Sam explains Jevons paradox—how efficiency gains lead to massively increased total consumption, not reduction—tracing it from Watt's steam engine and Eli Whitney's cotton gin to AI making code generation cheaper, which he predicts will create an explosion of demand for code and a net positive economic outcome. ✦ AI generated
Sam · My First Million · 2026-07-23 · original ↗
starts at this moment · 23:43
An economic principle stating that as technology makes use of a resource more efficient, the total consumption of that resource actually increases rather than decreases. Okay. So, as something becomes more efficient, you would think you're using less of it cuz you're being more efficient, but in total, you use way more of it because the demand explodes. ... Eli Whitney, he comes up with this little handheld device where you can kind of like put cotton in there and kind of cranks it and it gets the seeds out to the point where one slave could produce 50 lbs of cotton. It made it 50 times more efficient. ... The exact opposite happened over the next like 30, 40, 50 years. Cotton got so cheap that in the south of America, they actually started calling it King cotton instead of King George. And so America's best export was cotton. And it got so strong that we had to import like 8 to 10 times more slaves than we currently had at that point pre Eli Whitney in order to keep up with all this demand for cotton. ... The reason why it's relevant right now is because what's one product that AI is making significantly more efficient? Code. ... A lot of people are saying that AI is going to put people out of work. I think it is the exact opposite. I believe that code will get more cheap, therefore demand will increase a significant amount to the point that we can't even understand.
verbatim transcript · starts at 23:43
23:24phrase that you're unfortunately uh need to know about and you're going to see everywhere online? I also want to rebrand it. So this thing, it's called the Jevans paradox. Have you heard of the Jevans paradox? It's not even a paradox. A paradox means like an example of a paradox is like can God heat a burrito? so hot that even he can't eat it. Uh like this isn't this is more like
23:43like uh >> what is that paradox called? The paradox. [laughter] >> That's a paradox. This isn't even a paradox. This is just like a like a like an economic like principle. >> Okay. Okay. Here, let me read let me read the actual definition. An economic principle stating that as technology makes use of a resource more efficiently, the total consumption of that resource actually increases rather than decreases. Okay. So, as something
24:05becomes more efficient, you would think you're using less of it cuz you're being more efficient, but in total, you use way more of it because the demand explodes. Okay. Go ahead. >> And I'll give you I'll give you a ton of examples. I want to rebrand it to Javon's paradox because uh give [laughter] him a little flavor. >> Yeah. Well, because it was created by this guy named James Jevan, who was a
24:24British guy, and I think that it'd be cool to have uh a wonderful economic principle be created by an American brother. So, I wanted to be one of ours, not one of theirs. So, right around uh the mid 1800s, James Watt created this new thing. It's a new variation of the steam engine, which is basically the steam engine that like uh everyone came to love and know. James Jevan was
24:43basically this guy in the 1800s. He wrote a book in 1865 called uh the coal question. And he basically says, I have a feeling that because of how amazing this new steam engine is, that Britain potentially is going to get rid of all of our cheap coal and we're going to have a problem. we're going to have a coal shortage because everyone else was like, "What are you talking about? The
25:03steam engine makes things significantly more efficient. Therefore, like there's only a set amount of work needs to get done. Like, we're just going to use less coal." And he goes, "No, brother. That ain't going to happen. We're going to use way more coal because everyone's going to want one of these steam engines." And he was exactly right. And this is where things get really freaky. And this is actually what I want to talk
25:21about. It expands in a way that you cannot even comprehend. And so, let me give you a really simple example. Eli Whitney, he was this guy from Yale and he was like, "I want to make it rich. I have this idea." So he goes down to the South of America. At the time, slaves would pick cotton and they would get cotton and it would take them hours to
25:40separate the seed from the cotton to the point where they could only produce about a pound a day of cotton that was usable, one person. and he comes up with this little handheld device where you can kind of like put cotton in there and kind of cranks it and it gets the seeds out to the point where one slave could produce 50 lbs of cotton. It made it 50