. With a very small population compared to land area it also has considerable very cheap hydroelectric potential which hasn't been tapped yet because they have so much even cheaper thermal. On the other hand I think that all of the developed world's problems with rising electricity prices are self inflicted - we could have very cheap nuclear any time we want.
@James, my information is from a suspect source (a loon who left the US because Clinton was too "right wing" to suit him).
Data centers benefit from low latency. Maybe ping times between Iceland and Europe aren't so bad, though...
The distance from Reykjavik Iceland to Berlin Germany is about 1500 miles. Reykjavik to Milan Italy is about 1800 miles. I do not know enough about the public internet to know how much latency at those distances. But my guess is Iceland is close enough for many web serving needs.