Creative destruction is an important aspect of economics, as Connor and Brittany discussed in a previous episode. Today, Emma and Brittany give modern examples of creative destruction in action.
Here’s a transcript of our conversation:
Brittany: Hi, Emma.
Emma: Hi, Brittany.
Brittany: So, in an older episode with Connor, he and I talked about this economic concept called creative destruction, and that was started by a guy, I always say his last name wrong, so forgive me, Joseph Schumpeter. I actually think I said it right. I think you could say like, Schumpeter, but we’ll go with that. But he was an Austrian economist, and we’ve talked about that a lot. And he coined this term, which basically means that you replaced something old with something new. And usually, this has to do with economics, with like a business or a product. So for example, when cars replaced, you know, horses and buggies, the horse and buggies were in less demand. In fact, a lot of people who owned horse and buggy services probably went out of business, right? but then there popped up cars and that replaced horse and buggies, and there was new jobs and there were new things. So we called that creative destruction. It’s when one industry is disrupted by a newer one. And we also saw that with television and radio. I think that was the example of one of the examples Connor and I used last time. So today I thought we could talk about more modern examples because I don’t know about you. I’ve never been in a horse and buggy. Maybe I’m missing out. But these are older examples. So I’ll just kind of kick us off. One thing that I think has been really cool about COVID, and I say that the wrong way, obviously nothing has been cool about COVID, but people had to innovate, right? Because we were living in a different world, so everything shut down, and all of a sudden you had different demands. And one thing that I’ve really loved is telehealth. Yes. So that’s an example of creative destruction. So before we had to go to the doctor’s office, we had to, you know, wait in the lobby, and I don’t know about you, but my doctors are always like 15 minutes late, and it drives me nuts, It’s like, yep. You get in the lobby, you wait 15 minutes, then you get in the room, and then you wait for like another 20 minutes. And it’s like this whole ordeal. No, obviously there’s still things you need to go in person too but one thing I really loved about this is that I had, appointments on my computer. Yeah. So I was able to call up my doctors and just say, you know, here’s what’s wrong with me. And if it was something serious, they would say, you know, come in. But that never happened. Usually, it was something that we could deal with Over the phone. I didn’t have to go anywhere. I didn’t have to risk getting COVID. doctors seemed to be more on schedule because they were just taking like phone call after phone call. I was still able to see my doctors. We were able to talk back and forth over my computer. And the cool thing is that’s still around. Even though COVID is slowly becoming a thing of the past, at least, hopefully, I’m still doing all my doctor’s appointments over the computer. So that’s one example. Yeah. And, I really love that one. So that’s something that I wanted to share if we Yeah. And maybe if you have something we can just kind of go back and forth and talk about our favorite examples.
Emma: Totally, well, I love the telehealth example. That’s also something that I experienced for the first time with COVID going on. And I was like, why haven’t we always been doing this?
Brittany: Right? It’s so much easier.
Emma: It makes so much more sense. And, you know, you spend so much less time waiting in line and waiting at the doctor and in waiting rooms in period. I think that’s like a huge example of how something that could have been really, really problematic for a lot of people not being able to go to the doctor. They were still able to do that because there was innovation. And I think the medical industry specifically has a real lack of innovation a lot of the time.
Brittany: Yes, Which they do.
Emma: Most of the time can be blamed on the government. But that’s something where creative destruction really happened. I also think when you look at the way that we consume media, that has completely changed. And when I say media, I mean tv, I mean movies, even videos from YouTubers or, you know, different people that talk about different stuff online. that has just completely changed. And we even saw in the last couple, you know, like year and a half or so with COVID, these giant film companies releasing movies directly to consumers without movie theaters.
Brittany: That’s a good point.
Emma: That’s a lot of people. Thank you for a lot of people. you know, maybe they don’t love going to movie theaters. Maybe they don’t like, you know, sitting in a cold air-conditioned room. I like going to the movies, so I’m still gonna keep going.
Brittany: I like the popcorn. Yes. That’s my favorite part.
