The Future Sold Out: The Tech Stock Bubble Bursts.
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John Kenneth Galbraith,
Los Angeles Times, interview, December 1999 |
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In 2001 the dust is still settling on the ruins of the overhyped tech dream
in Australian and overseas. Technology stocks have lost over half their
“value” in the last year leaving many an investor, new business
and superannuation fund the worse for wear. In a neat twist the "progressive” flirtation with the new economy has cost participants dearly while those that sat on their hands and money – “conservative” investors - find themselves in the lead. Sadly this is the received wisdom of the current Australian conservative government with their reluctance to support new technology over the last several years seen as an "advantage". We may have little sympathy for high net worth investors who lost a relatively small proportion of their funds but before we congratulate ourselves – what about the impact on the rest of us? It is over the next several years that the fallout from the disintegration of so much value will impact on the rest of Australia – the super and retirement funds, investment and vocations in new industries and ideas, and in Australia's ability to maintain a lead position in developing new, skilled and long term businesses and jobs. Billions of dollars worth of value has evaporated, except for a few lucky ones that made money and got out early before reality set in and let out the hot air in the technology bubble. The medium and long term effects of the tech wreck will impact on our lives for may years to come with one example being the recent and continuing fall in the value of Telstra and other similar businesses. Likewise the separation of the old and new economies was never real and a downturn in one will eventually affect the other directly and indirectly. And that affects all of us. It was the new industries that are supposed to provide the backbone to the “networked” or “knowledge” nation of the future, our nation. The dramatic reallocation of resources to the tech and media sectors in 1998 and 1999 was driven by this same idea – the idea that crazy growth in tech and media was being “accelerated” by the new technologies and that this growth could and would go on for some time. But the whole gig was basically a scam by the promoters of Big Technology and Media – the share analysts who need returns in the millions, the big media and technology suppliers and providers, and by the “bright young things” feted as the only generation would "understood" the new economy - programmers and day traders fresh from a computer, business or media course - who thought they were the kings and queens of the brave new media world and blindly put their faith in imaginary profits and an imaginary future. The "irrationally exuberant" players sold out a promising future that a less exuberant and more critical progress would have ensured and underwritten: a progress that was largely "ungoverned" as governments instead opted for the bear pit of self-interest with self-, ad hoc and non-regulation. These players rightly saw the benefits the new ideas could bring over the next five or ten years but made the grave mistake of collapsing this future into a one or two year timeframe. The classic mistake of overestimating the short term effects and underestimating the longer term effects was made yet again spurred on by the anticipation of short term gain. This has effectively eaten away the promise of our future, devouring the value built into a more gradual development of new ideas, new jobs and news way of working, leaving a burnt out technology “husk” for us to live off for the next five or so years. Now skeptics and conservatives alike can claim that this new technology future could “never have worked” and it will be several years before new ideas can find a suitable and successful pathway through the difficult business of starting up and operating a new enterprise. |
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