I am not an economist. I am a software guy. A computer scientist. And while I have not spent my life thinking about economic trends, I have spent an enormous amount of time thinking about complexity. And I know it when I see it. Insane complexity.
We have a market that is driven by debt that no one understands, and by trading activity run by software programs that no one understands. We have created a hive. It operates with a collective mind, but a mind like that of an adolescent or teenager, that cannot be reasoned with. No, it is worse than that. The hive is not even a collection of just people, but also of very inhuman software programs that operate based on rules that are, when executed en masse, totally unpredictable.
It is truly HAL from A Space Odyssey. Our economy is on autopilot and no one knows where the plane is going. And when it gets there, we won’t know why. We will only be able to look back retrospectively to figure out the details using forensic techniques.
But while the details are unclear, the psychology driving the big pattern is obvious: we all want something for nothing.
The truth is our economy has been in trouble for a long time. It is the “too smart for the room” guys that, at some point in, I would imagine the 90’s, figured out how to make money without actually creating any value.
The boom in the financial community economy was always a sham because it produced absolutely nothing. The boom in the real estate market was a sham because it was based on nothing.
There is no reason that moving money from column A to column B should be so disproportionately valuable. In truth it really isn’t that valuable, but we have been willing to pay a lot of money to people who we thought understood what was going on and could protect us from that which we did not understand. But they didn’t understand either. Hence for example, the AIG collapse.
In truth we should be making things that add real value to people’s lives. But in this country we are making less and less as we export real production to countries like China.
But the chickens are coming home to roost.
Ironically, while we are still incredibly expert at producing intellectual property, there is a political and social movement led by wackos like Richard Stallman, and cheer led by wackos like Mike Masnick that want to entirely devalue one of this country’s last great exports by arguing against any protections for intellectual property, and by arguing that even the concept of intellectual property is unjust.
In the tech economy, in the last five years we have produced very little that actually makes any of our lives better. Twitter is cute, but economically unproductive. Ditto Friendfeed. Ditto (fill in the blank with your favorite social media platform). These products are economically neutral. And that is not a good thing. To those of you that would argue with me on this point, I defy you to explain the real world economic value/impact of the social media revolution. How does it help increase the real world GDP even one little tiny bit. I dare you. I double dare you. You can’t do it. Because if all of it went away, the world would be the same the next day. And I don’t want to hear any crap about how we are going to “figure it out”. The time for figuring out how to create value out of economically unproductive concepts has passed. We need to rethink some things.
Just for context, please remember that there is actual precedent for creating value for people with technology. Think of word processors, databases, spreadsheets, web browsers, web publishing, search engines, email, etc. Social media is the first major computing revolution that as far as I can tell, has produced essentially nothing.
But the social media craze is perfectly fitting in a society where producing nothing has been in fashion for years. Mortgages without credit. Profit without product. Riches without risk. Oops.
The truth is that as things have gotten more and more complex it has become easier to abdicate responsibility for understanding. And that has lead us to this incredibly insane place where we can actually believe that things that produce no real value are somehow valuable. Because even if *we* can’t understand it, we assume someone else must. But it just isn’t so. The truth is it is likely if you can’t understand it, no one else can either.
We need to take things back into our own hands. There is safety in really understanding what you are holding in your hand. We need to stop trying to trick each other into buying the pig in the poke. We need to simplify. We need to get back to producing sound products that really do matter. This is as important in the financial community as it is in the tech economy. Because its really all the same fundamental problem. We want to believe you can get something for nothing and it just ain’t so.