I actually think that there was always an unsustainable feel about what had happened on Wall Street over the last 10, 15 years, and it’s not that different from the unsustainable nature of what was happening during the dot-com boom, where people in Silicon Valley could make enormous sums of money, even though what they were peddling never really had any signs it would ever make a profit.
That doesn’t mean, though, that Silicon Valley is still not a huge, critical, important part of our economy, and Wall Street will remain a big, important part of our economy, just as it was in the ’70s and the ’80s. It just won’t be half of our economy. And that means that more talent, more resources will be going to other sectors of the economy. And I actually think that’s healthy. We don’t want every single college grad with mathematical aptitude to become a derivatives trader. We want some of them to go into engineering, and we want some of them to be going into computer design.
brad
on 29 Apr 09Let me say, as a non-American….Hallelujah that someone that thoughtful is in now leading your country (and, by extension, the rest of the Western world). Obama actually has a higher approval rating in Canada than our own Prime Minister right now.
James Hasik
on 29 Apr 09I will note, for accuracy, that finance never got larger than eight percent of the economy in recent years. Admittedly, it was closer to five percent in the early 1980s, and may very well eventually return to that level of effort.
Still, that’s an encouraging sign from O. Now, if he’d just stop trying to stimulate and regulate, talent would be free to reallocate resources to those healthier sectors.
That seems to be what you all are doing at 37 Signals. At our small firm, we’ve had great success with remote collaboration via Backpack and Writeboards. Thanks.
Anonymous Coward
on 29 Apr 09James, how exactly does Obama’s “stimulat[ion] and regulat[ion]” prevent “talent” from going wherever it chooses? Is there any indication that “talent” isn’t doing so?
Rick Vlaha
on 29 Apr 09The thing that is NOT healthy for this or any other economy is when the power shifts from private industry to government. This is a disturbing trend (that’s been happening for many years and has greatly accelerated in the last 100 days) that would cause great alarm to our founding fathers. The larger and more powerful the Federal Government, the more that liberty suffers. It’s a basic understanding of the human condition that our founders understood well.
Giorgio Sironi
on 29 Apr 09So the movie movie The Pursuit of Happiness is not so inspirational, as I suspected…
Andrew H.
on 29 Apr 09@Rick Vlaha
I’m not sure your founding fathers could have understood that. They were rebelling against a monarchy, not large government. Bureaucracy and entitlement are common traits across the two systems, but that does not necessarily mean that “government” is bad.
Here in Canada, some of our best and brightest do work for the government – The National Research Council, the National Film Board, Environment Canada, the Canadian Space Agency… these are all state-funded bodies that do fundamental research that is not profitable to conduct by private companies, and it’s where we should have our brightest people.
At least, that’s my perspective on it.
Anonymous Coward
on 29 Apr 09Centrally planned economies have a horrible historical record. Obama is a gifted, brilliant individual, but neither he nor all his economic advisors are smart enough to do a better job than the “invisible hand” of a truly free market. A big difference between the Silicon Valley bubble and the Wall Street bubble is that taxpayers (including those still too young to vote) were not forced by the government to absorb the malinvestment losses of the Silicon Valley. The insanely risky, overleveraged malinvestments on Wall Street provided unbelievably good returns for years which were not shared with the taxpayers, but the taxpayers are now frightened and bullied into sharing the inevitable losses of these malinvestments. Change indeed.
Pierre
on 29 Apr 09Soon enough, a bubble will inflate somewhere else, and the zombies will pursue profits there, and they will recruit other zombies, until eventually the apocalypse is upon us once again. Stay away from zombies.
Anonymous Coward
on 29 Apr 09Hm, “we don’t want” “we want”, “we want”. Daddy knows best?
Silicon Valley for the last 30 years: innovation like the world has never seen, including the natural corrections that occur in a free market. It’s messy at times just like the rest of life.
Maybe you read this and thought “ain’t Obama wise?”. A closer look reveals something more like arrogance.
Happy
on 29 Apr 09“where people in Silicon Valley could make enormous sums of money, even though what they were peddling never really had any signs it would ever make a profit.”—I say, good for them. People bought, sold, invested, and worked voluntarily in that boom; knowing the personal risks and potential rewards.
There’s been a disturbing sea-change lately where “making enormous sums of money” is now seen as somehow unseemly or unfair. Yes, it was unsustainable, but that doesn’t make it by definition bad. I’d much rather have those cycles of boom and bust than a centrally planned distribution of occupations, production, and investment.
Future Ex-Pat
on 29 Apr 09Rich=Cvil
Poor=Victims
Middle Class=Need to piss or get off the pot and decide to be poor or rich so we know how to calculate you into the voting blocks.
David Andersen
on 30 Apr 09@ Brad -
Define “thoughtful”, sans emotion.
@AC #1 -
Any government intervention into an economy is going to distort that economy by changing the way capital is allocated. If you tax or regulate something enough, you’ll get less of it. If you subsidize or deregulate something enough, you’ll get more of it. Those basic principles have all sorts of secondary effects, including on the movement of talent. Examples abound.
David Andersen
on 30 Apr 09“where people in Silicon Valley could make enormous sums of money, even though what they were peddling never really had any signs it would ever make a profit.”
This is analysis by hindsight, and wrong. Obviously if people could make enormous sums of money, someone else had to believe that they were worth investing in and that a profit could be realized eventually. Those beliefs turned out to be wrong in many cases (but not all) but that’s how a free market of individuals making their own sovereign decisions operates. Mistakes will be made – it’s the price of freedom. What other system could work better?
Jason
on 30 Apr 09Why does the answer have to be one or the other; free market or complete gov’t control? The secret is (as it has always been) finding the right mix of freedoms vs. regulation.
Like all things, economies, governments, even whole societies are cyclical… Obama’s election (along with the left’s congressional power sweep) was a big swing of the collective pendulum away from laissez faire, and I think that it’s the right time for such a swing. Eventually gov’t regulation will go too far, people will forget about the troubles of the past few years and we’ll swing (as a society) back away from gov’t regulation.
It’s like a higher-order “invisible hand”... and it’s the beauty of our system of government. Every few years, we have a bloodless revolution built right into our system… a self-correcting society… and that was the genius of our founding fathers!
Anonymous Coward
on 30 Apr 09The troubles of the past few years were not caused by too much laissez faire like the current propaganda machine is trying to convince everyone. The root of those troubles was exactly the opposite: the implication that the government would socialize the losses (as Bush administration started and Obama administration accelerated) that led people to assume much larger risks than they would without such implication. The pendulum swung from too much government to even more government, and will eventually swing back probably past the optimum free market protected by rule of law and limited government to anarchy of walled compounds and private security forces. The sooner we start swinging back, more chance we have to see balance restored within our lifetimes.
Stephen
on 02 May 09obama.actions != obama.words
This discussion is closed.