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Friday, December 6, 2013

Abundance Down There, and Back Up

While a number of thinkers and economists have been lamenting The Great Stagnation, a quiet revolution is developing. And much of it is happening “down there”—in areas invisible to the naked eye.

You’ve probably encountered a number of lamentations about the automation of everything. And in the short term, these processes may be quite jarring, particularly to ordinary people and to a political class obsessed with job creation for its own sake. If a robot can cut your hair or a kiosk can replace an order taker at a burger joint, it’ll probably happen. And, indeed, if you can someday “print” a pencil, then Leonard Read’s illustrious pencil might be telling quite a different story.

And yet Ricardo’s Law never sleeps. With freed up resources, we simply have to figure out new and creative ways to serve people. As venture capitalist and FEE supporter John Chisholm wrote in a recent Forbes column, it’s time to create your own job:

Choose any product or service in an area you are passionate and knowledgeable about. The area may be aerospace, boats, cars, cooking, education, electronics, fashion, fiction, films, fitness, gadgets, gardening, health, history, math, merchandising, music, politics, scuba, space, sports, statistics, travel, woodworking, you name it. Now think of limitations of the product or service you selected.

If you find those limitations, then you can exploit them by finding ways to make life better for people by bridging the gaps or solving the problems those limitations present. Adopting an entrepreneurial mindset will be critical—even in the most mundane areas of the economy. Instead of thinking about automation and nano-manufacturing as being job killers, think of them as productivity enhancers that create new wants and needs. In other words, ask not why the burger-flipper must lose her job to R2D2. Ask what the burger-flipper will be doing next.

So the next twenty years are going to be interesting. We can say with confidence that three things are going to happen:

  • Automation is going to displace a lot of skilled and unskilled labor—particularly as minimum wages and other bad laws raise labor costs that make automation more attractive.
  • Nanotechnology is going to mean that the production processes we’re used to are going to change. Entire sections of a manufacturing ecosystem (logistics, warehousing, assembly) may disappear thanks to new nanoscale manufacturing techniques that obviate the need for many discrete but interconnected parts created in different places.
  • Connectivity is going to mean that some things can be manufactured—right there—in your home or place of business. Or that new assembly and logistics systems will emerge over the old ones. The logic of “I, Pencil” will still hold for some things, but not others. 

All three of these forces working in combination will be extremely transformative.

This is creative destruction. It’s been happening for a thousand years. The only thing that’s changed is the pace of change, and perhaps the need for more creativity and more awareness by ordinary people. And I realize that’s a tall order. But it will happen.

All of this is going to yield radical abundance. Better, faster, and cheaper is going to be the new normal. That means ordinary people have access to better, faster, and cheaper goods, but will also have to learn to live in a better, faster, cheaper world.

Ironically, only the political class stands in the way of these transformative processes in sectors like healthcare, education, and energy. So it’s no accident that things are getting worse, slower, and more expensive in these sectors. Eventually, however, sharp, savvy entrepreneurs will find cracks and fissures in these State-heavy sectors and restore the benefits of creative destruction.

Let’s hope so, for everyone’s sake.  

  • The Freeman is the flagship publication of the Foundation for Economic Education and one of the oldest and most respected journals of liberty in America. For more than 50 years it has uncompromisingly defended the ideals of the free society.