I was reading over some blogs this morning, trying to stay current on technology trends and such.
One blog that I keep up with is I, Cringley. Cringly used to write for PBS, his blog on PBS was also named “I, Cringly”. So maybe the new one should follow suit “I, Cringley 2.0″, but I digress.
He is known for as a technology journalist, but lately has also put on his “economics blogger hat”, Cringley’s latest post is an interesting mix of the two subjects.
Everyone is just waiting for the day the US economy turns around, because it can’t get much worse, right?
To be honest, I hope it doesn’t get much worse, but I wouldn’t bet on it. I definitely think that there are a lot of things that have been neglected as a whole in the US economy.
Namely, infrastructure. I do not just mean roads and bridges. I mean it more in the universal manner, like “network infrastructure”, “financial infrastructure” or even “human infrastructure”.
Cringley’s latest blog post touched on a concept from Charles Dow…
Among the many rules that constituted the Dow Theory was that Railroads stocks would lead any market rally or decline. That was because Dow figured that businesses would start (or stop) shipping items before the revenue from those sales hit their bottom-line.
When the economy is very focused on the production and shipping of physical goods, then the railroad stocks was a great indicator. As the infrastructure of the USA added Interestate Highways, I am sure that the trucking stocks became anothe great indicator.
With the US automakers on the brink of collapse (except for Ford) and all of the various types of manufacturing jobs that have left our economy over the last 30-40 years, one could definitely argue that the shipping of physical goods is no longer an indicator of how good our economy is doing.
I have heard over the last decade that our we are moving into a “New Economy”, occasionally some state that we have a “Services Economy”. I think that having a “Diversified Economy” is best, just like having a diversified stock portfolio is supposed to minimize your risk of losing money, current circumstances excluded.
Back to Cringley’s post, which is commentary on a talk he attended given by George Morton. George’s theory is that we can get a indicator on the state of the economy, based upon the number of CCIE (Cisco Certified Internet Engineer) there are in the US (or the world).
The idea basically stems from the idea that the more CCIE folks your country has the better your economy must be, because of the fact that the economy relies so heavily on data networking (i.e. Internet).
Morton’s theory is interesting, and I believe that the number of CCIE folks out there can be used as an indicator, as it represents the fact that companies are highering these CCIE folks or investing their “human infrastructure” to have their top engineers trained to pass the CCIE exam.
There were comments made by readers of the blog that possibly the rise in CCIE certs came from laid-off engineers were taking the opportunity to further their training and get certified. However, Cringley remarked (and I agree) that the costs associated with the CCIE certification is expensive and thus unlikely than an individual would pay for it themselves. My two-cents is, that it highly unlikley an unemployed engineer is going to pay for CCIE certificiation.
I do not think that we should expec the economy to just rebound, too many pieces of the “infrastructure” have been neglected. If the economy was a football team, having just suffered a horrible season, you woud likely hear people say “It is going to be a building year.”
I think that the companies in America are going to be investing in their various infrastructures. Training their staff, so that their human infrastructure can produce higher quality work. There will be some that invest in new software and hardware, taking advantage of price breaks, utlimately enabling their business to have greater efficiency, doing more with less. As those “improvements” happen, the economy will feel the benefits, but not in my opinion a rebound.
In my opinion the economy will really start to rebound as new businesses are formed, thus creating new jobs, buying new equipment, filling up the vacant office buildings, printing new marketing materials, which will in turn be delivered by UPS.
I heard from a smart business man once, “You can only grow your way to profitability.” To me, that statement if applied to the whole economy, means that the economy will not rebound merely by propping up the BIG businesses, it needs to have new businesses started, therefore the work that the government is doing to try and improve the “financial infrastructure” is important.
Who knows, maybe there will be new businesses that create products that can only be shipped by railroad.
I think I got off topic.
Laterz
bdbenner blogs ccie, cisco, cringley, economics, economy, railroads