George Santayana’s famous quote has become a cliché, but Derek Thompson’s recent Atlantic article about New England’s whaling industry suggests economic policy makers could learn from the past. Central to the industry’s rise and fall is technological change. New Englanders had an edge on the rest of the world thanks to bigger and better ships, more precise charts, iron toggle harpoons, more efficient winches, and wages based on the hunt’s success.
But nothing lasts forever, and in the whaling industry’s case, it wasn’t just the jump in petroleum production. “In the middle of the 19th century, whale oil prices increased, which should have led to more production. But output never recovered after the 1850s even as whaling continued to grow around the world. Why did Americans give up?” Relying on Leviathan, which chronicles the whaling industry, Thompson cited higher wages, foreign competition, and many entrepreneurial alternatives that “turned Americans toward the domestic economy.”
What can policy makers learn from the whaling industry? Although its life and death “might seem like a precious nostalgia trip…it’s really a modern story about innovation. It’s about how technology replaces workers and how opportunity costs influence investors and change economies.” The trick is spotting where change is heading.
That was the late Steve Jobs’ strategy when he took over a failing Apple in 1997 and steered it away from bankruptcy by simplifying its product line and waiting for the next big thing. Jobs “focused on the sources of and barriers to success in his industry—recognizing the next window of opportunity, the next set of forces he could harness to his advantage, and then having the quickness and cleverness to pounce on it quickly like a perfect predator” (Richard P. Rumelt, Good Strategy Bad Strategy: The Difference and Why It Matters, 2011).
