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Means Are Not Ends

Posted By Don Boudreaux On May 15, 2013 @ 10:08 am In Creative destruction,Growth,Myths and Fallacies,Seen and Unseen | Comments Disabled

Here’s a letter to Salon:

In your interview of Jaron Lanier you quote a passage from his book Who Owns the Future? [1] – a book in which Mr. Lanier laments the modern economy’s facility at making available at very low costs many goods and services whose production in the past required a great deal of human labor: “At the height of its power, the photography company Kodak employed more than 14,000 people and was worth $28 billion.  They even invented the first digital camera.  But today Kodak is bankrupt, and the new face of digital photography has become Instagram.  When Instagram was sold to Facebook for a billion dollars in 2012, it employed only 13 people.  Where did all those jobs disappear?  And what happened to the wealth that all those middle-class jobs created?”  (“The Internet destroyed the middle class [2],” May 12).

Mr. Lanier sounds profound, I suppose, to people unfamiliar with history.  So let’s re-write Mr. Lanier’s prose just a bit in order to put his fears in historical context:

“At the height of its power, agriculture employed 90 percent of the population and produced output worth vastly more than half of U.S. GDP.  It even invented countless plant hybrids and animal breeds.  But today nearly all farms of the past have gone bankrupt (or, seeing the economic writing on the wall, were transformed to other uses).  Agriculture today employs only about one percent of the workforce [3].  Where did all those jobs disappear?  And what happened to the wealth that all those good agricultural jobs created?”

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

(For the pointer to the Salon piece on Lanier, I thank Steven McDuffie.)

By Mr. Lanier’s logic – and, to be fair, he’s hardly the only person who sees the world as he does – we’d all be made much wealthier if, suddenly, each gallon of water for human consumption had to be manufactured using many workers.

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[1] Who Owns the Future?: http://www.amazon.com/Who-Owns-Future-Jaron-Lanier/dp/1451654960/ref=sr_1_1?s=books&ie=UTF8&qid=1368626704&sr=1-1&keywords=jaron+lanier

[2] The Internet destroyed the middle class: http://www.salon.com/2013/05/12/jaron_lanier_the_internet_destroyed_the_middle_class/singleton/

[3] Agriculture today employs only about one percent of the workforce: https://www.cia.gov/library/publications/the-world-factbook/fields/2048.html

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