Economic Meltdown (seconda parte)

[kandrathe]

In R&D we use "S-curves" to model a technology through an R&D process. Using perpendicular recording as an example, initial growth was slow (before product introduction), then breakthroughs made and densities were increasing at alarming rates. Now we are approaching the top of the S, where material and physical limits are being approached and have been working on the slow grind ramp of the next technology (Heat Assisted Magnetic Recording)

Difficult early growth, a booming middle, and then a rough, slow gaining upper 4th as you approach materials and physical limitations.

I think you can make a real argument that a DJIA model does not necessarily need to be one that is "one sided". A correct model could easily have an inflection much like the S-curve models we use to demonstrate a technology R&D cycle. I'd probably argue that the correct model is really an overlapping series of S-curves associated with whatever the primary innovation at the time is that is stimulating growth the most. The overall market is somewhat tempered by the diversity, but there is little doubt that things like computerization and the miniaturization of was the real driver of growth in the early 21`st century, much as industrialization and the miniaturization of were the leading drivers from the late 30s through the 70s.

We're approaching a point where computerization is not going to sustain explosive growth. We need "the next big thing" for that. I wish I knew what that was, but I doubt it's social networking, smartphones and tablets, as they seem to be more about shifting money from one place to another within the economy rather than driving real growth. Who knows what's next, but I don't see any major growth before we start seeing something different that can drive jobs without government subsidization.

I like your the S-curve theory. I don't think we've fully automated to the limit of our current technological level yet. Also, we've gained productivity from new work place philosophies, such as KANBAN, and other JIT production, Deming, Tom Peters, etc.

Negative factors like commodity scarcity (e.g. peak oil), or labor shortages can cause declines until a replacement is found or a correction occurs.

I don't agree on government subsidy as the best method of instigating change. It can skew choice away from what would otherwise be the correct one, such as what has and is happening with ethanol or biodiesel made from crops. Texas Instruments, and Motorola had microchips for years before a Steve Jobs and Steve Wozniak decided to build inexpensive Apple kits. Often a revolution has all components in place until the right people come along to pull it all together. But, I would give some credit to NASA and the military industrial complex for driving the demand for miniaturized logic chips in the first place. I would like to see more government funding going into pure research, and let smart entrepreneurs and innovators discover the subsequent applications, and profit from them.