Sunday, January 22, 2017

Amazon to Add 100,000 Jobs, Great News But . . .

That Creative Destruction Thingee Rises Up Again

In spite of, and not because of the election of Donnie the Trump Amazon is announcing that it will be adding 100,000 jobs to its distribution activities.  This is to handle the increase in on-line sales that the company expects to take place over the next year and a half.  Sounds great, and it is good, except for this other side of the story as reported by the NYT.

"The company’s hiring plans are certainly good news. But to understand the forces roiling the American economy, it’s key to remember that online retailing has destroyed many times that number of positions at malls and shopping centers across America."

What is happening here? It's the horse and buggy industry phenomena. When automobiles took over daily transportation, all of those in the horse and buggy businesses lost their jobs. The great economist Joseph Schumpeter explained and coined a brutal term.

"The contrast between the two scenes is an example of what the economist Joseph Schumpeter termed “creative destruction,” the inevitable process in which new industries rise and replace old ones."

So yeah, this is great unless your job is in the 'creative destruction business' like a mall near Baltimore.

"Fifteen miles away in the suburbs, all that is left of Owings Mills Mall is rubble, demolition having started in the fall, after the last anchor stores, Macy’s and J. C. Penney, closed within months of each other."

It is government's job to help the victims of creative destruction, the same way it helps the victims of floods and earthquakes and hurricanes. Unless of course one is a conservative in which case government's job is to cut taxes for the wealthy and thus not have any money left over to help victims.

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