Emma: I love the snacks. That’s my favorite part. The overpriced snacks. Yes. but yeah, there are a lot of people where, you know, they can just open their computer or open their TV and just watch the movie directly. And for a long time, you had to wait months and months. They had to figure out who was gonna carry the movie and where it was gonna go. And I think the media TV movie industry is a really good example of innovation because it’s constantly looking for the best way to keep people engaged and the best way to keep people interested. and there’s not a lot of government intervention in that sort of field. There’s a little bit, but not too much. And I think it’s a really good example of creative destruction because rather than saying, you know, oh, these movie theaters, they’re all going out of business, or Oh, these blockbusters, they’re all going out of business. People are saying, wow, Netflix has thousands of people that work for them now, and they’re creating these new jobs in these new fields. So it’s not necessarily, and we’ve talked about this on multiple podcasts before, it’s not that those jobs all just go away. Yes, exactly. It’s exactly that. They shift into new fields and emerging entire industries that are built around new things. So it’s a very exciting thing to watch.
Brittany: I’m glad you brought up the job part because one of the most famous, I think examples of this is automation, right? So you go to McDonald’s, Dorigo, wherever it is, you go and you can order your food on the little kiosk screen. And you know, people are saying, how dare you, you’re gonna take away these entry-level jobs. And then a lot of free market economists are saying, yeah, but maybe that is true. But now you’re gonna have new jobs opening up. Yeah. Cause these jobs aren’t being taken by entry-level workers. Now maybe entry-level workers can go learn a trade. there’s other things for them to do. So one key component of creative destruction, as its name implies, is something is destroyed. Right? There’s something that’s destroyed. And a lot of people freak out about this. A lot of people say like, oh no, how could you change the way things are? And some people just don’t like change. Yeah. There was a, I think Connor used this example a million times when the camera came out, people thought the camera would steal your soul, and people were, they thought it was gonna be like the end of civilization as we know it. Yeah. And now, like, look at everything we take pictures of, right? So, automation is another thing that has honestly just made our lives so much easier. I hate having to deal with people like I people person, but I don’t love it. And I love that I can go to the grocery store and do self-checkout if I’m in a hurry. Totally. Also, I buy a lot of sugar sometimes, and I don’t want the cashier to see all the candy bars I’m buying. So it’s nice to have that privacy. And another one kind of on that line is Uber and taxis, right? So for so long, taxis were the only game in town, or cabs if you didn’t have a car. And for anyone that’s ever had to take it, a taxi or a cab, they were usually very dirty. They were overpriced. They only took cash. And nobody takes cash or nobody has cash these days. So then Uber comes along, and Emma, you lived in DC with me as well. And you know, when you’re in DC you take Ubers a lot, at least I do. Yeah. And so it was nice when I first moved here, that’s when Uber was really getting started and Uber disrupted. It was a creative destruction of the cab industry. It took something the cab was already doing, and it made it better. So that’s part of creative destruction is you’re not just destroying something, you’re making it better with innovation.
Emma: Exactly. It’s not like the, you know, the ability to go across town without owning a car just completely goes away.
Brittany: That’s not, yeah.
That’s getting destroyed. It’s not the things that we need and the things that consumers are asking for. It’s the way that we get those things. So, you know, you’re still wanting a movie to watch on the weekend with your family. You’re still needing to find a way to get from point A to point B, on the weekend, and you wanna go hang out with your friends and you don’t have a car. Well, there’s gonna be a way to get there, but the way that you get there could change over time as a result of innovation. So that’s something that we even saw with remote work versus working at an office. So I work remotely, I live in Tennessee, and most of the Tuttle twin’s team is in Utah. But because of technology, we are able to all work together at the same time. We have things like Zoom, we have video conferencing, we have something called Slack, which,
Brittany: Oh yeah, Slack is amazing.
Emma: If you’re familiar with Slack. Slack is awesome. It’s basically like instant messaging, but you can connect a bunch of different ways with people on your teams and make groups and all kinds of stuff. So I’m sure by the time our podcast listeners are working, there will probably be something even better, thanks to Creative Destruction. But it’s a great time to be working because there are so many new innovations that come out to help us be productive and to help us work together, even when your team is all around the world. So that’s why this technology isn’t something that scares me. You know, obviously, it can be hard sometimes to adjust to new things or when things work a different way and I think that’s a lot of times why you hear, older people talk about, oh, back when I was young, this is what life was like. But for a lot of people, like even going back to the doctor instance, you know, this technology actually helps live a healthier life. It helps save time and hassle. And sometimes, yeah, there are certain ways that you kind of need to adjust or maybe things feel a little different for a while, but at the end of the day, this is not something that we should be afraid of. And again, we’ve talked about that in, in other podcasts about the Luddites and people who were scared to use technology. But at the end of the day, these innovations are here to serve us because they revolve around what consumers want and what they’re demanding. And as you know, we are the consumers. There’s, it’s not some artificial thing. It’s what do people need. What problems do they have and how can we solve them? And that’s what I love about innovation.
