Wednesday, September 22, 2010

New Scientific Method and Standard of Living

I thought it beneficial to expand on a particular point I made in my last post, "Plenty: Guilt or Sense of Responsibility?," in light of the subject of the New Scientific Method. Sir Francis Bacon's famous quote, "knowledge is power" suggests that there is an innate power that comes from having a knowledge of the natural world. With a knowledge of the natural world, humans may manipulate their surroundings and use natural laws to their benefit. In my last post, I stated that "levels of wealth, health, and lifestyle are not zero sum game." As an Economics major, I think that it is high time that I bring a bit of economic thought into our class discussion. I will use a few examples from economists to illustrate the truth of Francis Bacon’s words, for example:
Charles Wheelan, in his book Naked economics: Undressing the Dismal Science, uses an interesting anecdote to illustrate how science and increases of efficiency have lead to an increased standard of living for humans. Wheelan explains that although in empirical terms Chicken was more expensive in 1997 than it was in 1919, it is far less costly in real terms. In fact a chicken in 1919, cost the average worker two hours and thirty-seven minutes to earn the money necessary to buy it. How much today? About 15 minutes.
Another example: The Simon–Ehrlich wager. To describe it briefly, this was a bet between a biologist and an economist regarding resource scarcity. The gist of the bet was that Ehrlich, the biologist bet that prices for five selected commodity metals would go up due to scarcity. On the other hand Simon, the economist, bet that prices for these commodities would go down due to increases in efficiency to due to technological advances. Simon won the wager.
It is clear from these two examples that Francis Bacon was right. Our increased understanding of the natural world has dramatically improved the wealth and living conditions of humanity.
This brings me to an interesting economic concept that links nicely into digital civilization: creative destruction. Throughout history, when science leads a to a breakthrough in technology, those who create it, disseminate it, and embrace it often ride its tide to a higher standard of living. However, in the wake of their success, are those who relied on old technology and/or skills for their livelihood. Though society as a whole is better off, these people are not. Thus the term: creative destruction. An example of this creative destruction are many: cobblers, weavers, tailors, etc. Future victims of creative destruction? Oil Companies, paper producers, people in the newspaper industry? The question I pose is what industries and trades will be “destroyed” by this digital revolution? I suppose for now, only time will tell…