Freeman

ARTICLE

No Bad Thing at All

The Free Market Passes the Benefits of Technology to Consumers

OCTOBER 01, 2001 by RALPH HOOD

Filed Under : Free Markets, Competition

Ralph Hood is a writer in Huntsville, Alabama.

One of the best observations I ever heard on the free market came from a redneck aircraft mechanic named Claudie.

It was sometime back in the seventies at Huntsville (Alabama) Aviation Corporation. I sold airplanes; Claudie fixed them. I walked into the shop one day and Claudie was using the first electric screwdriver I had ever seen in action. Claudie was always fast, and the electric screwdriver made him even more so. I watched in awe as he removed screws from the wing of an airplane.

“Brrt,” went the screwdriver, and one screw was out. “Brrt, brrt, brrt,” and three more were out. I was amazed.

“Claudie,” I said, “that thing saves a lot of time, doesn’t it?” I’ll never forget his answer if I live to be a hundred.

Without missing a beat, Claudie and the screwdriver answered: “(Brrt, brrt, brrt) It don’t save me no time (brrt, brrt, brrt). I was workin’ eight hours a day before, and I’m still working eight hours a day (brrt, brrt, brrt).”

“Well,” I opined, “it’s saving the company time.”

“Naw it ain’t (brrt, brrt, brrt). They still payin’ me for eight hours a day, just like before (brrt, brrt, brrt).”

As I pondered that, Claudie made that aforementioned commentary about the free market.

“I reckon,” said Claudie, “it ain’t saving nobody but the customer, ’cause the customer’s gettin’ his airplane fixed quicker and cheaper.”

I reckon he was right, and I wonder: Has it ever been put better by any college professor? I don’t think even Milton Friedman ever put it better.

Consider the hi-tech revolution. Remember when it was going to give us a four-day workweek, eliminate paper, and make profits easy to come by? What happened? Hi-tech did indeed increase productivity and save costs. Then, just as in the industrial revolution, competition forced business to pass those savings along to the customer.

I taught aviation management back in the eighties. On the first day of class I told my students about the first electronic calculator I ever saw. It would add, subtract, multiply, and divide, and it cost several hundred dollars. I couldn’t afford one. Then I showed the students a calculator I had recently bought for eight dollars. It was smaller and would do more. Everyone could afford one. “What,” I asked them, “made the price drop?”

That first day, every student responded with enthusiasm that “technology” made the price drop. “Nope,” I told them, “technology allowed the price to drop. Competition made it drop.” Then I told them about Claudie and the electric screwdriver.

Throughout history, the free market has passed to consumers the benefits of technology. As Claudie might have said, “That ain’t no bad thing at all.”*

*Claudie, by the way, is no longer a redneck mechanic. Now the maintenance director, he wears a tie and plays golf.

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October 2001

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