Jetsons Episode 5,437: the Kroger vending machine

Gary Gibson, Introduction…

Do Americans have to temper their expectations of leisure and comfort in general…and in particular their dreams of the good life in retirement?

“LOS ANGELES (AP) — When Paula Symons joined the U.S. workforce in 1972, typewriters in her office clacked nonstop, people answered the telephones and the hot new technology revolutionizing communication was the fax machine.

“Symons, fresh out of college, entered this brave new world thinking she’d do pretty much what her parents’ generation did: Work for just one or two companies over about 45 years before bidding farewell to co-workers at a retirement party and heading off into her sunset years with a pension.

“Forty years into that run, the 60-year-old communications specialist for a Wisconsin-based insurance company has worked more than a half-dozen jobs. She’s been laid off, downsized and seen the pension disappear with only a few thousand dollars accrued when it was frozen.

“So, five years from the age when people once retired, she laughs when she describes her future plans.

“‘I’ll probably just work until I drop,’ she says, a sentiment expressed, with varying degrees of humor, by numerous members of her age group.

“Like 78 million other U.S. Baby Boomers, Symons and her husband had the misfortune of approaching retirement age at a time when stock market crashes diminished their 401(k) nest eggs, companies began eliminating defined benefit pensions in record numbers and previously unimagined technical advances all but eliminated entire job descriptions from travel agent to telephone operator.

“At the same time, companies began moving other jobs overseas, to be filled by people willing to work for far less and still able to connect to the U.S. market in real time.

“‘The paradigm has truly shifted. Now when you’re looking for a job you’re competing in a world where the competition isn’t just the guy down the street, but the guy sitting in a cafe in Hong Kong or Mumbai,’ says Bill Vick, a Dallas-based executive recruiter who started in an effort to help Baby Boomers who want to stay in the workforce.”

We can agree that America’s wealth these last forty years or so has largely been an illusion (we’ll come to why in a moment). And sadly a period of readjustment seems to be inevitable…

But that is no fault of “capitalism” or the free market. At the risk of exposing ourselves yet again to FBI monitoring, we’re going to point a finger or two of blame at the abandonment of the gold standard. Loosing the dollar from gold has resulted in loss of American jobs overseas, destruction of purchasing power domestically and exploding government debt. And we have a finger or two more remaining for the creeping fascism known as “regulation”.

And, too, we don’t think there’s anything inherently working until you drop dead. As long as the work is fulfilling, that is. We don’t think Americans are seeking to be free of work or meaningful activity. Ideally, these two things should be the same. Rather we think that Americans — that everyone, really — just wishes to be free of worry about providing for tomorrow…at least by some point in their lives.

Here’s the thing. Saving is supposed to work. It’s supposed to pay off. The general price levels are supposed to have come down, for food, education, housing and medical care like it has for the technological wonders whose markets are largely untouched by government’s benevolent fist.

The lower prices are supposed to go hand in hand with stagnant or even lower levels of income, all ushered in by competition and innovation. Even if incomes stagnate or fall, general prices fall a bit faster, simultaneously making savings worth more over time. That’s how prices act under free market competition when money is allowed to behave like any other commodity (i.e. when the commodity used for exchange isn’t under government control).

That’s right, good patrons. (Price) Deflation is your friend. It’s what happens when money isn’t manipulated. The economic arguments to the contrary are part of the same flimflam as Keynesianism in general.

Baked into this free market, honest money, deflationary cake is progress and technological advance.

When machinery replaced human and animal muscle, society was richer for it. We don’t lose out when there is less hard work to be done. We are wealthier when our labors liven our minds and don’t break our backs.

Was the world better off when men had to sweat in the fields and the majority enjoyed only a few crude comforts? When food consumed the lion share of one’s income and what niceties existed required expensive specialization and matching high prices?

Aren’t we better off as technology takes the load off of human muscle and brings down the general price level? When new wonders make life easier while costing less and less?

In other words, good patron, would you rather pay 95% or more of your income to live like a feudal serf… or 25% or less of your income to live like George Jetson?

Perhaps we’re in the minority about this, but we prefer the world of automated factories, refrigerators and email to the world of field laborers, mind-numbing factory work, ice delivery and the letter-carrier. And we would love to see the innovations and improvements continue bringing us wonders no one has yet imagined.

Many hands may make for light work… but the relentless march of the markets make for even lighter work. Expensive, labor-intensive methods give way to more efficient ones that require new technical knowledge. The world is better for it. Anyone who says different is welcome to live in a mud thatch without flush toilets and without automobiles like the progress-killing, inflation-loving government seems to want for us all.

Jetsons, Episode 5,437

You have heard of unmanned flight. Much more impressive to me is the unmanned grocery store that could be coming to a street corner by you. It’s being pushed by Kroger. It is a large-scale machine stocked with 200 items from the grocery store.

Crackers, cheese, milk, bread, chips and dip, maybe even some fruit and cold cuts — most of the common items found in the grocery store — are all in this brilliant vending machine now being tested at select places around the United States.

The prices are more comparable to the grocery store but it has more convenience than the convenience store. The savings to the company includes no 24-hour staff, no high insurance for security risks, no sky-high real estate, no maintenance of building, and the foregoing of the endless headaches of wacky customers, untrusthworthy employees, bathroom catastrophes, theft, and more.

It seems like a sure thing. It’s not. People have to keep it stocked. There are many inventory tweaks that have to be done over the coming months. My first thought was that these machines had better carry beer and cigs else people won’t go to them, but of course that wouldn’t be compatible with the nanny state’s existing age restrictions. So it might work and it might not. Only the balance sheet will say for sure.

