Sunday, October 24, 2010

I, Drill bit.

When it was clear that the Chilean miners would be rescued soon, several Christian factions in Chile were squabbling over which of them had been instrumental in getting God to answers their prayers. The Evangelical, Adventist and Catholic clerics each claimed credit for what they said was divine intervention in the survival – and expected imminent rescue – of the 33 men who had spent 67 days beneath the earth.

Now the Wall Street Journal says that capitalism was what saved the miners. The basic principle is that innovation happens when you let free markets operate unhindered and incentivised by profit motives, as illustrated in the famous parable of the pencil ( “I, Pencil”)

In the case of the Chilean miners, several factors converged to create the possibility of rescue. The central rock drill bit- that stood out for its toughness - was made by a small company in the USA. The high-strength cable winding came from Germany while the communication cable that kept the miners contactable came from Japan. . Samsung of South Korea supplied a cellphone that had its own projector. Cupron Inc. in Richmond, Va., supplied socks made with copper fiber that consumed foot bacteria, and minimized odor and infection.

The WSJ article concludes:

In an open economy, you will never know what is out there on the leading developmental edge of this or that industry. But the reality behind the miracles is the same: Someone innovates something useful, makes money from it, and re-innovates, or someone else trumps their innovation. Most of the time, no one notices. All it does is create jobs, wealth and well-being. But without this system running in the background, without the year-over-year progress embedded in these capitalist innovations, those trapped miners would be dead.

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