In a message dated 12/15/00 5:07:42 PM Central Standard Time,
seankenny@blueyonder.co.uk writes:
> Microsoft issuing a profits warning. The editor of Business Week publishing
> a book this week whose central premise is a world wide crash is imminent.
> I'm interested to know what the economists on the list think is going on.
> I've certainly seen the belief, "it'll never happen" expressed here before.
I'll admit that in the heady months leading up to the beginning of the
present slump in the stock market I was beginning to be tempted to wonder "Is
this it? Is this the beginning of the REALLY sharp upturn of The Spike?" I
know a lot of other people had the same feelings and a few even expressed
those feelings. Now, many months into what's clearly a major downturn in at
least the capital markets for technology-related developments, such thoughts
seem pretty naïve.
I think the truth is to be found by stepping back and thinking again about
how major historical changes look on large and small scales. That we're
experiencing a downturn in one (albeit important) aspect of the social
implementation of new technologies doesn't mean that the over-all trend of
the present time isn't a significant acceleration of the basic business and
technology cycle. However, it does mean that we have to be careful when
thinking about the fine scale of such a phenomenon.
On an issue-specific small scale, what happened between 1997 and the first
quarter of 2000 was a "gold rush" brought on by an exponential growth in
AWARENESS of the Internet and its potential. That same "aha" feeling that
many transhumanists report having when the major elements of our world-view
click into place happened on at least one front for a snowballing proportion
of the investing public over a fairly short period of time, fueled by the
media's self-referential feedback of a few simple ideas about how business
methods would be effected by advancing network technology and the
Ponzi-scheme possibilities of geometric growth in stock values in a few
easily identified sectors of the capital markets.
Had we really been in the first stages of a true technological singularity,
this runaway inflation would have been self-sustaining: The influx of capital
would have fueled technological development into real products with real
economic value fast enough to maintain the building momentum. Obviously this
didn't happen on the scale required. A collapse of stock values was thus
inevitable as absurd P/E ratios came to be seen as the naked emperor they
were. The fact is that much of the inflation was based on investment in
companies with no realistic business plan that were only proposing a fairly
slight revision of existing business methods: Most of the "e-tailors" were
developing enterprises that promised in reality only a slight increase in
efficiency in a market segment that is inevitably characterized by small
margins on high volumes of trade in existing products.
A major question - yet to be answered - is whether the personal experience of
having been burned in this pyramid scheme will create an intermediate-term
brake on the willingness of investors to back REAL technological innovation
that promises REAL revolutionary profit potential. On a large scale, I think
we ARE seeing real increases in economic productivity arising from
synergistic interactions of the basic technological innovations that are a
basis of the transhumanist world-view. The fundamental value of the insight
we all share - that advances in information technology fuel a positive
feedback loop with molecular biology, other medical technology, materials
science and robotics - is still there. However, we certainly and obviously
haven't reached a stage in which the specific instances of that feedback
function operate in a completely continuous and "smooth" fashion. On a fine
scale, the operation of that synergy is still episodic and "jerky".
Individuals who overextend themselves financially in this environment will
get burned - some quite badly. However, I maintain my conclusion that
investment in the long term growth of economic values created by innovative
technologies is the best course. This means picking investments that are
aimed at creating real economic value by significantly improving efficiency
in areas that are known to be highly valued by large segments of the
population.
Greg Burch <GBurch1@aol.com>----<gburch@lockeliddell.com>
Attorney ::: Vice President, Extropy Institute ::: Wilderness Guide
http://users.aol.com/gburch1 -or- http://members.aol.com/gburch1
ICQ # 61112550
"We never stop investigating. We are never satisfied that we know
enough to get by. Every question we answer leads on to another
question. This has become the greatest survival trick of our species."
-- Desmond Morris
This archive was generated by hypermail 2b30 : Mon May 28 2001 - 09:50:39 MDT