Mark Hopkins wrote an interesting post on technology and the recession. While I disagree with Mark on “kids” being any more susceptible to group psychology than adults, the post touches on something that we should all be keeping in mind.
In investing and in business, when everyone is running in one direction, I tend to at least start glance the other way. In the case of the economy, general sentiment right now is incredibly negative. And there is a good reason for this if you’ve just watched your retirement savings or personal portfolio evaporate. While things may get worse, and there are certainly a lot of negatives to dwell on, there are also some enormous positives that we should not overlook.
As a society, we have the most efficient, entrepreneurial, and technologically advanced economy that has ever existed. As Mark noted, the barriers to entry in creating new companies (good and bad) are so low that literally anyone can do it. A startup today (in sectors as diverse as greeting cards or news) can compete, right out of the gate, with Fortune 500 companies (and sometimes win). At no point in history has it ever been easier, faster, or more cost-efficient to bring innovations into being.
Likewise, while commodity prices are still relatively high (food, gas, metals, baby oil), over the long term technology continues to bring the cost of everything down. Whether it’s genetic engineering of seeds, or advanced inventory systems that help Wal-Mart deliver t-shirts for $2, or $800 Macbooks that would have cost $2,000 just 5 years ago, technology continues to level the playing field, granting the rich and the poor increasingly equal access to resources.
There is also a level transparency that would exceed the wildest dreams of just about anyone in 1987 or 1929. Want to know who built that building you just walked past? Maybe you want to learn to build a web site? Or perhaps you just want to understand how a credit swap works. Anytime/anywhere information allows all of us to build, create, evolve, and solve the biggest challenges, with a speed and efficiency that is easy to take for granted.
At the end of the day, a society’s economic standard of living is based on the ability of its people to do more with less resources. Less time, less money, more output. The United States (and, increasingly, the world) is filled with brilliant, creative, and entrepreneurial people. This financial downturn may take a serious toll, but the tools that we have to deal with it are the best they have ever been.
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