Destructive Automobiles

Allie Pittman Honorbound

Although some individuals might be worse off than before, Charles Wheelan, the author of Naked Economics, states that, “Creative destruction is not just something that might happen in a market economy. It is something that must happen.”[1] A term created by economist Joseph Schumpeter, creative destruction is the “process of industrial mutation that incessantly revolutionizes the economic structure from within it, incessantly destroying the old one, incessantly creating a new structure.”[2] Creative destruction is crucial to long-run economic growth in a market economy especially when considering job creation and job destruction. It is estimated that more than ten percent of jobs in a particular year are destroyed, but the same amount of jobs that were destroyed are created within the same year; however, these numbers are subject to fluctuation.[3] Without creative destruction, humans would not be nearly as productive as they are today and technology would not be nearly as advanced. That being said, many industries are wiped out almost entirely because of it.

Capitalism gives some, but then it takes some; In order to create new jobs, old jobs must be forgone. The creation of the automobile left most people better off. Not only is it faster to get from point A to point B, the automobile boosted other industries like oil, steel, roadway development, and automotive repair.[4] However, this leaves the steam engine and the horse and buggy industries in the dust. The creation of the steam engine enlarged markets, reduced shipping costs, built new industries, and provided millions of Americans with new jobs in the nineteenth century. In 1910, 238,000 Americans worked as blacksmiths making parts for items such as the steam engine, yet today blacksmiths are nearly extinct. In 1920 nearly 2.1 million Americans worked for railroads, but fewer than 200,000 do today. The decline of jobs in both blacksmithing and railroad work can be attributed to the creation of the car. [5] The same can be said for the horse and buggy industry. The Elkhart Carriage and Harness Manufacturing Company produced buggies, carriages, surreys, wagons, and harnesses. Sales were booming so much that they expanded into the West Coast and Canada. At the turn of the century however, sales that were once 10,000 or more dropped to only 1,345 in 1916 due to the creation of the automobile, and three years later the final buggy was sold. [6]

Creative destruction can be seen as a good or a bad thing depending on who is asked. Though it destroys many jobs, it also creates jobs in its wake, and will remain a staple in the market economy.

[1] Charles Wheelan, Naked Economics: Undressing the Dismal Science (New York: W.W. Norton & Company, 2010), 46-48.

[2] Mark J Perry, “The ‘Netflix Effect’: An excellent example of ‘creative destruction’” AEI, n.d. https://www.aei.org/publication/the-netflix-effect-is-an-excellent-example-of-creative-destruction/

[3] “Creative Destruction.” Economists.mit.edu. MIT, n.d. http://economics.mit.edu/files/1785

[4] David Hoppock, “Insights on Creative Destruction and Technology,” Investopedia, 2015, http://www.investopedia.com/articles/investing/070715/insights-creative-destruction-and-technology.asp

[5] W. Michael Cox, “Creative Destruction,” Library of Economics and Liberty. n.d. http://www.econlib.org/library/Enc/CreativeDestruction.html

[6] Tim Ashley, “Horse-Drawn Vehicle Makers in Elkhart County,” Elkhart County Historical Museum, n.d.http://www.elkhartcountyhistory.org/exhibits/online/transportation/repair-page/

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