There are all sorts of analogies I could use for my oddball optimism at this particular moment in history -- creative destruction (John Tanner in Man & Superman: "Construction cumbers the ground with institutions made by busybodies. Destruction clears it and gives us breathing space and liberty"), spring cleaning, etc. But the analogy that resonates with me are those Western pine trees that need fire to reproduce.
For all our talk of a global economy, our economic "system" is a cobbled-together jumble of new technologies and old rules, of fresh opportunities and outdated restrictions. We could talk about many of them, but let's just look at two well-known examples.
Newspapers
It's generally understood that newspapers (at least American metro newspapers) are in dire straits, and we're currently involved in a debate that supposes that the decline of the nation's newspapers will mean the decline of journalism as a public good. As a former newspaperman with lots of buddies still in the trade, I can testify that those guys are generally unimpressed by my suggestion that we should save their careers by hastening the demise of their metro-daily employers
Besides, they argue, none of the known web-based new-media business models generate enough cash to support quality reporting. If any of those new business models were any good, they say, we'd already be investing in them.
But this is where the pinecone-in-the-forest-fire analogy comes in handy. Because there are workable business models for Web-based journalism. The problem is that they won't take root and thrive until the fire burns off the undergrowth, prepares the soil and provides them a chance to compete. The biggest brake on media innovation isn't lack of ideas or some missing business model, it's that failing old media companies continue to occupy the big ecosystem spaces where innovation is most needed.
Unfortunately, the people who are getting paid to think about such things tend to be on the newspaper industry payroll. It's why my former employer ignored my 2005 white paper suggesting that we reinvest our double-digit profits in technology, research and quality-improvements in order to secure a long-term sustainable future of 5 to 8 percent profitability in the coming post-monopoly era.
This is not simply because those newspaper executives were foolish. It's that they represent an institutional culture that is fundamentally incapable of changing its identity even when faced with the irrefutable inevitability of its demise. There are too many inertial impediments to change, and you can't change your DNA. That's not how evolution works.
Here's why they have to go before constructive change can really get up some momentum, and be sure to catch this point because it's typically misunderstood and supremely important: We'll never find a true market value for journalistic information until these companies stop giving away news in print for free.
Wait. In print? The standard view is that free content on the Web is the problem. But follow closely: The newspaper business is the advertising business. Yes, you pay for a newspaper, but what you're really paying for is paper and printing and delivery and big capital amortizations. The content -- everything that the journalists produce -- is just a loss-leader that allows newspaper companies to rent your attention to advertisers (advertising is also content, but let's save that for another post).
So long as our information economy treats journalism as overhead, valuable only as advertising-bait, then our economy will be glutted with free, low-value journalism. We won't be able to study specific indications of value -- in terms of price or quality -- so long as it's produced as a subsidized commodity. The Web merely revealed that truth.
It also sparked this fire, and the serial collapses of newspapers in 2009-10 will race like a panic through the media ecosystem. TV outfits will suffer. Wire services will close shop. And journalistic talent will flood the job market.
What will emerge from such a brew? It's hard to say, or we'd all be saying it. But when you consider the nice correlations between journalism costs and web profits, and that the new distribution "channels" are essentially free, and the multiplier effects of networked media, there are reasons to be optimistic.
So why can't we prove those ideas now? Well, one reason is that seeds need good conditions to grow. Our current media ecosystem is a tree farm, not a rainforest. The soil is poor, the ground is packed, the sunlight is blocked and there's plenty of scrubby undergrowth in the way. But a fire changes all that overnight.
The few alternatives that have taken root exist today in the shadows of that tree farm and must struggle for leftover resources. But let a fire race through it and see what happens: Nutrients are released to the soil. Light bursts through holes in the canopy. Healthy young seedlings stand a chance against opportunistic weeds that have adapted to life in the half-lit-margins.
Tree farms and other artificial monopolies are not healthy, but you don't get from a tree farm to a healthy climax forest without a nice cleansing fire first.
The financial system
I don't pretend to understand the global financial system in the way that I do the media economy, but while this example is more general, the parallels are fairly clear. All our classical notions of capitalism are based on adding value and using markets to determine and distribute that value. Yet our current economic miseries are founded in a global financial system that somehow became addicted to producing paper profits instead of adding value. So how did that happen?
Like our newspaper industry, the global financial "system" became too much of a monoculture, centralizing too much power and cutting off the necessary feedback loops that keep an ecosystem healthy. And yes, regulation via democratic government -- so long as it reflects the will and interests of the people -- is a proper feedback input, no matter what our current crop of Capitol Hill Republicans say.
Civilization depends on our interconnected cooperation, and financial systems are its lifeblood. Yet somehow we allowed the financial industry to write rules that benefited only its own members, a sign that government had been corrupted by too much money in too few hands. Today we are all waiting on the signs that the wildfire that is sweeping our economies has been brought under control.
What is clear is that the replacement for our scorched banking and credit systems will be different than the pre-September status quo. And we have reason to believe that the new system will be better adapted to the realities of the 21st century world.
Optimism
Which makes me wonder: How much pent-up demand will there be for good information once the big newspaper companies finish their convulsions? How much credit will the world need to fuel really great new ideas, many of them from companies that didn't exist before, once the banking industry begins to re-emerge in its new guise?
And how will these new businesses and systems grow without the monopolistic pressures of dominant but decrepit 20th century businesses that succeeded by squelching innovation rather than pursuing it?
There were several reasons why Americans enjoyed such unexpected prosperity in the 1990s, but chief among them may have been the productivity boom brought on by the expansion of affordable micro computing. Are the x386 and x486 series of PCs the true heroes of the Clinton Era economies? But booms like that occur only once. After that, they're the new baseline.
Are there leap-ahead booms awaiting our 21st century economy? Absolutely. What will be the value of communications systems that make use of all the advantages of the Web? What will be the value to businesses and consumers of properly understood social media applications and principles? How will the rise of enlightened business practices affect our job markets? How will pragmatic, intelligent approaches to government affect the ROI we receive from our taxes?
I look around today and see advancing walls of flame, yet the ground is littered with pine cones. For most of us, survival means we may have to pick up and run at some point. We don't have to destroy the forest to be disrupted by a wildfire. But what if all this is simply preparing the ground?
What if the future isn't just the misery of incremental tweaks to a status quo we all seem to hate?
Burn, baby. Burn.
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