It’s Not the ATMs, Mr. President!

I was tempted to use a different head-line on this one:

“It’s Not the ATMs, Stupid!”

That would be a take-off on Bill Clinton’s famous slogan against President George H.W. Bush during the 1988 presidential campaign when he remarked, “It’s the Economy, Stupid!” while trying to frame the most important issue of that presidential campaign cycle.

But I don’t want to be be disrespectful to the president of the United States. I don’t believe he’s stupid and I greatly respect the office.

Yet, he sure said a dumb thing on the NBC Today Show on on June 15, 2011 that will come back to haunt him during the 2012 presidential campaign.

It also revealed a lack of understanding of basic economics.

Here’s what he said…

In a Today show interview with Ann Curry, President Obama talked about one of the reasons he thought employment numbers have been slow to rebound–self-service automation–specifically kiosks and ATMs.

In the interview, he said, “There are some structural issues with our economy where a lot of businesses have learned to become much more efficient with a lot fewer workers. You see it when you go to a bank and you use an ATM, you don’t go to a bank teller, or you go to the airport and you’re using a kiosk instead of checking in at the gate. All these things have created changes in the economy. “

According to the Washington Examiner’s Philip Klein, ATM Industry Association CEO Mike Lee sent him an email response that said, in part, that “President Obama should never use ATMs as an example of how technology replaces human labor because ATMs today play a critical role in providing extensive employment in the ATM and cash-in-transit industries.”

Economics 101: Innovation multiplies jobs–it doesn’t shrink them.

No, it’s not the ATMs, Mr. President!

It’s bad economic policies. In the past three years we have done all the wrong things to try and create jobs. Government intervention and growth doesn’t do it.

And it’s pretty scary that at the highest levels of our current government, they just don’t seem to understand how wealth is created, how jobs are made, and what economic drivers are essential for prosperity.

Now I will be the first to admit that economic theory in its various forms can be hard to understand. That’s why so many people call it an imperfect science.

But for the past twenty-five years, Shirley and I have home-schooled our kids on the tenets of modern free enterprise capitalism. Those basics include:

  • It is individuals, and the businesses they start, that create wealth. Government doesn’t create wealth. It only distributes it according to its goals and desires.
  • Tools are essential to increasing productivity. The more-and-better tools that man creates (including  ATMs), the more wealth (capital) can be generated.
  • Over the past five hundred years, the creation of the middle class–which has grown exponentially worldwide–has been due to the wonderful development in technology which has increased jobs– never taken away opportunities to get ahead.

Yes, it is true, whenever man innovates, or new technologies are created, then older jobs and trades go away. Certain jobs are lost when new technologies are introduced.

For example, there are millions of people in America today named “Smith.”  They wear that surname because many of their ancestors were “back smiths” who worked with metals that were essential to an agricultural society. They made horseshoes, plows, and other metal objects that were vital for industry for hundreds of years.

But machines eventually took their place–did a better job of making metal objects–and all the “smiths” of the world had to move on to other professions.

Did the “Smith Family” suffer from these changes in technology? Maybe for a time. But I can guarantee that there are more wealthy, employed and prosperous “Smiths” in America today than in any other historical period. Innovation didn’t create long-lasting job loss. It actually became a vehicle for greater wealth among the Smith clan.

There are two classic examples of economic change–producing more jobs not less jobs–in the past few hundred years. The first was the Industrial Revolution.

The Industrial Revolution

The Industrial Revolution was a period from the 18th to the 19th century where major changes in agriculture, manufacturing, mining, transportation, and technology had a profound effect on the economic and cultural conditions of the times. It began in England, then subsequently spread throughout Europe, North America, and eventually the world.

The Industrial Revolution was a major turning point in human history; almost every aspect of daily life was influenced in some way. Most notably, average income and population began to exhibit unprecedented sustained growth. In the two centuries following 1800, the world’s average per capita income increased over 10-fold, while the world’s population increased over 6-fold. In the words of Nobel Prize winner Robert E. Lucas, Jr., “For the first time in history, the living standards of the masses of ordinary people have begun to undergo sustained growth. … Nothing remotely like this economic behavior has happened before.”

In other words, using machines to do more for human beings did not decrease jobs or prosperity. It greatly multiplied job opportunities for billions of people. World population actually exploded because it was easier for people to live and work.

Starting in the later part of the 18th century, there was a transition in parts of Great Britain’s manual labour and animal–based economy towards machine-based manufacturing. It started with the mechanization of the textile industries, the development of iron-making techniques and the increased use of coal. Trade expansion was enabled by the introduction of canals, improved roads and railways.

The introduction of steam power produced dramatic increases in production capacity. The development of all-metal machine tools in the first two decades of the 19th century facilitated the manufacture of more production machines for manufacturing in other industries. The effects spread throughout Western Europe and North America during the 19th century, eventually affecting most of the world, a process that continues as industrialization. The impact of this change on society was enormous.

What are those impacts? More wealth, a higher standard of living, more jobs, and greater opportunities for all.

The Information Revolution

The second great quantum leap in job creation and increased prosperity has been the Information Revolution that has taken place in our lifetime–in the past thirty or forty years. Much of it took place through the invention of one tiny object: the micro-chip.

Arthur Laffer, Stephen Moore and Peter Tanous share the amazing benefits of that little innovation in their groundbreaking book, The End Of Prosperity: How Higher Taxes Will Doom the Economy If We Let It Happen:

“The dawning of the age of the microchip and all the attendant, fabulous technological advances have played a vital role in this wild and wonderful ride. Ingenious and daring entrepreneurs from Bill Gates to Fred Smith (there’s that name again!) to Larry Ellison to Google founders Sergey Brin and Larry Page launched whole new industries and made billions of dollars for themselves and billions more for workers and society. More wealth was created in the United States in the past twenty-five years than in the previous two hundred. In 1967 only one in 25 families earned an income of $100,000, whereas now, almost one in four families do.”

And millions of new jobs were created as a result of the Information Revolution. The tiny machines didn’t take jobs away–they exploded the opportunities for people to create wealth.

I sometimes wonder what many men and women did a hundred years ago when there was no such thing as hardware and software–or electronics. Think how many “geeks” have come into their own because one little mechanical innovation allowed them to use some God-given abilites that the hoe and plow never offered. 

The lesson is extremely clear: Improved technology grows jobs if you’re willing to look for the possibilities.

And here’s where we get down to the troubling aspect of President Obama’s comments. Producing jobs and prosperity is really the result of a worldview–a “faith” that is always dreaming of more opportunities and improvements in life, family, and human culture.

Because what is really multiplied when technology enhances human life, even taking away some short-term job occupations in the process, is that it gives human beings a greater opportunity to be creative–to think through how the latest innovation can be enhanced and expanded. Greater leisure through better tools produces more time for creative thinking–and that valuable activity greatly multiplies human activity (i.e. jobs).

Better tools–like ATM machines–give us the time to use our creative imaginations to explore new ideas, make new applications, and create more products. We’re not enslaved to the ancient technologies or limitations.

Machines multiply creativity–if we believe there’s a Creator to follow and a world to improve.

That’s where the worldview is crucial: God. Man made is His creative image. A mandate to improve the world. Faith to do so by his power and grace. Innovation. Improvement. Jobs. Prosperity.

We need to say to ourselves “It’s the worldview, stupid!”

Then have faith and imagination to keep improving that world for our benefit and his glory.




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