2014 Writing Contest: 100 Years of Change: Once upon a time...Before TV!
Third Place Essay
Computers have changed our world, whether we like it or not. If all of the computers in our nation vanished tomorrow, our society would be vastly different. The IBM PC, first introduced in 1981, ignited a revolution that would change the world in many ways, including economically. From advancing the productivity of our economy to making the world a more interconnected place, the computer has shaped the continuously evolving economy.
With the widespread prevalence of personal computers in the majority of Americans’ homes, consumers can more easily find the goods and services they wish to purchase. Instead of having to wait for a particular good to appear in a local retailer, one can simply search for the item on the internet and purchase the good, thanks to the creation of online payments systems.
Through broadening the selection of goods and services available to the consumer, computers allow goods that were previously only available in a small area to be sold to people all over the world. Having more goods available for purchase on the market results in an increase in the supply of goods, which in turn drives the price for a particular good down, allowing consumers to spend more money elsewhere in the economy. The increase in global interconnectivity not only increases profits for firms, but also diversifies the types of goods available.
As previously stated, computers allow consumers to purchase a broader selection of goods. When people buy these goods, they must use some sort of online payment system to transfer the money from their names to the firms. One benefit of using this online system of monetary transfer is the speed at which the transaction occurs. If an American consumer buys a Chinese good, the money can immediately be electronically transferred to the Chinese producer. As soon as this transaction is complete, the Chinese company is free to spend the money in any way it chooses. Because the Chinese firm does not have to wait weeks for the physical currency to arrive, the firm can spend its money more quickly, thanks to the electronic payment system.
The decrease in the time a firm spends waiting for payment directly increases the number of times the unit of currency can be spent. In economics, the term velocity is used to describe the number of times currency is exchanged and is also represented in the equation MV=PQ, where M is the supply of money, V is the velocity, P is the current price level, and Q is the quantity of production (or GDP). Assuming that both the supply of money and the current price level in an economy remain constant, economic theory says that the increase in the velocity of money caused by online purchasing has directly increased the GDP of an economy. Given that GDP growth is one of the most significant identifiers of a strong economy, the effects of the personal computer are proven to induce positive economic impacts.
With the help of computers, more and more jobs that previously required human labor are becoming automated. One example of this shift from human to computer labor is the cashier. Prior to the widespread prevalence of computers, human cashiers were needed to scan the goods that were being purchased, accept payments, and give change. Thanks to computers, these positions no longer require human labor. Automated check-out stations allow consumers to scan their goods and enter their payment into the machine. By automating the check-out process, retailers are able to decrease costs by eliminating the amount of labor that must be paid for, which results in a more profitable enterprise. As technology continues to develop and more ways to reduce day-to-day operational expenses develop, profit margins will continue to rise, resulting in continued growth in the global economy.
As personal computers continued to grow more intertwined with the lives of the average American, banks and other financial institutions evolved to fill the niche created. The most influential tool associated with the personal computer and the internet, in terms of economic impact, was the creation of online banking and investing. Prior to computers, a bank customer would need to visit a local branch in order to find out a balance, make a transfer, or perform any other financial transaction. With the creation of online banking, however, a bank’s customers can perform the same tasks from the comfort and convenience of his or her home. A task that previously required a significant part of one’s day could now be accomplished before one’s morning coffee. Continuing on the idea of ease and speed of making financial decisions, the stock market and other means of trading were impacted dramatically by the widespread adoption of computers. Computers allow information regarding companies around the world to be universally available. They allow an investor to view the real- time price of a stock that varies by the second and creates the ability for shares to be bought and sold in a heartbeat. Computers have not only increased the speed at which these investing transactions occur but also lessen the previous difficulties of investing by allowing a plethora of information to be available.
While it is likely that computers will soon give way to smaller, more portable, and more efficient products, such as smartphones and tablets, it is important to remember that the personal computer was first to create the opportunities described above; smartphones and tablets merely demonstrate the continued development of technology and innovation. While it is unfair to say that one advance has shaped our economy over the past 100 years, it is certain that the economic benefits we have received from the personal computer have driven our economy forward and will continue to do so for years to come.