Fifty Things that Made the Modern Economy

by Tim Harford

People who instinctively feel that society should take care of its poorest members often feel very differently if those poorest members are migrants.

in the early 1800s, only two in three babies who weren’t breastfed lived to see their first birthday.

many governments try to promote breastfeeding. But nobody makes a quick profit from that.

Food had been perhaps the last cottage industry; it was something that would overwhelmingly be produced in the home. But

washing machine didn’t save a lot of time, because before the washing machine we didn’t wash clothes very often. When it took all day to wash and dry a few shirts, people would use replaceable collars and cuffs or dark outer layers to hide the grime. But

The washing machine didn’t save much time, and the ready meal did, because we were willing to stink but we weren’t willing to starve.

long-planned meal is likely to be nutritious, but when we make more impulsive decisions our snacks are more likely to be junk food than something nourishing.

for every hundred sexually active women using condoms for a year, eighteen will become pregnant.

The pill gave women control in other ways. Using a condom meant negotiating with a partner. The

A sexually active woman who tried to become a doctor, dentist or lawyer was doing the equivalent of building a factory in an earthquake zone: just one bit of bad luck and the expensive investment might be trashed.

As the pill became available, they signed up for long professional courses in undreamt-of numbers.

Computing was what banks did, and corporations, and the military: computers worked for the suits.

And that brings us to the second economic impact. How many of those people are choosing virtual fun over boring work for real money?

That commentator was Charles Coolidge Parlin. He’s widely recognised as the world’s first professional market researcher – and, indeed, as the man who invented the very idea of market research. A century later, the market research profession is huge: in the United States alone, it employs around half a million people.

founder thought he’d be able to sell more advertising space if advertising were perceived as more effective, and he wondered if researching markets might make it possible to devise more effective adverts. In

The invention of market research marks an early step in a broader shift from a ‘producer-led’ to a ‘consumer-led’ approach to business – from making something then trying to persuade people to buy it, to trying to find out what people might buy and then making it. The producer-led

The nature of advertising was changing: no longer merely providing information, but trying to manufacture desire.

Where Ford offered cars in a single shade of black, Google famously tested the effect on click-through rates of forty-one slightly different shades of blue.

Signalling these days is much more complex than merely displaying wealth: we might choose a Prius if we want to display our green credentials, or a Volvo if we want to be seen as safety-conscious. These signals carry meaning only because brands have spent decades consciously trying to understand and respond to consumer desires – and to shape them.

Ever since our ancestors mastered fire, humans have been able to get warmer when it’s cold. Cooling down when it’s hot has been more of a challenge.

The enduring and profitable Hollywood tradition of the summer blockbuster traces directly back to Carrier. So does the rise of the shopping mall.

Air conditioning has changed demographics, too. Without it, it’s hard to imagine the rise of cities like Houston, Phoenix or Atlanta, as well as Dubai or Singapore. As

when the temperature exceeds the low twenties centigrade (low seventies Fahrenheit), students start to score lower in maths tests.

a hotter-than-average year is bad for productivity in hot countries, but good in cold ones:

crunching the numbers, they conclude that human productivity peaks at between eighteen and twenty-two degrees.

Time-use studies suggest women spend more time shopping than men do. Other research suggests that this is a matter of preference as well as duty: men tend to say they like shops with easy parking and short checkout lines, so they can get what they came for and leave; women are more likely to prioritise aspects of the shopping experience, like the friendliness of sales assistants.

And an invention such as the elevator works much better when combined with other technologies: reinforced concrete to build skyscrapers; air conditioning to keep them cool; and public transport to deliver people to dense business districts.

Technology seemed to be booming, but productivity was almost stagnant. Economists called it the ‘productivity paradox’. What might explain it? For a hint, rewind a hundred years. Another remarkable new technology was proving disappointing – electricity. Some corporations were investing in electric dynamos and motors, and installing them in the workplace.

Steam engines rarely stopped. If a single machine in the factory needed to run, the coal fires needed to be fed.

The answer was that to take advantage of electricity, factory owners had to think in a very different way. They could, of course, use an electric motor in the same way as they used steam engines. It would slot right in to their old systems. But electric motors could do much more.

A factory powered by steam needed to be sturdy enough to carry huge steel drive shafts. A factory powered by electricity could be light and airy. Steam-powered factories had to be arranged on the logic of the drive shaft; electricity meant you could arrange factories on the logic of a production line.

Old factories were dark and dense, packed around the shafts. New factories could spread out, with wings and windows to bring natural light

In the old factories, the steam engine set the pace. In the new factories, wor...

And because workers would have more autonomy and flexibility, you even had to change the way they were recruited, trained and paid.

Brynjolfsson and Hitt revealed their solution: what mattered was whether the companies had also been willing to reorganise as they installed the new computers, taking advantage of their potential. That often meant decentralising, outsourcing, streamlining supply chains and offering more choice to customers.

your old processes and add better computers any more than you could take your old steam-powered factory and add electricity. You needed to do things differently; you needed to change the whole system.

Researchers studying the S.S. Warrior’s trip to Bremerhaven concluded that the ship had taken ten days to load and unload, as much time as it had done for the vessel to cross the Atlantic Ocean. In

To begin with, the trucking companies, shipping companies and ports couldn’t agree on a standard. Some wanted large containers;

Then there were the powerful dock-workers’ unions, who resisted the idea. You might think they’d have welcomed shipping containers, as they’d make the job of loading ships safer – but they also meant there’d be fewer jobs to go around.

But perhaps the most striking coup took place in the late 1960s, when Malcom McLean sold the idea of container shipping to perhaps the world’s most powerful customer: the US military. Faced with an unholy logistical nightmare in trying to ship equipment to Vietnam, the military turned to McLean and his container ships to sort things out. Containers

Without the ability to plug into the world’s container shipping system, Africa becomes a costly place to do business with.

you might now pay less than $50 a tonne. As a result, manufacturers are less and less interested in positioning their factories close to their customers – or even their suppliers. What matters instead is finding a location where the workforce, the regulations, the tax regime and the going wage all help make production as efficient as possible.

The retailers didn’t want to install scanners until the manufacturers had put barcodes on their products; the manufacturers didn’t want to put barcodes on their products until the retailers had installed enough scanners.

For a small, family-run convenience store, the barcode scanner was an expensive solution to problems it didn’t really have.

With a manual checkout, a shop assistant might charge a customer for a product, then slip the cash into her pocket without registering the sale.

Shops in general, and supermarkets in particular, started to generalise – selling flowers, clothes and electronic products. Running a huge, diversified, logistically complex operation was all so much easier in the world of the barcode.

On a warm summer’s day – let’s say 25 degrees Celsius – fish and meat will last only a few hours; fruit will be mouldy in a few days; carrots might survive for three weeks if you’re lucky.

And just as with the development of the TV dinner, simplifying the process of feeding a family transforms the labour market. Fewer shopping trips means housewives face fewer obstacles to becoming career women.

One study found it was eco-friendlier to grow tomatoes in Spain and transport them to Sweden than to grow them in Sweden.

Economists still don’t fully understand why some countries grow rich while others stay poor, but most agree on the importance of institutions – things like corruption, political stability and the rule of law.