Wednesday, May 2, 2012

Who's the Sec'y of Inventory Control, Paul?

Responding to a question, NY Times columnist and Nobel Prize winning economist Paul Krugman tips his hat to entrepreneurs;

What is your personal favorite "minor" innovation that has had a large impact on efficiency, and therefore, the economy?
[–]nytimeskrugman[S] 998 points  agoHmm. I'm not sure about efficiency. But how about the graciousness of life? As someone who spends too much time in airports and train stations, and has been doing that for a long time, let me say that the advent of self-flushing toilets in men's rooms has made life significantly less disgusting.
And on the more serious front: bar codes!!!
Yes, we are a fan of bar codes too, as we mentioned (in a different blogging location a few years ago ) for Krugman's benefit (he probably missed it, with his busy schedule);
But, old-fashioned is no qualification for an economist. Social Security being 19th century technology--like the horse and buggy--imported from Bismarck's Germany via FDR's New Deal in the 1930s. 
Since then, we've split the atom, invented jet engines, sent men to the moon and back, developed bar codes that allowed the creation of the modern retail superstore, and have computerized and internet-ized such simple tasks as writing letters, and visiting the library. 
Not so well known is how a half century or so ago, a young aspiring junior executive at AT&T in New York City was told by his new boss that The Monopoly wasn't doing any business with the agriculture sector (most grocery stores didn't even have a business phone, relying on a pay phone located in the store for the few calls they needed to make), and would like to change that.

So that young man began to knock on doors and talk to the people whose job it was to put nourishment on the tables of America's families.  Almost everyone--grocery store managers, grocery wholesalers, manufacturers and packagers, told him the same thing.  Their biggest problem was managing inventory; getting the food from the fields to the store shelves, at the right time, at a price that people would willingly pay.

'A butterfly flaps its wings in Africa'...and Wal-Mart arises in Arkansas.

The profit motive drives innovation.  It can even overcome roadblocks created by powerful governments--AT&T had the telecommunications technology, but IBM had the computer know-how and both were wary of the anti-trust division of the Justice Dept.  Today's shopping experience is very different from that of the 1960s, thanks not to the benevolence of the farmer, the manufacturer, the wholesaler and the retailer, but from their regard to their own self-interest.

Even leftish economists recognize that.  Which is a good thing.

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