Scott Rasmussen wrote an article which is a good reminder that the future of economics and economic growth in America will not be decided by Washington–as much as they like to pretend–but instead by “makers” who will drive the next innovation to boom the economy, like Bill Gates and Steve Jobs began doing in the 80’s. It could be 3D printing, virtual reality, or high speed tube trains that are the future of American growth, but these choices are not for Washington to make; they couldn’t possibly know what the market–individuals–will value, want, and need most. The way that valuable things are created is in a process of informed trial and error in a free-ish market that allow consumers to vote with their dollar to choose the next product. Of course there are also investors who risk their money in hopes of cashing in on the next economic boom; they too fuel innovation and the future economy by guessing about what future markets will demand, and providing the capital for whatever that is to be supplied.
Of course the government has its influence on the economy by using force to make or break favored or hated companies, to misplace resources where there is no demand, and other crony capitalist schemes sure to slow the economy. The best thing the federal government could do for the economy is get out of the way, and return a large portion of the money taken from the private sector through taxes to be spent by individuals instead of the government. But as much as people do not understand the nature of government being unable to create wealth and unable to apportion resources as well as the free market, many people are also somehow clueless when it comes to accepting new innovation and technology. Somehow people cannot get past the fact that creating better technology will inevitably lead to the loss of jobs in the sector it replaces, but that as long as the net value has been increased, more jobs will be created in other sectors.
I am thinking about the comments on an article about a private project from Tesla Motors that is building a 3 mile test track for a high speed tube train which would operate using magnets and a vacuum tunnel to allow extremely high speeds. This is the economic project I am most excited about, because we really haven’t had a major advance in transportation for a century. Planes and cars were already invented 100 years ago, and have certainly been improved on, but nothing new or revolutionary has been implemented. Now, Tesla Motors CEO Elon Musk claims his new project will allow travel between New York City and Los Angeles to take place in 45 minutes. Since the tubes could also be placed underwater, NYC to Beijing would take 2 hours.
Musk’s ‘Hyperloop’ would work in a similar manner to the old fashioned pneumatic tube delivery system, which would use suction to pull a capsule along the tube to the destination.
Giant vacuum tubes can be built on the ground and even underwater, and will send capsules capable of carrying several people at a time, along a mag-lev track similar to those used for conventional bullet train, at incredibly high speeds.
This, if successful, will truly be a revolution in transportation, and connect the world in ways only dreamed of as a physical equivalent to the internet. So what were some commenters on the article concerned about? The extreme economic damage this project will do on car manufacturers, sellers, and the employees. Can out economy survive a step forward of this magnitude, or will everything come crashing down? And how can we disagree? The invention of cars surely ruined the business of many a horse shoer. But what these fears of the unknown leave out is that the horse shoer began changing tires instead.
Maybe I’m naive, but I was actually surprised by the comments decrying the use of the new rail because of the economically damaging effects it is sure to wreak on the nation. I really thought we were past criticizing advances in the economy by claiming these advances will ruin the economy. Yes, this rail would probably put many airlines out of business. But what about the money saved on building highways and runways? It won’t just disappear. Some of those resources will go into the new rail, and provide many construction and operations jobs similar to those of the old economy’s transportation system. But the rest, the net money saved after building a far better transportation system will be spent on other innovations, other products, and other manufacturing jobs. Will some jobs disappear? Certainly, just as saddle-makers took a hit, car and airplane makers would under these circumstances. But these losses will be confined to the outdated industry, and jobs will be created in the new industry, as well as others which have a new influx of resources.
Imagine how easily food, goods and resources could be transported to everywhere on earth. Imagine the billions of dollars and man hours flooding new industries as we can finally ease production on the the outdated and primitive automobile. Imagine the environmental benefits of a vacuum sealed tube train cutting emissions. Imagine the extra money in every individual’s pocket because of the reduced price of travel, and lower price of every good that needs to be shipped. Imagine what this extra money will be spent on, all the new items and innovation for our economy, and all the new jobs that it will create.
We don’t need to fear advancements in the economy unless we are only concerned about one specific sector. We could certainly save the jobs of say car manufactures at GM, but the unseen consequences are forfeiting advancements which will help everyone, and the new jobs that go along with it. But the economy as a whole will always do better with more creation of wealth, and cutting transportation times and costs to a fraction would have unimaginable economics benefits. If you are a truck driver, this may be a scary transition. But if you are a consumer, as we all are if we participate in the economy, the benefits will far outweigh the consequences. So maybe that truck driver can retire a couple years early when the price of food falls ten-fold with the cheaper faster transportation of this tube train. This new train would be the ultimate economic facilitator, which would undoubtedly raise the standard of living of everyone it reaches. And with all the increased resource availability and hours more free-time for millions (if not eventually billions), people will again be free to create, and fret, the next giant leap for our world economy.