How Air-Conditioning Invented the Modern World

A new book by the economist Tim Harford on history’s greatest breakthroughs explains why barbed wire was a revolution, paper money was an accident, and HVACs were a productivity booster.

Congress's air-conditioning system, photographed in 1938 (Library of Congress)

In the beginning, it wasn’t the heat, but the humidity. In 1902, the workers at Sackett & Wilhelms Lithographing & Printing Company in New York City were fed up with the muggy summer air, which kept morphing their paper and ruining their prints. To fix the problem, they needed a humidity-control system. The challenge fell to a young engineer named Willis Carrier. He devised a system to circulate air over coils that were cooled by compressed ammonia. The machine worked beautifully, alleviating the humidity and allowing New York’s lithographers to print without fear of sweaty pages and runny ink.

But Carrier had a bigger idea. He recognized that a weather-making device to control humidity had even more potential to control heat. He went on to mass-manufacture the first modern air-conditioning unit at the Carrier Corporation (yes, that Carrier Corporation), which is still one of the largest HVAC manufacturers in the world. Air-conditioning went on to change far more than modern printing—it shaped global productivity, migration, and even politics.

The story of air-conditioning—and 49 other breakthroughs—is the subject of a new book, Fifty Inventions That Shaped the Modern Economy, by the economist and Financial Times columnist Tim Harford. I spoke to him recently about some of the book’s biggest ideas, and the following conversation has been edited for clarity and brevity.

Derek Thompson: Humans wanted to keep cool long before Carrier’s invention. But it’s sort of pathetic how we tried to do it. You describe the early 19th-century business of New England companies shipping large carved ice cubes insulated with sawdust around the country. New England literally exported ice the way Georgia exports peaches. There were even shortages during mild winters—“ice famines.”

Tim Harford: It was really hard to cool things! Before the invention of air-conditioning, you had to take something that was very cold and move it to places that were hot. And there were fascinating problems. For example, when the bodies of water that supplied the ice, like lakes, started getting polluted, the pollutants would be trapped in the pieces of ice. When they melted at their destination, it filled the air with unpleasant smells.

Thompson: Truly, thank God for Willis Carrier. The global effects of air-conditioning that you describe are mind-blowing. Air-conditioning transformed cities’ skylines, allowing for tall glassy skyscrapers that didn’t broil people in the top floors. It transformed demographics, allowing for migration in the U.S. to the Sun Belt, to Atlanta and Phoenix. By allowing politically conservative retirees to move south and west, you quote the author Steven Johnson saying that air-conditioning elected Ronald Reagan.

Harford: Yes, and it’s key to have a global perspective, too. This didn’t just reshape America. Air-conditioning reshaped the world. Places like Singapore and Shanghai are miserable when they’re hot and humid, but today they are global metropolises. There are studies saying that human productivity peaks around 70 degrees. That means that air-conditioning made us more productive, but also, by creating density in Singapore, it allows people to work longer and keep making the world a rich place. There is also the dark side of air-conditioning. You cool the temperature inside, but these units are energy-hungry, and they contribute to global warming.

Thompson: The first invention in the book is the plow, which facilitated the agricultural revolution. You write that “agricultural abundance creates rulers and the ruled, masters and servants, and inequality of wealth unheard of in hunter-gatherer societies.”

The second invention in the book is the gramophone, which allowed the most popular singers to reverberate in houses around the world, turning local stars into global superstars. That, too, creates inequality of wealth unheard of in pre-gramophone societies. Do you think technology inherently creates superstar effects and inequality?

Harford: There are two questions in there. First, does tech always increase inequality? Second, can politics offset that?

First, no. The famous example of technology displacing workers is the mechanized loom, famously smashed by the Luddites. These machines made their owners rich. But I think it’s possible that those looms actually decreased income inequality, because the new looms could be used by lower-skilled workers, who earned more money. On the other hand, I do think that much technology today is biased toward people who already have skills, which exacerbates winner-take-all effects.

