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Trump's anti-Amazon Luddism

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In just two hours last month, Amazon shares lost $5.7 billion in value right after Donald Trump tweeted the following: "Amazon is doing great damage to tax paying retailers. Towns, cities and states throughout the U.S. are being hurt - many jobs being lost!" (AP Photo/Julio Cortez)

In just two hours last month, Amazon shares lost $5.7 billion in value right after Donald Trump tweeted the following: "Amazon is doing great damage to tax paying retailers. Towns, cities and states throughout the U.S. are being hurt - many jobs being lost!"

Critics of the President were quick to point out that he was feuding with Amazon's proprietor, Jeff Bezos, who also owns the anti-Trump Washington Post. His tweet, they said, was the act of an autocrat, of a bully, of a South American caudillo. Worse, it was just the latest in a series of unpresidential tweets. Similar outbursts had damaged the value of Boeing, Lockheed Martin, and Toyota.

Oddly, none of the President's detractors made the most obvious criticism of all: That what he was wrong. Amazon is not hurting towns, cities, and states throughout the U.S. It is not destroying jobs. On the contrary, it is lowering prices, boosting incomes, and generating growth.

Perhaps it is unsurprising that few wanted to defend the corporate giant. Booksellers hated Amazon from the start, unable to match its range and prices. When it developed e-books, that resentment spread to publishers, agents and authors – a powerful coalition. As it moved from books into general retail, its enemies multiplied. As well as the literati, it was now supposedly putting decent blue-collar workers on the dole. And that's before we get to the anti-business Left, who see it as the ultimate evil multinational.

It is certainly true that Amazon is putting some retailers out of business. But it doesn't follow that, in doing so, it is pushing up the overall unemployment rate or undermining the American economy. All new technologies displace older ones. Lightbulbs were bad news for chandlers, cars for ostlers, phones for telegraphists.

Overall, though, these new technologies did not make more people jobless, any more than Amazon is doing. Indeed, only two weeks before his Amazon Tweet, the President had boasted through the same medium: "Highest Stock Market EVER, best economic numbers in years, unemployment lowest in 17 years, wages raising [sic]".

Quite. What opponents of automation miss is that time-saving advances free people up to invent, make and sell new products, products that they might not previously have imagined. When Amazon does undercut its competitors with lower prices, it allows millions of Americans to buy things more cheaply. To put that another way, Americans can live at the same standard as before while working slightly shorter hours. They can use those extra hours in all sorts of productive ways – ways that, when you add them all up, far outweigh the localized losses of the older retailers.

This process, which the economist Joseph Schumpeter called "creative destruction," has been accelerating since the industrial revolution began. Yet, it was resisted from the start by people using arguments similar to the Donald's.

At the beginning of the nineteenth century, when mechanical looms transformed the production of textiles in England, groups of weavers smashed the new machines, which they blamed for depressing wages. Those workers, the Luddites, have become a byword for moronic technophobia, but they were supported at the time by many intellectuals, who believed that mechanization would lead to armies of unemployed men roaming the countryside.

In the event, far from forming bands of vagrants, most textile workers found work in the new industries that were developing at that time, precisely because people no longer had to spend every waking hour on feeding and clothing themselves. For thousands of years, the lives of ordinary people had barely changed. Now, labor-saving machines made it possible for the masses to buy clocks and porcelain, cutlery, and furniture, changes of clothes and glass windows.

Amazon is the latest in a long line of firms that have found a way to supply our needs more efficiently. We know that, because we use it ourselves: There are over 300 million Amazon.com customers. Yet, we often simultaneously regret the loss of the bookshops and other small stores we no can no longer be bothered to patronize.

We are oddly sentimental about certain categories of jobs. When a steel mill closes, it's big news, but no one much cares about unemployed switchboard operators, local reporters, archivists, or travel agents. In fact, people from all these industries find new jobs because the American economy keeps growing. Why is it growing? Because it is open to new inventions and new enterprise.

You've got a good thing going, Mr President. Don't throw it away.

Dan Hannan is a British Conservative MEP.