That Giant Sucking Sound: Oh Yes You Can...In Pakistan?
Some things simply defy the standard bounds of logic. One of those things is the evolution of the "new economy". If that phrase sounds like a bad blast from the past, remember that the business cycle is perpetual, and economies always evolve and adapt to various changes.
In that way how is the "new economy" any better or worse than the "old new economy"? The answer requires an examination of development theory and the theory of the rise and decline of civilizations.
Development theory traces its origins to the agricultural and industrial revolutions during the eighteenth century. Those times of drastic demographic and cultural transformation indicated that the most advanced economies passed through a process of evolution by which the industries and practices they abandoned were resumed by lesser developed economies. As those lesser developed economies became more technologically advanced, they, too, abandoned certain industries and practices which were resumed by economies at lower levels of the development process. That trend held true throughout the nineteenth and twentieth centuries. Then increased access to technology made technology emerge as the great equalizer, and the whole concept of development theory became more complex and confused.
It is a long observed fact that most of the heavy manufacturing industries have eagerly persued the low-cost labor sources in Asia and South America. For most of the last two decades that process has been recognized as a natural aspect of globalization and an indirect consequence of the fact that most consumers focus on price rather than state of origin when they make purchasing decisions. It also is acknowledged that the cost of those lower priced products is the loss of jobs in the developed states as manufacturers shift their operations to emerging markets.
It was simple to shrug aside these realities when the jobs in transition were those hands-in-the-filth jobs that most developed societies view as some way or other beneath their superior standards. The high tech sphere was their domain. But apparently that too has a short shelf life in the developed states. If no refuge exists in high tech, what niche will the developed economies fill next?
Consider two very recent examples involving two very prominent US-based companies: Boeing and Microsoft. Boeing's latest slow-down cycle coincided with its decision to relocate its corporate office to Chicago. At that time the Boeing/Airbus rivalry reached a dead heat. Airbus has since surpassed Boeing in terms of sales, profits, and production. As a way to regain some of its lost market share, Boeing proposed plans to rehabilitate its B747 series. Those plans never left the drawing stage because purchasers did not want a repackaged 747; they wanted the glitzier Airbus models.
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