This is something new that private enterprise is bringing to us. It begins small. It could grow and grow and become something widespread and common and amazing. I recall seeing reports of even more amazing machines in Japan that sell live crabs, hot food, and bananas (very popular in Japan). These could all come to the U.S., but, again, it all depends. The profit and loss statements tell us what’s what, whether something should stay and expand or contract and die.

We are rather used to this sort of relentless progress in the world of free enterprise. In the last decade or so, it seems like the world turns upside once every 12 months, so that reverting even a year in progress would be unthinkable. If people have to give up even one benefit of this progress — my favorite example is Skype video conferencing from hand-held wireless devices — there would be wailing and gnashing of teeth.

We are surrounded every day by the glories of free enterprise and risk tasking. We don’t have to lobby for the progress. We don’t have to vote for it. We don’t have to stop our lives and get involved in some stupid pressure group and march around with signs that say: “we want to do our grocery shopping through vending machines!!”

Instead, the entrepreneurial companies are working constantly to figure out what it is that we might like and then work hard and take the risk of offering it to us. It’s up to us to decide that we are for this or against that. If we use the service, it stays and expands. If we don’t, it goes away and something else comes along.

I was thinking about this as I stood in line at the post office last week. The line was long. There were two clerks and they seemed to be moving at a pace that was completely disregarding of the long line. The clerks, who seemed to be nice enough people, seemed to be telling nearly ever customer what the customer had done wrong, and also instruct them on various mandates with which they needed to comply.

The environment inside is joyless, dingy, bureaucratic, dutiful, stale. The distance between the employees and the customers was great. They were guarded by a high counter. We were kept at bay by various lines on the ground. While we waited, we read signs about what we were required to do. Absolutely no one was happy to be there: not us and not them.

I make it a task to try to dissect government agencies like this and try to figure out what is wrong with them. Sometimes it is hard to figure out why these buildings are so depressing, why the service is so bad, why a sort of terrible dreariness pervades these institutions. It’s beyond what any “management consultant” could fix, beyond what any house cleaning would repair. The sense of lifelessness, sadness, an anachronism is pervasive and seemingly unrepairable.

Meanwhile, service gets ever worse. The post office is lobbying Congress to let it cut out Saturday service altogether because otherwise it will bleed red beyond even Congress will be willing to support. I can’t think of the last time that the post office offered anything that seemed splashy or wonderful. Just looking at the general structure of its business model, it doesn’t seem to have change much in a hundred years.

Why is private enterprise so amazing, always on the side of progress, while government institutions are so dreadful, dreary, and backwards? Some people figure that this is because the wrong people are in charge of government. We need to elect better rulers so they can shape up the bureaucrats and reform them so that we get “good government” instead of staid, belligerent, inefficient, anachronistic government.

That’s not the reason. The core of cause was explained by Ludwig von Mises in his 1944 book Bureaucracy. He wrote it as a follow up, 25 years later, to his original book on Socialism. As Mises explained, socialism could never work because there could be no profit and loss test to discover the best use of resources in society. The balance sheet is built from data that emerges from the real-life exchange of private property. Eliminate private property and exchange – as socialism does – and you crush the very heart of economic life.

Mises took the next step to point that that the same problem that dooms full-blown socialism is integral to bureaucratic management as well. There is a wedge driven between the producer and the consumer. The producer is not acting based on any feedback it gains from those who depends on its production. The balance sheets reflect inputs and outputs but are not profit and loss statements that emerge from real-world experience. There is no real market at work here. The bureaucrats, at best, are playing market but not actually experiencing one.

What difference does it make? It makes the difference between regress and progress, between systemic and sustained failure, on the one hand, and a system that is forward driven and self correcting, on the other. The difference matters for our daily lives. Improvement lifts our spirits, lengthens our lives, boosts our standards of living, grants us more fulfilling lives. A world of stasis and decline denies all of this to us.

It’s remarkable, isn’t it, that what kind of institutions society creates — and a seemingly small factor like whether an institution’s balance sheet is built by markets or legislatures — could have such an incredibly profound affect on the whole of the way we experience life itself.

If you pass one of these cool new vending machines, remember to consider what its very existence implies about our world. Think of the way that the unplanned order of the market economy serves society in ways we hardly ever think about, and consider too how absolutely dreadful the world would be if the whole thing were organized by politicians and the misnamed public sector.

I propose what we might call the “munchy test.” If you have the munchies at 1:00am, and you just have to have an ice cream and soda, who is going to give it to you? The institution that cares to feed your eccentric eating habits is that one that cares about your life and well being.


Jeffrey Tucker


A Parting Shot:

Such is the nature of those wacky markets with their tendency to reward innovation and risk. They replace hard work with fulfilling work. Convenience and ease increase as human beings strive to serve each other better.

We are at a time when markets so clearly serve mankind better than politics do that the politicians are feeling increasingly threatened. They are doing everything they can to malign and reduce the power of unhindered, peaceful exchange.

Are we saying that liberty — particularly as applied to the marketplace — is driving us toward some too-good-to-be-true “Jetsons world” of leisure, comfort and plenty?

Ha! Good patron, just look around. And look behind you, too, at history. That is precisely what’s been happening for the past few hundred years as free markets have replaced mercantilism, feudalism and conquest.

It’s the state that would halt progress, keep us where we are… and eventually drive us backward.

It is the state that protects the current way of doing things… that protects the current industries and employment while maintaining its stranglehold on commercial activity. It is the state that struggles so mightily against change and innovation.

This is the best time to place your bets on the progress. Liberty and innovation are set to outpace the state. All our lives are going to be getting better at a faster clip…


Gary Gibson

The Daily Reckoning