When it comes to the economy, I think we’re missing the point.
The old system is broken. Let’s talk about that.
There are arguments about what to do to help ease the burden of the current recession. The Democrats got their big stimulus package, the Republicans want more tax cuts. It’s the same debate we’ve heard for the last 30 years. Yet, it seems to me that something much bigger is really happening right now. There is a change that is much bigger than stimulus spending or tax cuts. It’s the Internet.
The Internet has totally disrupted our traditional economy. It has wreaked havoc on traditional industries. Having worked in the travel industry back in the ’90s, the change started immediately with the introduction of the Internet. Travel Agencies started going out of business. Now one can argue it was the loss of commissions on sales of tickets that started it, but as soon as on-line agencies began to replace the corner travel agent, the final nail in the coffin was in place.
Travel is not the only industry where this disruption has occurred:
1. Newspapers – going out of business
2. Music Industry – total disruption of music distribution
3. YouTube – you can watch anything and everything and be entertained for free
4. Airlines – who wants to fly when you have webex or gotomeeting
5. Automobiles – who needs a $30,000 car when you can work from home now.
6. Retail – why fight traffic at the mall, when you can shop online?
7. News – traditional 1/2 hour news has never been the same
8. Microsoft – Open Source is killing their business
There is a lot more going on in the world economy. The stimulus packages and tax cuts are not the solution to our problems right now. I think first, we need to understand that we are going through a major change in the global economy that is being driven by the Internet. Traditional industries are under pressure because they want to continue to be faceless corporations in the age of information. Customers may know more about their products or services than they know about themselves because people are talking about them.
Take the case of the automotive industry. On the whole, the majority of Americans do not have much sympathy for US automakers. They have watched as the industry has not really done much over the past 30 years to change its ways. The unions are unwilling to change their behavior, and neither is management. They should ask themselves why their competitors have fewer labor-management problems.
The big nameless corporation is dying. The age of the Entrepreneur is here today. The Internet is driving this new age. People have to change their ambitions from getting jobs to creating jobs. Or, understanding that they have to take a more proactive role in their employment. The age of hiding behind your job is over. People need to understand we live in a global economy, not a local economy. Education needs to be part of the culture, not the pariah it has now become. Everyone needs to participate in education, not just teachers and students.
Throwing money to treat a mortal wound, or cutting taxes without cleaning the wound before it is treated, will not save us. We need real change. We need a radical approach. First, we need to recognize that we are entering a new economy. Let the old one die.
Interesting….Robert Reich: Trying to fix the old economy is the wrong approach. We should be trying to understand the new economy.
http://robertreich.blogspot.com/2009/07/when-will-recovery-begin-never.html
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I agree with you on this thought:
“Rather than assigning blame for any of the changes to a particular new development, I would rather acknowledge a simple reality: that the world keeps changing, and the changes come in shorter intervals than they did in previous millennia.”
I wish I had more time to research my assertions. At a glance, the debate is not more spending, less taxes. It should be understanding the real change that is occurring right now. The Internet is a truly global phenomenon. To your point, the speed of change requires new thinking to understand where these changes are taking us. Is there a death to the old economy happening right now? Are we entering a new economy? What is it? How do we define it?
Thanks for your comments.
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Workers rioted & destroyed factory machines during the industrial revolution because the machines were replacing skilled labor.
Telegraphs & telephones & transcontinental railroads eliminated the market for the Pony Express before it even became profitable.
The development of the automobile destroyed the market for carriages & buggy whips & livery stables.
Federal Express, UPS, DHL, et al have severely cut into the profits of the US Postal Service.
We can keep building a longer list if you wish, although I’m not ready to agree with all of your assertions. Rather than assigning blame for any of the changes to a particular new development, I would rather acknowledge a simple reality: that the world keeps changing, and the changes come in shorter intervals than they did in previous millennia. Think of it as an economic model for Moore’s Law.
The key is to identify which of the new developments will have real potential. To paraphrase Wayne Gretzky, ‘It ain’t where the puck is, it’s where the puck WILL BE.’