The Industrial Revolution Past and Future

Federal Reserve Bank of Minneapolis ^ | May 2004 | Robert E. Lucas

[anglian]

Of the tendencies that are harmful to sound economics, the most seductive, and in my opinion the most poisonous, is to focus on questions of distribution. But of the vast increase in the well-being of hundreds of millions of people that has occurred in the 200-year course of the industrial revolution to date, virtually none of it can be attributed to the direct redistribution of resources from rich to poor. The potential for improving the lives of poor people by finding different ways of distributing current production is nothing compared to the apparently limitless potential of increasing production.

[10Ring]

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[dan1123]

This is an important graph to snap the socialists out of it:

I think the main thing is that we have moved in a sort of pipeline of economic progress. Step one is to do something manually, step two is to optimize and mechanize. First farming by hand, then with animal help, then mechanized, then controlled with breeding and genetics. Second making things by artisan one at a time, then assembly line breakdowns, then machine enhanced assembly. Third, distribution goes from needing many places where goods are produced, to centralized production and dispersed distribution centers, to just-in-time distribution with complex inventory minimizing scheduling and forecasting. In general, production goes up, prices go down, and displaced people move on to new, usually less demanding work.

This is all good, and has made things more affordable and in fact has driven people to buy more luxuries unheard of 50 years ago, and has driven innovators to create new products. But what if we are in the position we are in today? People seem to believe that there is doom on the horizon and that investment banks going under will take the rest of the economy with them. Sure, the commodities and housing bubbles popped, leaving large investors with huge losses, but the consuming machine is still going. I don't think a financial sector crunch is going to hit the little guy very hard at all. I predict a mild 6-month max deflationary period before there is a return to a healthy low level of inflation.

[Hawthorn]

What a great essay! Should be required reading for every young socialist who thinks 0bama will save the world!

(But the old socialists are clearly hopeless!)

[roadcat]

Long read! The essence of the article is in the first excerpted paragraph! Rather than grabbing (extorting) fish from the successful fisherman and trying to give it to the hungry, you spread the skills of fishing to the hungry masses. We don’t need Obamism/socialism, future trends of robotics and science will increase production and the entire world will share in the mastery of these new tools in order to better their lives. Or something like that. Obama should get out of the way, he’s a hindrance to productivity.