Brian Potter challenges a comforting economic assumption: that everything physical gets cheaper as technology advances. While manufactured goods and labor-intensive services follow a predictable divergence, Potter reveals that the raw materials feeding our civilization are behaving differently than history suggests. This analysis is vital for anyone trying to forecast the cost of infrastructure, energy transitions, or food security in an era where supply chains are fracturing.
The Great Divergence
Potter begins by distinguishing between goods that are made and goods that are extracted. He notes that while the American Enterprise Institute has popularized the chart showing services getting expensive and manufactured goods getting cheap, "there are many types of goods that aren't shown on this chart. One example is commodities: raw (or near-raw) materials mined or harvested from the earth." This distinction is crucial because it introduces a variable often ignored in standard inflation models: depletion.
The author explains that unlike a factory that can simply build another robot to increase output, mining faces physical limits. "Because they're often extracted from the earth, commodities can be subject to depletion dynamics: you run out of them at one location, and have to go find more somewhere else." Potter illustrates this with the shift from Minnesota iron ore to overseas sources, and the concept of "Peak Oil," where society is forced to access increasingly marginal, expensive locations. This framing effectively grounds abstract price theory in geological reality.
"The more that production of some commodity looks like manufacturing — produced by a repetitive process that can be steadily improved and automated... the more you'll tend to see prices fall over time."
This observation is the piece's analytical anchor. Potter argues that when a commodity can be synthesized or processed with high repeatability, prices plummet. He cites industrial diamonds as the ultimate example: "The biggest decline in price of any commodity I looked at is industrial diamonds, which fell in price by 99.9% between 1900 and 2021 due to advances in lab-grown diamonds production." The shift from mining to synthesis effectively broke the link between scarcity and cost for that specific material.
The Reversal of Fortune
However, the historical trend is not a straight line down. Potter's deep dive into over 124 commodities reveals a significant inflection point in recent decades. While the long-term data supports the idea of falling prices, the modern era tells a different story. "Historically most commodities were getting cheaper over time, but in recent decades this has been significantly less true." The data shows a distinct shift where beef, pork, oil, and copper, once consistently falling, have begun to rise.
The evidence for this reversal is stark when looking at specific categories. For agricultural products, Potter notes that "24 of the 25 crops examined have lower inflation-adjusted prices today than at the beginning of their time series," yet "if you look just since 2000, the trend has reversed: only four crops fell in price in real terms since then." This sudden pivot suggests that the forces driving down costs—automation and efficiency—are being overwhelmed by other factors, such as climate volatility, land degradation, or geopolitical friction.
Critics might note that Potter's reliance on historical price data could understate the role of monetary policy and currency fluctuations in these trends. While he adjusts for inflation, the specific drivers of the post-2000 reversal—beyond general supply and demand—deserve deeper scrutiny regarding central bank actions and speculative markets.
"Beef, pork, oil, natural gas, copper, construction sand, and phosphate for fertilizer are all commodities that formerly were consistently falling in price but for the last several decades have been getting more expensive."
This list is not just a collection of data points; it is a warning signal for the built environment. If the raw inputs for construction and energy are no longer following the deflationary path of the 20th century, the cost of building the future will be fundamentally higher than our economic models predict.
The Manufacturing Lens
Potter's most compelling contribution is his proposed lens for understanding these fluctuations: the degree to which a commodity resembles a manufacturing process. He argues that "the question of 'how much, over time, does the production of this commodity resemble a manufacturing process?' seems like a useful lens on understanding the dynamics of commodity prices." When production is repetitive and scalable, prices drop. When it relies on finite, depleting resources, prices rise.
He supports this with the history of aluminum and titanium, where specific process improvements like the Hall-Heroult smelting process drove massive cost reductions. Yet, he acknowledges the limits of this theory, noting that "plenty of things that can shift supply and demand curves to the right or left: cartels, national policies, a spike or collapse in demand, and so on." This admission prevents the argument from becoming overly deterministic, acknowledging that human intervention and market manipulation can override technological efficiency.
"Historically commodities have generally fallen in price over time, but recently this trend has increasingly shifted towards rising prices."
This summary captures the central tension of the piece. The comforting narrative of perpetual deflation in physical goods is breaking down, replaced by a new reality where scarcity and extraction costs are reclaiming their dominance.
Bottom Line
Potter's analysis is strongest in its rigorous separation of manufacturing efficiency from extraction scarcity, offering a clear framework for why the cost of raw materials is rising despite technological progress. Its biggest vulnerability lies in predicting why the post-2000 reversal occurred, as it attributes the shift broadly to a weakening of manufacturing-like trends without fully isolating the specific geopolitical or climate drivers. Readers should watch for how this deflationary break affects long-term infrastructure planning and the feasibility of green energy transitions that rely heavily on these now-expensive commodities.