Briefs: Technophobes, as they are

technophobes

Not a long time ago, I had a conversation with a friend about cars that could drive themselves automatically, and the reality of them existing one day. And the friend that I was talking to began to lament about how these vehicles would eventually put taxi drivers out of business. His point was basically how this one technological advance would be bad in the sense that it would do way with jobs for one segment of workers. My argument to him was that the new technology would actually create other jobs that had previously not existed at all and would make up for the jobs lost. Would the taxi drivers need to perhaps find a new profession? Probably. The same way the buggy drivers had to when the automobile became widely available after Henry Ford’s invention of the assembly line.

In Henry Hazlitt’s timeless book, “Economics in One Lesson”, he talks about a segment of the population that he refers to as “technophobes“. These are people resist technology advances because, in their mind they lead to the demise of some steady employment for some. They don’t consider that these new technologies don’t exist in a vacuum and require labor to sustain its existence. Technological achievements should be looked at as a labor-saving positives instead of a labor-robbing negatives. The empirical evidence shows time and time again throughout history that despite the introduction of new labor-saving technologies, jobs (as an aggregate) have not dwindled away. In fact, each major technological advance has brought with it a need for more production, a need for more innovation and in short, a need for more jobs.

Imagine that you were around when the concept of the personal computer was born and the thoughts that may have crossed your mind as you thought about the impact of this device on jobs. You might think about how adversely it would affect employment, because after all, the computer can do so much with so little effort or labor. Certainly, it would be the cause of major unemployment. What would happen to the masses of workers who take 8 hours in a day to do the same task that it would take a computer to do in 15 mins? Now think about how much we are surrounded by computers in our current world and how ridiculous a thought like that would seem now. The same could be said about other technological advances like the automobile or the steam locomotive. Think about what those inventions did to human productivity and not only how their introduction into existence did not dwindle jobs but in fact they led to the increase of needed jobs to facilitate all of the economic activity created as a result of their existence.

Mr Hazlitt puts it like this: “Each of us is trying to save his own labor, to economize the means required to achieve his ends. Every employer, small as well as large, seeks constantly to gain his results more economically and efficiently— that is, by saving labor. Every intelligent workman tries to cut down the effort necessary to accomplish his assigned job. The most ambitious of us try tirelessly to increase the results we can achieve in a given number of hours. The technophobes, if they were logical and consistent, would have to dismiss all this progress and ingenuity as not only useless but vicious. Why should freight be carried from New York to Chicago by railroads when we could employ enormously more men, for example, to carry it all on their backs?

Economics if life.

Note: You can get Henry Hazlitt’s book “Economics in One Lesson” at Amazon Books





The Benefits of the Free Market

markets

Free markets are somewhat of an enigma to some people and are even looked at by others as a threat to our current society. Some people have the idea that free markets are markets where companies can go un-checked and are free to take advantage of consumers for their own benefit. This view is one that assumes that companies are the ones “holding all the cards” in these markets. However, that is not the case at all. In fact, it is just the opposite. Additionally and contrary to the idea that free markets are a threat, they are what affords our society the high standard of living that we currently enjoy. It is also free markets that are responsible for the innovation that we continually see and for all of the advancements in technology, medicine, and every other industry that we could think of. Let’s look at a few of the benefits of the free market.

Demand Drives Supply
In a free market scenario, supply and demand forces dictate economic results. More specifically, it is demand (the consumers) that really dictates economic results, because demand is what drives supply. And manufacturers (supply) will “react to the market” in the form of responding to demand and manufacture the demanded products. Companies will only manufacture goods that consumers want and are able to buy, as long as it is economically viable (meaning, they can make a profit that will allow them to continue manufacturing the wanted good). They will not manufacture a good that customers do not want and are unwilling to buy.

Innovation
In a free market, competition exists (naturally) also as a way to benefit the consumer in terms of quality of goods. Because consumers (demand) are the driving force in the free market, and manufacturers are competing with others for the same consumers, manufacturers have an incentive to use technology in a way that continually enhances existing products. They are always in the business of making their product more attractive to the consumer to purchase. We see that in





Better products
The competition that is naturally generated in the free market between manufacturers in the same industry also leads to better products for the consumer. The same reason that manufacturers have an incentive to work efficiently and prices their products at competitive prices is the same reason why they have the incentive to innovate their products, or create other products that are better.

Rations Prevented
In a market that is not purely free, there is always the danger of product shortages or even the need for rationing, especially in regard to essential products. For example, in times of fuel shortages, you will inevitably see consumers “stocking up” on gasoline, topping off their tanks in order to prevent the situation where the next time they need gas, they will be unable to find any (because everyone else it topping off and stocking up). Many states have laws which prevent businesses to increase their prices at a level politicians feel would be “unfairly” charge consumers in an emergency situation (price gouging). The fact of the matter is that if the free market were to be allowed to dictate the price, the law of supply and demand would take over and would allow for a more tapered shortage, and more availability to more consumers.

I will discuss more benefits of the free markets in future articles.

Please comment and discuss.