Tuesday, December 30, 2014

People Don't Learn Enough From History

I love this story from one of my favourite books, Why Nations Fail:

Elizabeth I (1558-1603) had recently issued a ruling that her people should always wear a knitted cap. Lee recorded that "knitters were the only means of producing such garments but it took so long to finish the article. I began to think. I watched my mother and my sisters sitting in the evening twilight plying their needles. If garments were made by two needles and one line of thread, why not several needles to take up the thread."

This momentous thought was the beginning of the mechanization of textile production. Lee became obsessed with making a machine that would free people from endless handknitting...

Finally, in 1589, his "stock frame" knitting machine was ready. He traveled to London with excitement to seek an interview with Elizabeth I to show her how useful the machine would be and to ask her for a patent that would stop other people from copying the design. He rented a building to set the machine up and, with the help of his local member of Parliament Richard Parkyns, met Henry Carely, Lord Hundson, a member of the Queen's Privy Council.

Carey arranged for Queen Elizabeth to come see the machine, but her reaction was devastating. She refused to grant Lee a patent, instead observing, "Though aimest high, Master Lee. Consider thou what the invention could do to my poor subjects. It would assuredly bring to them ruin by depriving them of employment, thus making them beggars." Crushed, Lee moved to France to try his luck there; when he failed there, too, he returned to England, where he asked James I (1603-1625), Elizabeth's successor, for a patent. James I also refused, on the same grounds as Elizabeth. Both feared that the mechanization of stock production would be politically destabilizing. It would throw people out of work, create unemployment and political instability, and threaten royal power. The stock frame was an innovation that promised huge productivity increases, but it also promised creative destruction.

While our society has dramatically changed over the ensuing centuries thanks to creative destruction, the sad thing is that the line of thinking employed by the monarchs Elizabeth and James has not been completely eradicated. Not only are these arguments still used by politicians in poor countries around the world, but they are sometimes used even in rich countries in certain industries. And the arguments are used because they work, on a subset of people that should know better.

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