The Bar Code: 2 Conservative Lessons

Last month, the bar code – those now ubiquitous 30 black and 29 white lines that allow items to be scanned electronically 10 billion times daily worldwide – celebrated its 35th anniversary. Its phenomenal success at retail check-out counters, airline check-in counters and countless other venues confirms two key conservative lessons: The power and value of supply-side economics and the power and value of bottom-up innovation, in contrast to top-down government direction and control.

First there’s the bar code’s confirmation of supply-side. To oversimplify, “supply side” posits that supply creates its own demand. To wit: Create a product and that product then, if good, will create a demand for itself. A dramatic recent example obviously is Twitter. The public was not clamoring for a Twitter-like device (only a few techies probably even thought about it), but once it was introduced and growing numbers discovered and toyed with it, Twitter’s existence itself created the extraordinary demand for it. The same is true of dozens of other products easily named, such as the hundreds of applications – or apps – for such smart-phones as BlackBerry and iPhone. The apps are seldom created in response to a demand for them; rather, once introduced, good apps spur their own demand. This is what the bar code did after it was modestly introduced in 1974 to track a Troy, Ohio, grocery store’s inventory.

The world’s most dynamic economy. This lesson reminds conservatives that wise economic policies target the “supply-side” rather than the “demand-side.” That’s jargon, of course, but its meaning is very important. It’s why conservatives call for lower taxes, lower regulation and lower interference in the market place so that innovators and entrepreneurs face fewer obstacles when creating supply – concocting their seemingly far-fetched products and processes. Most fail, of course. But it’s the winning out-of-the-box innovations that have kept America the world’s most dynamic economy for over a century and that will ensure our continued economic domination. Policies that promote the supply of goods, processes and ideas promote our growth and boost our living standards.

The bar code’s second conservative lesson is as important and revealing. It is that government solutions fail because no group of experts, even when aided by computers or endless focus groups, can be as effective as a free, open and competitive marketplace. George Laurer, leader of the I.B.M. team that invented the bar code, recently told the New York Times that the code’s initial design was presented to Massachusetts Institute of Technology experts for review. Though they did not dismiss the code outright, they advised that the code, within a few years, would not be used very much. “Well, they were wrong,” says Laurer.

Experts are wrong. Indeed, over and over again, experts are wrong, littering the innovation graveyard with such products as the New Coke, 8-track tapes, Ford’s Edsel, Sony’s Betamax and countless others. All initially seemed great ideas to their inventors, to their firm’s product committee, to the executives and board of directors. But, as Laurer noted about M.I.T.’s view of the bar code, “they were wrong.” They didn’t learn they were wrong, of course, until the marketplace, through its brutal and unforgiving competition, rendered its verdict.

Such competition is, indeed, a dreadfully messy process, but it rewards good ideas and punishes bad. This mess and (irritating) randomness greatly offends liberals, who, probably well-intentioned, seek to rationalize the process by entrusting it to experts. Yet government experts are no cleverer than the private company experts who introduced those mountains of failed products. But when a private firm’s product fails, it quickly is pulled from the market. Not so with a government-sponsored product. Rather, liberals respond to failed programs by throwing more money and resources at them and expanding them. What’s worse, with the advantage of government backing, these programs typically overpower and crowd out private competitors. The result is that government programs seldom face a true competitive market test and thus linger for ages, consuming resources and dampening national productivity.

The bar code’s now unobtrusive presence on almost every product in the developed world is a reminder that government’s most useful economic role is to foster the economy’s supply-side and then to allow the market to reward the winners and punish the losers.

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