Blockbuster's Bankruptcy Was An Exciting Sign of Economic Progress

In 2004, there were 9,000 Blockbuster locations. Now there are none, except for a privately owned store that licenses the name. Some may see this as a lot of lost jobs. In fact, it represents greater opportunities – for both consumers and employees.

At one time, videos and the stores that rented them were a major innovative breakthrough. But Blockbuster went out of business in 2013, as more and more consumers have shifted to streaming services like Netflix, Amazon Fire, and Apple TV. The last remaining chain locations – which had seemed such a convenience just a few years earlier – closed their doors. Privately owned locations were able to license the Blockbuster brand and keep going. After five years of the Blockbuster name on an ever-declining number of locations, there is one left. Bend, Oregon is home to the last Blockbuster.

While the sole remaining Blockbuster in Bend is holding on, it is bucking a trend. It is the same trend that has allowed capitalism to generate wealth and growth for the past two centuries. How we earn our money changes over time, and it depends largely on how we spend it. We perform the jobs we do now to produce the goods and services that we want and need now, not in the ones we wanted in the past.

When we no longer need a video store on every corner, they close down, giving way to improved technology. As we progress, we will continue to shed some jobs and create others, tailoring what we do for a living to how we prefer to live and what technologies can do for us. Streaming services have grown and prospered not because they benefit the investors or employees, but because they benefit consumers – who want convenience, choice and lower prices.

We have seen this process of creative destruction play out before, and we will continue to see it as long as we have a dynamic economy. Mechanical harvesting, hybrid corn, automation of the egg production process, and other technologies to bolster agricultural productivity eliminated the jobs of a great many people. But they didn't eliminate the constantly expanding list of people’s wants beyond food, not by a long shot. The percentage of people working for the railroads has declined dramatically, but consumers found that planes and automobiles were better at meeting their need for mobility – and the auto and airline industries spawned new jobs.

As jobs are shed, new ones are created. Because of the Internet, we no longer need as many travel agents, bookstore employees, and store clerks. Instead, we need apps developers, web designers and web masters. Because of video streaming and digital movie channels, we no longer need tens of thousands of video store clerks. So we have more people available to perform personal care services, provide telephone technical support, and work at customer fulfillment centers for internet-based companies.

In fact, the economy couldn’t generate new jobs without shedding others, if for no other reason than there wouldn’t be enough people to perform them.  New farming technologies made it possible to shape a modern economy and society. If half of all Americans still worked on the farm, as they did 150 years ago, we would never have had the people needed to keep our factories going. If over 30 percent of people still worked in manufacturing, there wouldn’t be enough people to staff hospitals and schools, modern police and fire departments, airlines and search engines. There may not be as many doctors, nurses, teachers and police officers as we would like, but there would be even fewer if we did not move on to more efficient ways of producing as they are created.

The goal shouldn’t be to preserve the jobs we have today. It should be to perform the jobs that will actually be needed in the future. Too many people seem to want to somehow combine 1950s jobs with a 21st-century lifestyle. But the reason we enjoy today’s lifestyle is because we perform today's jobs.

Many are sentimental about the past. Many talk, for example, of the social interaction consumers got at a Blockbuster store. But if that were a reason to cling to an outmoded means of distribution, we wouldn’t have ATMs or Internet shopping. For that matter, we would still have blacksmith shops.  

Next time you are enjoying a movie on Netflix – without having to leave your home, without being disappointed when the video you want isn’t available, without having to spend as much per video – remember that this service was made possible by progress. And it will eventually be replaced by progress, as even newer technologies emerge to improve on what we have now.