Financial Literacy & Horse Manure

By Dr. Bob Froehlich | Mar 29, 2018

Dr. Bob Froehlich

Most investors and students of investing, as they strive to gain financial literacy, often times make the mistake of only focusing on what to read and what to watch. That is only half of the equation. Equally important, but almost never discussed, is what you should not be focusing on and what you should not be paying attention to. True financial literacy can only be achieved when in addition to knowing what to focus on you also know what not to focus on, or worry about. Let me show you what I mean.


One of the biggest concerns on investors’ minds today is our weak employment market. The media has many investors believing that one of the main reasons that we have so few jobs is because of all of the advances in technology. In my opinion, that’s horse manure. I’ll explain the horse manure comment later. First, I want to show you that technology isn’t killing all of our jobs. Meaning you should not be worrying about it or focusing on it.


It’s amazing to think that some people actually believe that technology will eventually eliminate all the jobs and that with no one working, the economy will collapse and so will our stock market. Let me remind you that there’s nothing new about this argument. It’s been around forever, and it’s based on innovation and change. Innovation causes us to change the way we do things, and those changes have an impact on the employment markets. And because technology is our most current innovation, it’s the one most feared and hyped by the media today.


Let me take a step back and remind you about the evolution of some prior innovations. Can you even imagine the great debate and concern about jobs with the advent of electricity and, even more important, the light bulb? I can hear the discussion now: “What are we going to do with all of the poor candlestick makers who will now be without jobs?” And what do you think happened when the automobile hit the road for the first time? If you were a buggy-whip manufacturer, you suddenly realized that your product wasn’t going to be needed nearly as much in the future as it had been in the past. You don’t need to whip an automobile to get it going. I don’t believe that innovation, and in this case technology, kills jobs. Instead, I think it simply forces a shift in our economy regarding the jobs that aren’t needed and those that are. While it’s easy to focus on the jobs that were made obsolete by technology. What about all of the new jobs that innovations in technology are actually creating? You’ll get a distorted view if you only look at half of the equation.


In 1908, based on the explosive growth rates forecasted for the telephone, a Bell Telephone Company engineer predicted that by 1930, every female in the United States between the ages of 17 and 30 would have to become a telephone switchboard operator. Two years later, in 1910, automatic switches were invented. Goodbye, switchboard operators!

I like to think of the switchboard operator, candlestick maker, and the buggy whip manufacturer not as individuals whose jobs were killed, but rather as people whose jobs shifted to fill a new and different need in our economy due to innovation.


In the 1800s, more than 80 percent of the jobs in the United States were agriculture-related. Two percent of these jobs were in manufacturing, and zero percent were in the area of technology. With the industrial revolution in the 1900s came an explosion in manufacturing jobs. More than 50 percent of the workforce was in manufacturing jobs, while 40 percent were still in agriculture, and a whopping one percent was in technology.

Fast forward to the 2000s with the technology revolution. Agriculture jobs dropped from a high of 80 percent down to two percent, manufacturing jobs dropped from more than 50 percent to a little more than 10 percent. Meanwhile, technology and service-industry jobs accounted for more than 80 percent.


You may be asking yourself, just where are all of these technology jobs today? Think Amazon, Groupon, and Google. Amazon didn’t even exist before 1994. Now they have 541,900 employees worldwide with offices, fulfillment centers, customer service centers, and software development centers all across North America, Latin America, Europe, and Asia. Groupon, which only launched in November of 2008, already has more than 10,000 employees. Groupon serves 500 markets in 44 different countries. Finally, Google wasn’t created until 1998. It’s hard to believe that you couldn’t “google” something in 1997. Now, Google has 80,110 employees that run more than one million servers in data centers around the world.

Add to that IBM and its 386,588 employees. Hewlett Packard and its 195,000 employees. Dell Technologies and its 138,000 employees. Microsoft and its 124,000 employees. Apple and its 123,000 employees. Intel and its 106,000 employees. And finally Cisco System and its 73,711 employees.

My point to all of this is that the economy and the stock market aren’t on the brink of disaster because there are no jobs due to technology. What we’re witnessing is simply one more job shift due to innovation. Now let me explain the horse manure comment I made at the beginning of this article.


Let me frame the issue for you this way. We’re always faced with reports that say, “if trend ‘x’ continues, the result will be disaster.” While the subject of these stories can be almost anything, the pattern is identical. Today, the subject is all of the jobs being lost to technology. These gloom-and-doom reports take a current trend, extrapolate it into the future, and then use it as the basis for their gloomy prognostications.

The problem with all of these gloom-and-doom predictions is that they’re all based on one major, critical assumption that things will go on as they have been. This assumption overlooks one of the basic insights of economics: people respond to incentives, which encourages innovation and change.

Here’s where my horse manure comment comes in. Nineteenth-century cities depended on thousands of horses for their daily functioning. All transport – both goods and peoplewere drawn by horses. In 1900, London had 11,000 cabs, and every single one was horse-drawn. London also had several thousand buses, each of which required 12 horses to draw them, or a total of 50,000 more horses. This doesn’t even take into account the countless horse-drawn carts working all day long to deliver goods needed by what was, at the time, the largest city in the world. The problem was that all of these horses produced a large amount of manure. On average, a horse produces between 15 and 35 pounds of manure each day. Thus, the streets of nineteenth-century cities were covered with horse manure.

In 1894, a writer for The Times in London estimated that in 50 years, every street in London would be buried under nine feet of manure. That’s not all. Because all of these horses had to be stabled, they’d take up even larger areas of increasingly valuable land. And, as the number of horses continued to grow, even more land would have to be devoted to producing hay for horses rather than food for people. It clearly seemed that the world was doomed!

Of course, the world wasn't buried in horse manure. The great crisis vanished when millions of horses were replaced by motor vehicles. This was possible because of innovation.

The next time someone tells you not to invest because the world is going to end because technology is killing all of our jobs, do me a favor and tell them I said, “horse manure,” and then give them a copy of this article.

Author Bio

Renowned former Wall Street executive, board member, thought leader, best-selling author and TV personality.

Dr. Bob is an expert on global financial markets, global economies, currencies and global demographic trends. He has chaired investment strategy committees for multiple global asset management organizations. Dr. Bob was named to three different All American Institutional Research Teams. This expertise has gained him international acclaim where he has traveled and has provided investment and financial advice and has delivered a keynote speech on investing in 107 different countries, as well as having six investment books published and translated into 10 different languages. Dr. Bob has the rare distinction of a distinguished professional career combining experience in both the public and private sectors. Finally, his financial services industry knowledge regarding retail investors' behavior and motivation is unmatched. This unique insight and perspective were developed by visiting over 5,000 retail brokerage offices and having met with over 100,000 financial advisors during his Wall Street career.
Since his retirement from Wall Street, Dr. Bob has begun a new chapter in his professional career by building a portfolio of boards spanning private, public, mutual fund and not-for-profit companies. The list currently includes; FC GLOBAL REALTY, INC., FIRST CAPITAL INVESTMENT CORPORATION, GALEN ROBOTICS, INC., HIGHLAND CAPITAL MUTUAL FUNDS, NEXPOINT CAPITAL, INC., KANE COUNTY COUGARS BASEBALL CLUB, AMERICAN SPORTS ENTERPRISE, INC., KC CONCESSIONS, INC., KANE COUNTY COUGARS FOUNDATION, INC., and THE MIDWEST LEAGUE OF PROFESSIONAL BASEBALL CLUBS, INC.