Now this is a bit of a surprise.
Yet as the respected New York Venture Capitalist, Fred Wilson writes on his blog, whilst the downturn is the main cause of many of the recent business failures, something more fundamental is happening:
“Clearly the economic downturn is the direct cause of most of these failures but I believe it is the straw that broke the camel’s back in most cases. The internet, now closing in on 15 years old in its mainstream incarnation as the world wide web, is in many cases the underlying cause of these business failures. Bits of information flowing over a wire (or through the air) are just more efficient than physical infrastructure”
People stopped buying records and video games in Woolies years ago. Gone went the Kodak instamatic cameras at affordable prices. News is read online. Globalised manufacturing ensured that the household appliances they used to source more efficiently than their competitors, stopped being the cheapest; undermined by the ability for anyone to send an email to a sales representative of a shipping firm in China.
Globalisation in a connected world did for Woolies. When my son is a teenager, his friends will arrange to meet online and share their music tastes before pressing the ‘buy’ button. They’ll discover the world from their shared trust in favourite web sites.
We are entering an era of profound and irreversible change to the way people choose to live their lives and organise the world around them.
And there isn’t a politician on the planet who is going to stop this.
That\’s Tom Watson that is. Bit of a shocker to find that we have a Schumpeterian in the Government isn\’t it?
To describe it he borrowed the phrase "creative destruction," and made it famous by using it to describe a process in which the old ways of doing things are endogenously destroyed and replaced by new ways.
Wonder if we might manage to infect him with other obviously true parts of Austrian Theory? Like, perhaps, meddling governments are the problem, not the solution? Or perhaps other related parts of economic theory. Christina Romer\’s point that the tax multiplier is rather larger than the spending one, meaning that tax cuts not increased spending are the appropriate method of delivering a fiscal boost? James Buchanan\’s that politicians and bureaucrats do what is good for politicians and bureaucrats, not what is good for anyone else?
No, perhaps not, such obvious truths simply wouldn\’t fit with the worldview of a modern and proactive politician now, would they? So I guess we\’ll just have to put this collision between his economic views and reality down to the stopped clock syndrome.
When Labour were elected in 1997 there was 0% broadband connectivity in the home. Last time I checked it was sixty odd per cent and three out of four people say they’ve used the Net.
Yes, I think so. For there he is apparently claiming that an unstoppable technological change is the result of politicians. Sigh.
It\’s not as if countries not ruled by Labour have had a rise in home broadband connections, is it?