By Jacob Melder
Guest Writer
In the Feb. 7 edition of the Cardinal & Cream, Union alumnus Jordan Buie argued the economy has recovered slowly, in part, because of technology.
He said factories that formally employed humans are now using machines, and accountants have been surpassed by software. As a result, the labor force laid off has been unable to find employment.
I believe, however, that technology is integral to economic prosperity.
The argument that technology will take away jobs is not a new one. In the Industrial Revolution there was concern that manufacturing improvements would devastate the economy.
And yet, that did not happen. Buie’s view of how economies – and people – work is incomplete.
Peter Schiff, CEO of Euro Pacific Capital Inc., said in a Feb. 7 interview with the Huffington Post, “Machines and tools make us more productive. They don’t destroy jobs, they liberate labor to pursue other things.”
For example, a factory that makes blankets bought a machine allowing the same production for half the workforce, laying off workers.
However, the factory owner now has more profits as a result of paying few employees. This allows him to do many things. He can expand his business, invest or buy himself a yacht.
More capital has been created, and the economy has grown, whether it is an increase in blankets or boats. Because competition exists in a free market, the businessman will keep prices low.
He could reduce his profit margin to make blankets cheaply, increasing the standard of living.
Purchasing the machine helped the manufacturer. Taking out a loan helped the bank, creating a higher return for investors who can spend that money.
In his book, “Economics in One Lesson,” Henry Hazlitt writes, “The belief that machines cause unemployment leads to preposterous conclusions. … The logical conclusion would be that the way to maximize jobs is to make all labor as inefficient and unproductive as possible.”
So what happens to the people who are unemployed? That is up to them. Some could go to work for a competitive factory. Perhaps others will start a factory of their own.
The important factor is that they are freed to do whatever they can do. A person can pursue a new invention, explore new markets or afford leisure time.
When efficient processes are introduced, products are less expensive, which means people can buy more or save money.
Without technology we would be scratching at the dirt trying to grow what little food we could.
Technology is not the cause for America’s poor economy. Technology is a main factor in America’s growing economy.
Jacob Melder is a senior broadcast journalism major.
