Disposable Razor

50 Things That Made the Modern Economy

BBC

Business

4.8 • 2.6K Ratings

🗓️ 25 February 2017

⏱️ 9 minutes

🔗️ Recording | iTunes | RSS

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Summary

King Camp Gillette came up with an idea which has helped shape the modern economy. He invented the disposable razor blade. But, perhaps more significantly, he invented the two-part pricing model which works by imposing what economists call “switching costs”. If you’ve ever bought replacement cartridges for an inkjet printer you experienced both when you discovered that they cost almost as much as the printer itself. It’s also known as the “razor and blades” model because that’s where it first drew attention, thanks to King Camp Gillette. Attract people with a cheap razor, then repeatedly charge them for expensive replacement blades. As Tim Harford explains, it’s an idea which has been remarkably influential. Producer: Ben Crighton Editors: Richard Knight and Richard Vadon (Image: Razor, Credit: Shutterstock)

Transcript

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0:00.0	50 Things That Made The Modern Economy With Tim Harford
0:13.5	There are clouds upon the horizon of thought, and the very air we breathe is pregnant with
0:19.2	life that foretells the birth of a wonderful change.
0:26.9	So begins a book written in 1894 by a man who had a vision that has ended up shaping
0:33.2	how the modern economy works.
0:36.1	The book argues that our present system of competition breeds extravagance, poverty
0:42.5	and crime.
0:44.1	It advocates a new system of equality, virtue and happiness, in which just one corporation,
0:51.1	the United Company will make all of life's necessities as cost-effectively as possible.
0:57.8	It's the end of money, too.
1:03.2	Instead, the manual labour required to make life's necessities will be shared out with
1:09.0	perfect justice.
1:11.2	It should take only about five years of each person's life.
1:15.1	The rest will be freed up for intellectual pursuits.
1:19.5	Ambitious people will compete not for material wealth, but to win recognition for promoting
1:25.0	welfare and happiness of their fellow beings.
1:29.3	All of this will take place in a city called Metropolis, located between Lake Erie and Lake
1:34.6	Ontario where Canada meets New York State.
1:38.9	Metropolis will run on hydro power.
1:41.8	It'll be the only city in North America.
1:45.0	And citizens will live in mammoth apartment houses upon a scale of magnificence such as
1:51.0	no civilization has ever known.
	...

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