A French politician objects to the fact that Amazon is “killing jobs” in the retail sector. According to him, one job created by the internet giant eliminates 2.2 brick-and-mortar jobs. Why? Because of the Seattle company’s much higher productivity. This phenomenon has led to the creation of the expression “Amazoned” to describe the plight of less productive retailers. Should we be concerned?
This brings to mind the concept of “creative destruction” put forward by economist Joseph Schumpeter. Comparing the economy to a “perpetual hurricane,” Schumpeter pointed out that the elimination of certain jobs and companies is not an illustration of the failings of capitalism, but is actually beneficial, and is indeed part of the system’s internal logic.
First of all, the fact that a company succeeds in building up such a lead in terms of productivity should be celebrated. Productivity gains are the vary basis of wealth creation, which incidentally is necessary in order to improve the living standards of the general population.
Second, and even more importantly, this frees up human resources to tackle other challenges. In a situation of labour shortage such as the one we are currently experiencing in Quebec, a reallocation of human capital can be particularly beneficial to the economy.
Finally, as was the case with previous industrial transformations, the improvement of general productivity, in addition to making us richer, tends to reduce the number of hours we work. This is why our quality of life is much higher than it was 130 or 140 years ago, even though we only work some forty hours a week instead of seventy!