Dr. Paul Thomas, Chief Economist at Intel Corporation presented a keynote speech on “Creative Destruction: The Prospects for Strong and Sustained U.S. Economic Growth” at SCIP10 in Washington, DC.
“My group is the best at coming up with historical perspective.” But how useful is historical perspective? This includes items such as PC shipments. Data vendors may disagree on Intel being best; they disagree among themselves as to which one of them is best.
The period from September 2008 to March 2009 was called the Great Recession by many observers. Dr. Thomas thinks that the recession is over. He would call it the Great Panic of 2008. It was a classic bubble downturn which has not been seen in a while. After the Great Moderation (moderate and widespread growth) of the previous four years (2004-2007); actually China and India did much better in the Great Moderation. Of countries that track their economies, only Zimbabwe had negative growth. Japan, Germany, and China all depended on exporting to the US so they got hit hard by US decline.
He recommends reading the book, “Manias, Panics, and Crashes.” He quoted Herbert Stein’s Law, “If something cannot continue forever, it will stop.”
Did people know that we were in the midst of a bubble? Yes, lots of people knew a bubble was going on.
The recovery is underway. For example, attendance at conferences is up in 2010. But now we know that if the US had continued stimulus in 1936, the depression of 36-40 would not have occurred. Every recession ends with massive predictions that massive problems, such as today’s high consumer debt, will preclude good, solid growth. But then we see that growth overcomes these issues.
We think of growth as part of the human existence, but it’s not. There’s an interesting web site by Angus Maddison (professor emeritus of economics at the University of Groningen, Netherlands) which contains long term economic information. In the year 1,000, the average GDP for Europe was 425/person. It stayed the same until 1800 when the Industrial Revolution started a pattern of growth.
Technology, especially semi-conductors, have helped a lot in recent growth. The book, “Wired for Innovation,” states that technology needs complementary inputs.
But let’s look at the customer experience. My favorite airline’s web site times out when I’m buying a ticket and I have to start over again. Or it will automatically upgrade me as a frequent flyer, but not my wife—and I want to sit with her!
We expect technology and transaction via technology to be troubled, but we expect products to reliable. We need to get the basics right in technology to grow.