How new technology makes us all richer can be a little difficult to work through. We can all see -- because it's obvious -- how rich the entrepreneurs who own the new technology get.
Jeff Bezos, for example, has a second yacht to carry his helicopter while following his first yacht. Which is, you know, pretty rich. Mark Zuckerberg has half a Hawaiian island and Ellison, of Oracle, has most of another -- both also have large yachts.
But what do we get out of this arrangement? One of the reasons populist politicians gain so much attraction from voters is that tracking that down can be difficult. There are answers. Zuckerberg's fortune comes from, in part, us getting free telephone calls on WhatsApp and Facebook Messenger. OK, free phone calls may or may not be of huge value to us individually but there are 4 billion of us -- half the entire world -- who get them which does add up.
The very existence of Amazon has cut 0.1 to 0.2% off the US inflation rate for two decades now. Just that price competition from it has lowered all prices for everyone by 2-4% on everything they buy. That's worth one yacht, maybe two.
We can also look at this in more detail in Bangladesh. Owners of shopping malls in Dhaka are selling up. Because they cannot make money any more and the reason is: “The rise of online retail,” “shop online,” the “expansion of e-commerce,” and so on.
We see this in my native Britain as well. The Office for National Statistics records that online sales are 28% of total retail sales today -- up from 3% in 2006. As a result, we simply require fewer shops and it's true that retail landlords are suffering. At least one of the large companies -- Intu -- went bust some years back as a result.
This doesn't mean that no one ever wants to go to the shops and everyone wants to only buy online. There really are those who enjoy going shopping just for the joy of going shopping.
What we're therefore seeing in some other countries is a division in the shopping experience. Yes, we still have little local shops where we can get little supplies of necessities -- a gallon of milk, a loaf of bread. We also have the big shopping experiences of places where it's possible to go and have a day out having that active fun of shopping.
The places feeling the financial pressure are those that used to provide the shopping that had to be done and that few find that fun. That's now better -- or preferentially -- done by point, click, and the delivery van.
These things are all true but we do tend to not put as much emphasis on these benefits to us -- even as they clearly are benefits because this is why we do things -- as we do upon the problems of those going bust because we've changed our ways.
We also tend not to feel a 1 or 2% change in price levels, or any other gradual change, over years. Even as they are how we get richer over time. One and two percent really does add up over decades.
Then along comes an economist and points out that this isn't, not really, how we all get richer. The real point is this: “As a result, the owners decided to sell off the property. Discussions are currently underway with several entities, including hospitals, corporate firms, and banks.”
Dhaka has a limited amount of land. As the most densely populated city on the planet, it has a very limited amount of land. So, if we stop using land for one purpose, then we get empty land that can then be used for another.
We're made richer by whatever value we put upon having a hospital, more jobs and employment from corporations, or even a bank -- hopefully one that doesn't lose all the money.
And that is how economists say we get richer. This new way of doing things, this new technology, uses fewer resources -- less land here, but it can be less labour, less energy, etc -- and this means we've now newly freed up resources to go and produce something else that we want.
We are richer by whatever value we put on this new thing that it is now possible to produce for our enjoyment. OK, hospitals aren't really about enjoyment other than in the leaving of them alive. But you get the point.
Economists are indeed strange people, but they really do say that we get richer when we stop using resources. Because when we don't use something in limited supply to do this thing, here, that then frees up the supply of that thing to be used to do something else. We are richer by the value we place on that new thing being done.
Tim Worstall is a senior fellow at the Adam Smith Institute in London.
