Tim Worstall, Contributor @ Forbes
There’s a nice essay in The Telegraph today about how fast the pace of technological innovation is: how quickly we seem to be getting new shiny gewgaws to play with.
We have, of course, Amazon just coming out with it’s Fire, Apple are about to release the iPhone 5, Samsung, if it can get the court related matters sorted, has products for both markets. Google has created Android to compete with Apple as Amazon is with the Fire and Microsoft has so many irons in the fire it seems tobe both competing against and cooperating with everyone else.
But underlying the details of who is doing what to and with whom, there’s two much larger economic points
to make:
For any new device, there’s a brief period when it’s the plaything of trendsetters with disposable income to burn. But the key moment comes when they enter the mainstream. You might have thought that tablet computers were already taking over the world one commuter at a time – but just wait until you see them in every school, every workplace and every home.
The first is the influence of markets and capitalism upon this process. It’s often thought that it is capitalism itself which drives both technical innovation and the higher living standards which that itself brings. But it’s not really: it’s markets more than capitalism. This is at the heart of a lot of the work of William Baumol, trying to untangle what it is that makes some societies innovate furiously, others not so much.
Yes, of course, the pursuit of profit is influential: but much more than that it’s the experimentation, the variance, the consumer choice, that markets enable which really matters.
The reason for this is the second important underlying point. It’s not actually the existence of cell phones, of tablet computers, nor even their possession, that makes us richer. It’s what we do with them that does.
It might be that we can do the same old thing more swiftly, cheaper or better. Or it might be that we can do completely new things with these new technologies. Doesn’t matter particularly which: but it’s the use to which technologies are put, the way that they increase productivity, which creates wealth, not the production of the technologies themselves.
Which is where the joy of markets comes in: the consumer gets to choose which version of whatever it is that they want. Which version contains the right ingredients for said consumer to do that value adding thing. More, different consumers, different groups of consumers, will have very different ideas about what is value adding. No one designing a piece of technology can possibly think up all the things that 7 billion people will do with a new technological toy.
For example, the people who designed the original cell phone at Ericsson, none of them had any inkling that a use would be to enable gay people to hook up in bars as with Grindr. Or as a banking system in East Africa.
FULL STORY: http://www.forbes.com/sites/timworstall/2011/10/01/apple-and-amazon-tablets-cellphones-capitalism-and-markets/?partner=yahootix
