Friday, October 10, 2008

American capitalism, new opportunities, re-regulation

Back in the 1980s, with Reagan’s policies tending toward extreme capitalism, we saw (with “supply side economics”) a rapid trend in business toward hostile takeovers and leveraged buyouts, with older conglomerates often broken into pieces, and recombined with new core businesses. The end result was fewer companies in one area (like credit reporting in my case) and potentially fewer data centers.

In the 1990s the trend continued as I worked in life insurance, although the business models were so complicated that it was not so simple to merge applications, so new application layers were created. And then there was Y2K adding to job demand. Nevertheless, eventually the trend toward super-consolidation continued, and after the financial pressures (including 9/11) there was more destruction of old-fashioned individual contributor (and often middle management) jobs.

I thought of this as good. The same forces making business more efficient encouraged the development of the Internet (although the 1992 National Science Foundation action was critical). That encouraged business structures, often advertising driven, that made personal self-publishing and recognition a valid business model as a secondary benefit. The individual publishers did not have to be profitable if the ISP’s and services could be. One came to look at one’s career differently, and realize that fundamental business changes could create new opportunities as they destroyed old ones.

Now, we see some retrenchment from “American capitalism” because of the credit crisis. Financiers like George Soros say that this is necessary, to accept more regulation, and that we cannot consume more than we produce. I hope we don’t regulate away the benefits of individual initiative, especially in the speech area.

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