Book Summary: “Fifty Inventions that Shaped the Modern Economy” by Tim Harford


Fifty Inventions that Shaped the Modern Economy

Title: Fifty Inventions that Shaped the Modern Economy
Author: Tim Harford
Scope: 3 stars
Readability: 4 stars
My personal rating: 4 stars
See more on my book rating system.

Important Quotes from Book

“As I researched these stories, I realized that some themes emerged over and over again. The plow illustrates many of them: for instance, the way new ideas often shift the balance of economic power, creating both new winners and new losers; how economic impacts can be bound up with impacts on the way we live, such as changing relationships between men and women; and how an invention like the plow opens up the possibility for further inventions—writing, property rights, chemical fertilizer, and much more.”

Phonograph:

“Thomas Edison’s phonograph led the way toward a winner-take-all dynamic in the performing industry… the economist Sherwin Rosen called this phenomenon “the Superstar economy.”

Seller Feedback:

“This function of matching people who have coincidental wants is among the most powerful ways the Internet is reshaping the economy. Traditional markets work perfectly well for some goods and services, but they’re less useful when the goods and services are urgent or obscure.”

 “Trust is an essential component of markets… In 1997, eBay introduced a feature that helped solve the problem: Seller Feedback.”

Birth Control Pill:

Invention of the Pill had huge impact on women’s job and educational opportunities.

Dynamo

“Until around 1910, plenty of entrepreneurs looked at the old steam-engine system, and the new electrical drive system, and opted for good old-fashioned steam. Why?”

“Factories could be cleaner and safer. They could be more efficient, because machines needed to run only when they were being used. But you couldn’t get these results simply by ripping out the steam engine and replacing it with an electric motor. You needed to change everything: the architecture, the production process, how the workers were used. And because workers had more autonomy and flexibility, you had to change the way they were recruited, trained, and paid.”

“And as more factory owners figured out how to make the most of electric motors, new ideas about manufacturing spread. Come the 1920s, productivity in American manufacturing soared in ways never seen before or since. You would think that kind of leap forward must be explained by a new technology. But no. Paul David, an economic historian, gives much of the credit to the fact that manufacturers finally figured out how to use technology that was nearly half a century old. They had to change an entire system: their architecture, their logistics, and their personnel policies were all transformed to take advantage of the electric motor. And it took about fifty years.”

“Two economists, Erik Brynjolfsson and Lorin Hitt, published research showing that many companies had invested in computers for little or no reward, but others had reaped big benefits. What explained the difference? Why did computers help some companies but not others? It was a puzzle.

Brynjolfsson and Hitt revealed their solution: What mattered, they argued, was whether the companies had also been willing to reorganize as they installed the new computers, taking advantage of their potential. That often meant decentralizing decisions, streamlining supply chains, and offering more choice to customers. You couldn’t just take 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.”

Shipping Container:

“Perhaps the biggest enabler of globalization isn’t a free trade agreement but a simple invention: a corrugated steel box, eight feet wide, eight and a half feet high, and forty feet long. A shipping container”

“ for an ever-growing number of destinations, goods can now be shipped reliably, swiftly, and cheaply: rather than the $420 (in today’s money) that a customer would have paid to get the Warrior to ship a ton of goods across the Atlantic in 1954, you might now pay less than $50 a ton.10 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.”

Bar Code:

“like the shipping container, the bar code doesn’t work unless it’s integrated into a system. And like the container shipping system, the bar code system does more than lower costs. It solves problems for some players and creates headaches for others.”

“Part of the difficulty was getting everyone to move forward on a system that didn’t really work without a critical mass of adopters. It was expensive to install scanners. It was expensive to redesign packaging with bar codes… The retailers didn’t want to install scanners until the manufacturers had put bar codes on their products; the manufacturers didn’t want to put bar codes on their products until the retailers had installed enough scanners.”

“But over time it became apparent that the bar code was changing the tilt of the playing field in favor of a certain kind of retailer. For a small, family-run convenience store, the bar code scanner was an expensive solution to problems the store didn’t really have. But big-box supermarkets could spread the cost of the scanners across many more sales.”

“But the bar code isn’t just a way to do business more efficiently; it also changes what kind of business can be efficient”

Refrigeration

“Above all, the cold chain revolutionized food. On a warm summer’s day—let’s say 80 degrees—fish and meat will last only a few hours; fruit will be moldy in a few days; carrots might survive for three weeks if you’re lucky. In the cold chain, fish will keep for a week, fruit for months, and root vegetables for up to a year. Freeze the food and it lasts longer still.

Refrigeration widened our choice of food: tropical fruits such as bananas could now reach any destination. It improved our nutrition. It enabled the rise of the supermarket: if your home has no way to keep food cold, you have to make frequent trips to the market; with a fridge and freezer at home, you can make a big shopping trip every week or two.”

“the shipping container made long-distance commerce cheaper, quicker, and more predictable. The bar code helped huge, diverse retailers keep track of complex supply chains. The diesel engine made huge oceangoing ships amazingly efficient.

The cold chain took all these other inventions and extended their reach to perishables. Now meat, fruit, and vegetables were subject to the economic logic of global specialization and global trade.”

Elevators:

“the new, safe elevators transformed the position of the highest-status areas in the building. When the highest reaches of a six- or seven-story building were reached only by an arduous climb, they used to be the servant’s quarters, the attic for mad aunts, or the garret for struggling artists. After the invention of the elevator, the attic became the loft apartment. The garret became the penthouse.

The elevator is best understood as part of a broader system of urban design. Without the air conditioner, modern glass skyscrapers would be uninhabitable. Without either steel or reinforced concrete, they would be unbuildable. And without the elevator, they would be inaccessible.

Another crucial element of that system was mass public transportation”

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