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Creative Destruction

Posted By Don Boudreaux On December 12, 2010 @ 2:56 pm In Complexity & Emergence,Everyday Life,Growth,History,Myths and Fallacies,Seen and Unseen,Standard of Living,The Economy,The Future,Trade | Comments Disabled

My buddy Bruce McLane alerted me to Maureen Callahan’s article in today’s New York Post – in response to which I sent this letter:

The arguments that Maureen Callahan lobs as grenades against technological change and trade are duds (“Not made in the USA [1],” Dec. 12).  The reason is that each of these arguments would have been equally applicable to 19th-century America, with the only difference being that the fear back then would have been the decline of agricultural employment rather than of manufacturing and low-skill service-sector employment.

In 1820, 79 percent of Americans worked in agriculture.  This number, however, was progressively reduced by improvements in technology.  Chemical fertilizers and pesticides; mechanized planting and harvesting equipment; refrigeration; improved veterinary medicine; better irrigation; faster transportation; and improved packaging for produce – along with more food imports made possible, in part, by motorized sea and air travel – all “destroyed” millions of agricultural jobs.

Would the proper policy in the 19th century have been to stymie these changes because many workers who knew nothing but farming lost their agricultural jobs?  If you agree that the answer is “no,” then it’s senseless to draw policy conclusions from Ms. Callahan’s lament for “the 45-year-old toll taker replaced by the E-ZPass” and “the 50-something cashier replaced by a self-service scanner.”  These jobs, and the others whose demise Ms. Callahan mourns, were themselves made possible only because technology and trade had earlier eliminated the need to have so many people toil on farms and ranches.

Contrary to Ms. Callahan’s claim, the trend of technology and trade changing the contours and contents of economic opportunity did not begin 30 years ago: it began in earnest in the 18th century.  And contrary to Ms. Callahan’s suggestion, this trend is utterly essential to continued economic prosperity.

Sincerely,
Donald J. Boudreaux

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