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Thursday, June 30, 2016

How Starbucks Saved My Hands and Taught Me about Economic Progress

It's a tiny thing, but it's why capitalism is awesome.

Wow. I think this is one of the coolest things I’ve ever seen: it’s a little green plug/stir stick that fits neatly into the lid of the Venti dark roast I’m enjoying. I think I vaguely recall having seen one before, but I don’t know for certain. This I do know: a seemingly mundane little innovation that few people probably even notice has made my life appreciably better by keeping my coffee hot and by keeping it from spilling. According to the baristas who served me today, a Starbucks employee invented it.

A tiny plastic stick dramatically improved my life. I’m going to keep the one I just got and add it to my assortment of doodads that I take on the road so I can use it when I get coffee elsewhere. I travel a lot, and there’s a chance you’ve probably seen my bumbling figure in an airport this week. Too many times, I’ve been holding a cup of coffee and gotten bumped or otherwise jostled in such a way as to land a splash of burning hot coffee on my hand. Suffice it to say this isn’t something that improves my mood.

I got to experience this just a minute ago. I opened a door that swung back and bumped my right elbow. I was holding a full cup of coffee in my right hand and noticed that I braced myself for the coming pain that would accompany a splash of piping-hot coffee on the flesh between my thumb and index finger.

No such pain was forthcoming. The benefits of this tiny, mundane little innovation were immediate, apparent, and good for my productivity. Instead of cursing my pain and searching for a napkin to wipe up spilled coffee, I got to focus on more important things.

By this point, you might be thinking, “So what? Your coffee is a little hotter, and you don’t burn your hands as often. Why does that matter in a world where there is still widespread starvation and suffering?” I’m sympathetic, and I certainly don’t want to give the impression that I’m dismissing real suffering or saying, “What’s your problem? My coffee is hot and yet my hands are unburned.”

Someone I will never meet made my life better. The little coffee plug illustrates a few important facts about innovation in a free and flexible economy. During a time when we’re debating which policy or presidential candidate will solve Great Social Problems once and for all, we do well to remember the wisdom of Thomas Sowell: “There are no solutions, only trade-offs.” Someone I don’t know who invented a little plug for my coffee has made me appreciably better off. That’s more than can be said for just about any politician.

Further, we do well to remember what economists like Friedrich Hayek and others have emphasized about “The Use of Knowledge in Society.” The social problem is to coordinate the knowledge about preferences and possibilities dispersed across billions of minds. Such knowledge cannot be known by a single person, and as Hayek and others have argued, markets are necessary if such knowledge is to be harnessed and transmitted through coherent signals.

Capitalism is a discovery process. The Starbucks coffee plug is another drop in what the economist Donald J. Boudreaux calls “the prosperity pool,” and it illustrates a more fundamental truth about the process of capitalist innovation. It’s a process of experimentation that allows people to identify (through trial and error) an array of goods and services that make people better off. To borrow from Joseph Schumpeter, the capitalist achievement does not consist of better baubles for plutocrats. It consists of a countless array of innovations that benefit the rest of us.

This article first appeared at Forbes in 2012.

  • Art Carden is a Professor of Economics, author, and co-editor of the Southern Economic Journal.