Brittany: Same. And it’s funny you mentioned remote work. That’s something that a lot of like older generations are really struggling with right now because I think for people our age we’re really excited because a lot of us like to travel, we like to do other things. Plus, you know, with millennials, we have a lot of student loan debt, which you talked about before. So living, you know, somewhere like DC is very expensive if you’re also paying off student loans. So working remotely is giving us this opportunity to, live in places that are cheaper, maybe are less expensive, and still be getting a good income. But I have noticed there are a lot of companies that are a little bit resistant. They’re a little bit scared of what this means because it’s not the way they’re used to doing things. So, but like you said, it’s all about trusting innovation and making things better.
Emma: Absolutely. Yeah. The more that we can adapt and improve our lives, why would you not want that? You know?
Emma: And the other thing is, we get to make these choices ourselves too. So if you don’t really like working remotely, there are still a lot of jobs that you can work in person. And things might be moving away from that direction a little bit right now, like, as a trend. But you can still find plenty of jobs. In fact, most jobs still are in-person jobs. So it’s not like we don’t have any choice in this stuff. It’s, actually all about choice. And it’s what are people choosing? so the individual still has a lot of power here to decide what kind of life do you wanna live? Do you wanna take an Uber or do you wanna own a car? Or maybe take a cab? There’s still some cabs going around town. Or you can even go to the last blockbuster on Earth, which is in my home state, not my home state anymore, but where I’m from in Bend, Oregon, which is where I used to go for Christmas a lot with my family. So you can go visit the last blockbuster. there are all different ways that you can make choices. and at the end of the day, the choices, again, those are what drive the innovation. What drives the creative destruction is it’s what we want and what we need.
Brittany: Absolutely. I think you’re right. One more example I wanna add is Amazon, you know, people get really mad at Amazon because, oh, you’re destroying brick and mortar stores, and I don’t know the number off the top of my head, but Amazon is hiring so many people and they’re opening up so many warehouses that that’s silly to me because even though, yes, a lot of brick and mortar, which means like a physical story, even though they’re closing, I mean every, like, we get our stuff in two days. Now all they have to do is press the button. Yeah. And it’s delivered to me in two days and there’s a bunch of new jobs created. Yes. So, yes, there are some old things we have to get rid of. We’ve gotta part, you know, ways with, with the brick and mortar type stores. And there still are some of them. But now we have better products, faster products, and there’s new jobs, so everybody wins.
Emma: Exactly. And one more thing with Amazon before we close is Amazon has made selling products to people a lot more accessible for small businesses because they can use Amazon’s fulfillment. Yes. Which basically means when someone orders, Amazon takes care of shipping the order to them, and they make sure that all the logistics are working properly. So a lot of people who maybe they couldn’t afford a physical brick-and-mortar storefront because rent is expensive for those places, they’re able to do an online store and reach customers that they never would’ve been able to reach before. And the other thing too is that there are niche markets which are basically like small markets of people who yeah, maybe they prefer to shop in person at a store. The growth of things like Amazon actually creates more demand for certain people who maybe they really value shopping in person. That becomes sort of a special experience for them. Yep. Sort of like the blockbuster sort.
Brittany: Yeah. exactly.
Emma: Tourist destination. And those things don’t just completely disappear. If people like it and people want to do those things, there will always be somewhere they can find a way to participate and do the things that they wanna do. So it’s not like, you know, creative destruction happens and poof. Yeah. All the things that we love are gone, and now we have to get used to this new way of doing stuff.
Brittany: So, I mean, even the Amish still use a horse and buggy.
Emma: Exactly and you can.
Brittany: You still be using It.
Emma: Yes. You can take a horse and buggy through New York City or you can take a cat. That’s right. So. Yeah. Or an Uber. We’re gonna wrap it up there, guys. You can listen to more podcasts at Tuttletwins.com/podcast. You can check out our show notes and listen to more episodes. Thanks so much for listening, Brittany, thank you for being on here.
Brittany: Talk to you later.