I take no pleasure in seeing anyone lose a job, but I can't say that the recent headlines showing that America's biggest banks have been losing money on their trading operations, and are having to radically shrink as a result, are entirely bad news for the country. Over the last decade, America's banking sector got pumped up by steroids - in the form of cheap credit and leverage - every bit as much as Major League Baseball's home run hitters. And if one result of the downsizing of Wall Street is that more of America's best and brightest math and physics students decide to go into science and real engineering rather than financial engineering, the country will be a whole lot better off.
Why? Because, to paraphrase the Columbia University economist Jagdish Bhagwati, Wall Street, which was originally designed to finance "creative destruction" (the creation of new industries and products to replace old ones), fell into the habit in the last decade of financing too much "destructive creation" (inventing leveraged financial products with no more societal value than betting on whether Lindy's sold more cheesecake than strudel). When those products blew up, they almost took the whole economy with them.
I was on Wall Street two weeks ago, and I've been in Silicon Valley this past week. What a contrast! While Wall Street is being rattled by a social revolution, Silicon Valley is being by transformed by another technology revolution - one that is taking the world from connected to hyperconnected and individuals from empowered to superempowered. It is the biggest leap forward in the I.T. revolution since the mainframe computer was replaced by desktops and the Web. It is going to change everything about how companies and societies operate.
The latest phase in the I.T. revolution is being driven by the convergence of social media - Facebook, Twitter, LinkedIn, Groupon, Zynga - with the proliferation of cheap wireless connectivity and Web-enabled smartphones and "the cloud" - those enormous server farms that hold and constantly update thousands of software applications, which are then downloaded (as if
from a cloud) by users on their smartphones, making them into incredibly powerful devices that can perform myriad tasks.
The emergence of the cloud, explained Alan Cohen, a vice president of Nicira, a new networking company, "means than anyone can have the computing resources of Google and rent it by the hour." This is speeding up everything - innovation, product cycles and competition.
David Fuller's view Information technology is another very important reason why we should not be too bearish about the US economy's long-term outlook. The US still has by far the best culture for inventing and developing cutting-edge new technologies.
A scan of the Fullermoney Archive, using the 'Search' link shown upper-left, fourth item down, will currently show 21 items on cloud computing, mostly in the form of share reviews.