Apparently, playing Pokémon Go is just another product of dirty capitalism.
Pokémon Go uses Google maps to simulate the real world on your phone. The recently-released game brings the Nintendo classic to life. As you walk around in real life searching for Pokémon, so does the in-game character. It has become a world-wide phenomenon in just two weeks.
However, not everyone is enthusiastic about the game’s release. A recent Vox article by Timothy Lee claims that Pokémon Go hurts small businesses and produces a negligible amount of value to society. Rather, it only provides a revenue stream to the game’s creators and leaves everyone else worse off.
The crux of the argument rests on the idea that when new technologies enter markets, they displace older businesses. This reduces employment, the argument goes, and effectively shrinks the economic pie. Often these new businesses and products do not create “real” value and only require a few employees to run them, opponents conclude.
Lee uses other examples such as Amazon, Google, and even Vox itself to show how retailers, newspaper companies, and ad agencies are being pushed out of business due to rising Internet-based companies and services. These companies, he claims, only provide a benefit to their investors while they diminish the incomes of everyone else. Pokémon Go is just one part of the problem.
This argument is patently false. When new technology reaches consumers, the displacement of older firms does not make everyone worse off. Instead, it provides even more opportunities, access, and information that improves peoples’ lives. Through the process of continued innovation, new companies create and provide better goods and services. Lee sees growth in technology of this sort as harmful.
In reality, everyone gains from the Pokémon Go economy. The economy is not a fixed pie, and GDP has been steadily increasing for the last two centuries. When prices fall for goods and services and accessibility increases, purchasing power also grows.
The game is not alone in using technology to increase consumer wellbeing. Companies such as Uber, Amazon, and Airbnb use the power of technology to provide goods and services more efficiently and at lower costs, making consumers better off.
Small businesses also see opportunity for growth from Pokémon. Anecdotal reports show that businesses near PokéStops and gyms, places where players congregate to catch more Pokémon, are seeing increases in foot traffic. Some are even strategizing to buy “incense,” a product in the game that lures more Pokémon to an area, to increase foot traffic and drive more sales. This can be done for a little more than a dollar an hour.
Perhaps fewer people are needed to build a video game than to build a car. But this assumes that the more people who are employed to build a product, the more value it has. For example, even though few individuals produce iPhones, they are not less valuable. This argument, which is similar to the discredited labor theory of value, subscribes to an antiquated way of measuring an economy’s productivity.
Consumers determine the value of goods based on their utility. The value that Internet-based companies provide to consumers is not tied to the number of people they employ. And even so, Amazon employs thousands across the country at their distribution centers and at their corporate offices. Uber’s numerous regional offices and partnerships with individual drivers offer a range of work opportunities.
Pokémon Go is more popular than most video games. Countless stories show people of all ages going outside, walking around, and interacting with each other trying to catch Pokémon. It represents technological progress continuing to better the lives of consumers as they try to “catch em’ all.”
Andrew Meleta is a contributor to Economics21. You can follow him on Twitter here.
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