What if I told you that over 30 years America would lose approximately 1.5 million jobs in a single industry? What if I told you that this would disproportionately affect women, as this industry accounted for approximately 8% of the women in the workforce? At face value, this doesn’t sound fair. No political candidate would dare run on a platform that openly embraced this change for good reason; when things start to directly impact their livelihood the relative ambivalence toward public policy of the average person is upended.
Now let’s flip the script. What if I told you that another person would listen to every single call you made? What if your phone bill every month was twice as much; rather than a few seconds to place an out-of-state call it could take several minutes. Is the added convenience, cost savings, and privacy worth the careers of hundreds of thousands? The answer is a resounding yes.
In the early days of telephones, operators were required, especially to place long-distance calls. These switchboard operators would have to physically connect your call via a cable to a different telephone circuit to enable you to place a call outside of your area code. When it came to international calls, oftentimes it would be necessary to talk to more than one operator. To reach the operator, one had only to dial zero on the phone and then it would immediately put you through to them. If you try this now, (As I just did) you are greeted with an automated voice telling you a few helpful numbers to call and nothing else. They became unnecessary as telecommunications advanced, and companies developed direct dialing to increase profitability and attract customers. This is a great example of the process of creative destruction!
Simply put, creative destruction is the idea that economic development is spurred along by innovations and companies surpassing past technologies and established corporations. Short-term unemployment may occur as established industries are disrupted; however, long term the economic development brought about by the innovation increases economic growth over time leading to a cascading effect throughout various industries. In almost every instance of this occurring, when looking back from the future, no one regrets adopting the new technology.
A great example of creative destruction at work is the fate of the Switchboard Operators. They represented a significant portion of the working female workforce in America in the 1950s. Yet despite massive layoffs in this field that disproportionately targeted women female labor force participation rose from 33% in the 1950s to 51% by the year 1980. Additionally, cellular devices have become ubiquitous in modern society. An indispensable tool, they serve not only as a means of communication but also as cameras, calculators, travel agents, and much more. As telecommunications developed, costs and complexity to the customer decreased thereby increasing demand. This increased demand and utilization would give rise to the car phone, which in turn be superseded by the flip phone, which would be superseded by smartphones. It may be a bit of a stretch but had the end of the switchboard operator not occurred and phones have not proliferated to the extent that they did, the iPhone may not exist. There would not be sufficient infrastructure or demand to support it.
This highlights the importance of not fearing innovation. People tend to get set in their ways and forget the remarkable ability of humans to adapt and learn new skills. Currently, claims abound that AI will entirely replace humans in many occupations forcing many out of their jobs. Often, they tend to paint a picture of a dystopian future similar to the movie WALL-E where humanity has nothing to do but sit around and wait for government handouts as robots do all of the hard work utilizing the mystical power of artificial intelligence. While this may be exaggerated, naysayers have predicted that something similar would happen with every major technological revolution in history and yet somehow economies kept functioning- in fact, they grew in often previously unprecedented ways. I am sure that back when the plow was first invented older peasants lamented that younger generations would grow soft and lazy leading to the downfall of society as they no longer had to use sticks to dig a hole in the ground. Instead, the next generation utilized this technology to plant twice as much ground leading to a food surplus that could support the Enlightenment and industrial revolution. The younger peasant didn’t work
any less hard. He still was in the fields 12 hours a day and came home tired to the bone. He had just accomplished twice as much in that time frame with his labor. Innovation doesn’t lead to humanity becoming weak, lazy, and incompetent. It enables us to be more effective with our time and labor.
