Two Phenomena that will force Change in Our Economy

The mariner mentioned recently that he was investigating the rapidity of change in marketplace products. The research on this subject has uncovered a wide ranging impact on culture and economy; the mariner still researches this subject. So far, two themes prevail throughout: Replacing current products with new products at an ever increasing pace is not a substitute for growth in an economy. The second theme is more volatile – global economy in 2020 will be in a state of worldwide depression – or not. Economists’ opinions are divided by predictions of what markets may emerge.

In this post, mariner examines whether new products are a substitute for growth in the US economy.

Since the late eighties, technical age nations have been exposed to a continuous revolution of new products displacing old ones before the old ones are old or culturally displaced. The obvious leader in this phenomenon is the 4G cell phone; Apple is the prominent example with its iPhone devices. Rapid replacement has affected marketing psychology across many sectors primarily as a spinoff of the iPhone; for example, virtually every marketplace can now be reached by an APplication promoted as an upgrade in service – and cost. The question arises, is this activity progress or is it disruption?

On a larger scale, communication providers and content providers are merging to reconfigure the business model for television/Internet viewing. Further, many companies, especially technology companies, are leveraging “cloud storage” as a new source of income from the same customer base that already exists. Again, the question is asked, is this activity progress or is it disruption? Is this activity a new market or is it simply reshuffling the deck of the same market, that is, is the new “profit” really a boost to the Gross National Product?

Yes, this is boring stuff. All this “product” development is laid over a saturated market. It is comparable to raising the rent on the same house; it is a hidden inflation factor more than it is new product income. The citizenry experiences a lot of activity and feels more secure about the future because gasoline prices are down and there is more discretionary cash in the household budget. This attitude may be unwarranted.

The technology industry is on hold at the moment waiting for the next product disruption to occur. Economists sense, however, that the next wave of products will be affordable only to a smaller market of higher income folks. This may cause tech company layoffs. Matched with continuously smaller job market opportunities, less than viable oil prices, and Federal/state debt, economists fear another recession no matter who is elected President.

Add to the pile of worries the terrible condition of US infrastructure – not only light rail, bridges and roads but new distribution technology for energy grids, water, and high speed communications, speculation about a downturn cannot be ignored. The US is not out of the forest, yet. We’ll have to wait for the next President and Congress to have a chance at avoiding a downturn.

REFERENCE SECTION

The Age of Stagnation: Why Perpetual Growth is Unattainable and the Global Economy is in Peril by Das, Satyajit.

A good website to add to the reader’s regular review of business trends is:

http://www.economywatch.com/news/Recession-Signs-Growing-Employers-Cut-Jobs-Factory-Orders-Fall0205.html

Clayton M. Christianson published The Innovator’s Dilemma in 1997. Christianson is the author who penned the word “disruption.” The book deals with the manner in which new, young companies disrupt older companies by producing cheaper products that have more demand. His primary example is the laptop computer displacing the market of larger mainframe computer companies.

Ancient Mariner

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