51st thing that made the modern economy | Deloitte UK has been saved
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Invention lies at the heart of industry and economics. The question of what systems best foster innovation and which innovations have the greatest effect on economic welfare have long occupied economists.
Over the last year the author and economist Tim Harford has presented a BBC radio series describing the fifty innovations he believes have ‘made the modern economy’.
Some entries that are less surprising than others. The dynamo, radar, battery and robot feature, but so too, do seller feedback, Ikea’s Billy bookcase, management consultancy and double entry bookkeeping. In making his choice Mr Harford has a preference for ideas that have made an impact in subtle or surprising ways.
Many of the great innovations have to come to fruition through a haphazard and serendipitous process. The final application of a technology is often distant from what its originator had imagined. Ideas build on themselves, in a chaotic and free-market fashion, with countless failures and dead ends along the way. The writer Matt Ridley memorably described this as ‘ideas having sex’.
To conclude his series Mr Harford asked listeners to send in their own additions to his list. Here’s the six entries from the six members of the Economics Team and a short explanation.
The assembly line
The assembly line method has revolutionised manufacturing, enabling complex machinery and goods to be produced more efficiently and at significantly lower cost. Many attribute its birth to the Henry Ford‘s Model T but it existed in less sophisticated versions for centuries before cars came along. As early as the 12th century, workers in the Venetian Arsenal produced ships by moving them down a canal where they were fitted with new parts at each stop. As well as making mass production possible, the assembly line method has led to the birth of specialised parts manufacturers and enabled geographically diverse supply chains. The European tradition of taking holidays in August is another consequence as workers on assembly lines had to go on holiday simultaneously, shutting down entire factories.
The tin can
The tin can is an example of an apparently mundane invention that has fundamentally changed the way we live our lives. The can has made the products we want cheaper, safe and more readily available. In doing so, the can has shaped the way we eat, shop and travel.
The method for perfectly preserving food without destroying its shape or taste was first perfected by Frenchman Nicolas Appert in the last decade of the 18th century. His technique used old champagne bottles but the method for using tin was later perfected by English merchant Peter Durand, helped by French inventor Phillipe de Girard. Durand patented the Frenchman's invention in 1810, apparently recording on the patent certificate that the process was "communicated to him by certain foreigners". The first commercial canning factory opened in June 1813, not in Paris but in Bermondsey. Durand’s partners soon began supplying the British Navy.
Canning soon brought exotic new foods to Western households, opened up export markets, and supported the progress of armies, navies, explorers and the British Empire.
Optical glass is an old technology, dating back to thirteenth century Italy, but one that had a profound effect on human welfare and development. Being able to see accurately is a vital human skill, but one that is far from ubiquitous. In excess of 60% of people in the developed world have corrected vision, either through glasses, contact lenses or laser vision. In the US and the UK the figure is closer to 70%. The welfare benefits from the invention of glasses have been enabling people to lead more effective and fuller lives. Many basic tasks, such as reading or driving, could not be performed by a sizeable proportion of the population were it not for glasses.
The advent of modern-day anaesthesia has allowed a multitude of invasive medical procedures, saving countless lives and enabling scientists to better understand the human anatomy. Before modern-day anaesthetics, alcohol, herbs, and even narcotics were used to render patients unconscious. These methods had erratic and often fatal results. A Scot, Sir James Simpson, was the first to demonstrate the anaesthetic properties of chloroform and is said to have played a pivotal role in popularising the drug for medical use. It is believed that Dr Simpson and his two assistants tested different chemicals on each other to establish whether they had an anaesthetic effect. After inhaling chloroform they quickly lost consciousness, and as soon as they woke the next morning, they knew that they had found something that could be used as an anaesthetic.
Online networks have had a rapid and widespread impact. In just a few decades they have transformed the way we interact with each other, the way services are delivered, the flow of information and even our political systems. It started with the BBS, the Bulletin Board System. These online meeting places were effectively independently-produced hunks of code that allowed users to communicate with a central system where they could download files or games and post messages to other users, over telephone lines via a modem. Today, we live in a world of extensive online networks connecting people from almost anywhere on the planet, with less time and effort than was ever before possible. Such networks have also fundamentally changed the business environment. With a wealth of consumer online data waiting to be mined, advertisers and marketers can reach audiences, understand trends and even outsource work they require to the “crowd”. More recently, online networks have also been associated with political change: from their role in helping organise popular uprisings in the ‘Arab Spring’, to their impact in allowing countless campaigns to more effectively communicate with potential voters and supporters. President Trump has been coined the ‘Hemingway of Twitter’ due to his use of Twitter –a platform he describes as the only way to communicate directly with the American people.
Satellite Navigation Systems
As has been the case with many great inventions, satellite navigation systems are now used for many more purposes than they were originally designed for. The technology works by connecting devices on the ground to signals from orbiting satellites – with the receiving devices subsequently able to calculate their locations to within a few meters. Such satellites were originally set up by the US Department of Defense in the early 1990s before being made available to civilian users in 1996, at President Clinton’s behest. Now, the technology is ubiquitous in modern day life. Perhaps the most obvious impact of these systems has been on navigation, with satellite navigation allowing people to more easily make their journeys and track those of others. This has had significant implications for logistics, maritime travel and the way we personally make our day-to-day journeys at home or abroad. Missing persons and criminal suspects can now also be more easily tracked.
GPS technology has transformed the way modern warfare is conducted. Military targeting has become much more precise, protecting civilians in wartime cities by allowing warnings to be issued to evacuate and lessening collateral damage. At the same time, many worry about the removal of much of the human aspect of combat, as satellite technology more readily enables attacks to be launched from thousands of miles away from danger. Satellite technology attached to airborne items also allows the military to track missile paths, bombing patters and aircraft. Soldiers can also now navigate themselves away from dangerous situations with routes suggested to them by technology at hand or by colleagues far away.
New developments in satellite technology are enabling precise navigation and tracking indoors, and Deloitte Global predicts that as of 2022 at least a quarter of human and machine uses of precision digital navigation will include an indoor leg or be entirely for an indoor journey.
Ian Stewart is a Partner and Chief Economist at Deloitte where he advises Boards and companies on macroeconomics. Ian devised the Deloitte Survey of Chief Financial Officers and writes a popular weekly economics blog, the Monday Briefing. His previous roles include Chief Economist for Europe at Merrill Lynch, Head of Economics in the Conservative Research Department and Special Adviser to the Secretary of State for Work and Pensions. Ian was educated at the London School of Economics.