Here’s the scene from Seinfeld where Jack Klompus insists that Jerry take the astronaut pen.

Note the first thing Jerry says about the pen: “Oh, wow, that’s the astronaut pen! I heard about that. Where did you get it?” What a strange question. How could it be that the main obstacle to owning an astronaut pen is simply not knowing where to get it? That doesn’t sound like much of a hurdle.

Put yourself in 1991, when this episode aired, and imagine you want an astronaut pen. Really, think about it. It’s 1991, you’re visiting your parents in Del Boca Vista, you hear about astronaut pens, and you want one. Step-by-step, what do you do?

First, figure out what kind of store would carry the pen. Kmart or a local convenience store might, but the likeliest place is a stationery store. Find the phone book, find the section with stationery stores (which the book may have a different term for), and start going down the list, calling to see if they have the pen.

But you don’t know Del Boca Vista. How do you figure out which store is five minutes away and which one is 45 minutes away? Ask your parents. They’ve never been to any of the stores, but by looking at the addresses they’ll be able to sort some of them by travel time, with a ten-minute margin of error. They’ll write down landmark-based directions for you. Add 10–15 minutes to account for the time you’ll spend getting lost on the way there.

Astronaut pens are actually a brand-name item, the Fisher Space Pen. But you wouldn’t know that, because you’d have only heard that there are these things called astronaut pens that write upside-down. Now you’ve found a store where the guy on the phone said, “Hmm, writes upside-down…” as he looked at a display at the end of the counter, next to the keychains. “Yeah, I sell that.” It’s a half-assed knockoff, but the guy doesn’t know the difference and neither do you. So you get in the car and drive to this store where they don’t know what they’re selling and you don’t know what you’re buying.

How many minutes of work would the whole project take from the time you decide you wanted an astronaut pen to the time you own one?

The 1991 level of effort likely wouldn’t be worth it. That’s too bad, because your going pen-less is a misallocation of resources. You want a pen more than you want the $15 it costs, and the pen seller wants $15 more than the pen. But the transaction is too much work. You’re willing to spend $15, but not $15 plus the 1991-era transaction costs. The sale doesn’t happen, and you, the seller, and Fisher all end up worse off.

Now, what if you could use magic to make the transaction go 50 times faster? Suddenly it would start to make sense.

That is what technology has done. By my estimate, the whole thing would take you two minutes on Amazon. Roughly one-fiftieth the transaction costs of the 1991 version. Transaction unlocked.

This same real-world magic has enabled not just better allocation of money, but also the creation of brand new wealth. The economy contains trillions of dollars of value that couldn’t have existed even 20 years ago. That runs from products like smartphones to companies and even entire industries.

Google (to take just one example) has a market cap around $360 billion. But that doesn’t begin to cover the value of their contribution to the world. Their full contribution is the billions of transactions, trades, hires, research hours, and so on that are 50 times cheaper today than they would have been for Jack Klompus, and therefore that much more likely to happen at all.

Economists call this consumer surplus. The difference between the most you’d be willing to pay for something ($15 plus a costly chunk of time and effort for the Space Pen in 1991) and the price you end up paying ($15 plus just about nothing for the pen today). Marc Andreessen observed that “software is eating the world”. And as it eats, it’s pooping out tens of trillions of dollars of consumer surplus.

This effect also applies to labor. Many of you draw a salary because you create wealth in the form of, say, software or design. Every day that you build something, you leave the world literally wealthier than it was when you woke up. And to do that, you have critical reliances on tools that were invented less than 20 years ago. When you were born, your work and all the consumer surplus you’ve created with it couldn’t have existed.

Apply this 50x efficiency improvement to every product and service in the world, and let our factor of 50 compound on itself for another few decades. The web has only been around for ~20 years. When cars were 20 years old — in 1906 — how much of their potential had been explored? And cars advance at nothing like the pace that software does. The implications are neat: compared to what’s coming, the tens of trillions of dollars we’ve seen so far are a rounding error.