But the winners of technology are often determined by politics and law. Bill Gates’s wealth could not exist without the U.S. property system that protected his software from being copied. Political choices have made him one of the richest people in the world.

Can politics offset inequality, too? Yes, of course. The welfare state can offset it.

Thompson: In fact, “the welfare state” is an invention that you discuss in the book, which is an impressively expansive definition of invention. The founders of the modern welfare state, in your telling, were much more interested in warfare than welfare. Otto Van Bismarck needed a dedicated army when he created pensions. To suppress his socialist rivals and secure popular support, Mussolini offered a fleet of social-welfare programs, including paid vacations and infant care. It seems to me that political necessity was the mother of political invention.

Harford: The welfare state was designed to strengthen the role of—it’s right there in the name—the state. It was initially designed to make the state more powerful and make people rely on the state.

More generally, “necessity as the mother of invention” is an intriguing cliché. Sometimes it’s not true. Take an invention like public-key cryptography. Here you had mathematicians tinkering around with prime numbers for a long time, in what might have seemed like useless work. Then some computer scientists realized that they could use the research behind prime numbers to encrypt messages. But it was unimaginable where the prime-number research would inevitably go.

But then, take barbed wire. Here, necessity was clearly the mother of invention. Americans could see for years that there was a burning need for a cheap material, which didn’t require a lot of wood, to fence in large areas in the western United States.

Thompson: In 1875, barbed wire was marketed as “The Greatest Discovery of the Age.” After the President Lincoln opened up the West by signing the Homestead Act of 1862, the American West was difficult to settle because settlers couldn’t enforce the boundaries of their property. You explain that barbed wire created the modern definition of private property.

Harford: Barbed wire allowed farmers after the Homestead Act to enforce their property rights. In any business, if you can’t practically enforce property rights, it doesn’t matter what the law says. You see the importance of enforcement in the music industry. The law says that the people who create music own the rights to it. But property rights meant something very different in the streaming world, when people could easily illegally download songs. Digital rights management was an attempt to create barbed wire for digital products. It tried to solve a “fencing” problem in music.

Thompson: Do you have a favorite invention in the book—or perhaps, an invention that you considered most underrated?

Harford: My favorite invention was paper. It didn’t occur to me at first. People said to me, “You must put the printing press in the book. It revolutionized the way we think; it led to the Reformation and rise of Europe.” But without paper, the press isn’t very useful. Yes, you can print on animal skin. But 5,000 copies of a book will require a quarter of a million sheep. Paper is what makes the printing press economically feasible. It’s an extremely underrated invention. Also, it has other practical uses, like toilet paper.

Thompson: As you write, the first example of paper money in world history was developed by merchants in Sichuan, China, around 1000 AD. It was an IOU. It wasn’t supposed to be a formal government currency. But the promise of value is one of the definitions of money, and an IOU is the promise of money. So people started trading their IOUs rather than carry around iron coins. They accidentally invented a private currency.

Harford: The paper money was a tradable IOU, which had been separated from the original debt. And if the debt can be traded, that’s what money is.

Thompson: It’s a beautiful lesson in the definition of money. And you write that when the Chinese government got wind of this, they tried to control the supply of IOU paper.

Harford: It wasn’t so much that the government wanted to control the money—they wanted to monopolize it. Here’s why. Let’s say you have an IOU from me. You go down to the corner store. You say, “Well, I could write you an IOU, or I could give you this IOU from Tim, who is a really good guy.” The corner store might say, “Actually, I trust Tim more than Derek anyway, so pass it over.” So now, my debt—Tim’s IOU—is circulating as money.

Here’s the magic: Tim’s IOU can be traded, over and over and over again, just like you traded it at the corner store. But nobody is ever coming back to me for the money. It’s more useful if it’s never cashed in. It’s pure profit. So, of course the government wants to be involved in that!

Thompson: In writing this book, did you learn anything about where invention comes from?

Harford: This is not a book about where ideas come from, or how inventions happen. Some of the inventions in this book come from private-sector geniuses, and there is stuff that is funded by the state. The biggest pattern is that it’s hard to find a pattern.