The Coming Economc Collapse
I was checking my stocks today on Google Finance and noticed this interesting article.
Ignore the Fox News part :) There's some of the usual rhetoric in the article, but also some interesting tidbits that makes me think some in the common media and academia are starting to actually grasp the current economic situation.
Many analysts ask if another big innovation—like the automobile or computer-- is coming and could save the economy. The problems are many new products are creating more jobs in Asia than in the West, and many technology companies are consolidating or facing extinction—consider the smart phone, Hewlett Packard and Yahoo.I've touched on this theme quite a bit in some of my previous posts, but I'll emphasize them again.
A lot of US innovation is starting to look more like French art than American commerce. Icons like Yahoo, Facebook and Twitter have made great contributions to the economy and culture but simply don’t have business models that generate enough revenue and sustainable jobs growth.
Google has succeeded by cannibalizing newspapers—the net effect has been to destroy more—and branching into software and media—which merely displaces workers elsewhere.
1. Innovation cannot sustain a large economy. There's just not enough innovative jobs to go around. Innovation can look good for a small economy like Sweden or Singapore, but it simply doesn't generate enough jobs to have a meaningful impact on the whole of society.
2. Innovation does kill jobs. This is not to say we should stop innovation for the sake of jobs. Yet one has to consider the jobs created versus the jobs killed. It is not enough to say well the automobile replaced the horse and carriage and life went on. Things are always the same... until they're different. I don't think society has quite grasped just how much of an impact automation and computing will have on it. Even the jobs it does create are for a few and highly skilled people. This is compounded by the extreme 'startup' and IPO culture, which has seemed to push innovation rapidly and makes some people rich. Yet, it has squandered the idea of large stable companies that could provide long term job stability. Innovation still happens under large companies. It just happens more slowly.
3. You are not that special. As the world becomes more educated and free trade expands, the more you realize just how everything can be done anywhere. Manufacturing can be done anywhere as a Chinese manufacturing worker is really not much different from an American. R&D can be done anywhere. An Indian software engineer is really not much different from an American software engineer. Yes going to the cheapest place and pushing your workers too hard will result in less quality, but over time these differences disappear.
China holds the West and its own future hostage—export-driven growth runs to ground when customers can no longer finance their purchases and trade deficits.Not everyone can be a net-exporter. It's basic math. Yet countries all over think export driven growth is going to be able to fix their economies and debt. The world can absorb a few big exporters... as it did when South Korea solved its debt problem by pursuing a massive export led program. Yet, today, more and more countries are in debt and they all think exports will solve their problem. It's not going to happen.
It's going to be interesting times.