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The future we are creating here: The opportunity inside the depression we are experiencing for the next several years

Submitted by: John Warner on Dec 21, 2009 at 5:40 pm Tagged with: Entrepreneurship, Innovation Source: InnoVenture

I agree with the premise of this article: The recession is over but the depression has just begun. For the past several years, economic growth was driven by an unsustainable, debt induced bubble. Now there is a massive deleveraging occuring, and while there will be volatility up and down in the economy, this deleveraging will be a drag on economic growth for many years.

The author says:

The likely volatility in government spending and taxation gives you the makings of a depression shaped like a series of W’s consisting of short and uneven business cycles.

This is precisely what our own economic soothsayer, Bruce Yandle, says:

The recovery path will be irregular, uncertain and bumpy. Indeed, its shape may change as recovery is occurring. The irregular path is associated with government interventions that come and go... ."

There is an opportunity in this for us, if we have the vision and courage to grab ahold of it. During the recent debt induced bubble, companies could grow merely by filling the demand for more stuff, even though long-term that was unsustainable. Once the debt tsunami ended, as it has, then there is no growth to be had from riding the debt wave. The only growth is from true innovation that creates new markets.

If you go far enough down in the comments in this article, you find this:

However this is not a typical “business cycle” recession but rather a major and permanent contraction in demand. Therefore our deficit spending needs to be geared towards investments that will create self sustaining economic growth, by encouraging rapidly growing emerging technologies and by making our economy more competitive and productive in the global marketplace. These concepts do not seem to even appear on the radar screen in Washington. The Krugmans, Pelosis and Obamas don’t get it and the Boehners, Palins and Shelbys continue to expouse Hooverian economic policies of “tough love” at a time when a patient is still on life support in the intensive care ward.

That is spot on. Over the next several years, when growth is not otherwise possible, there will be an increase the premium paid for growth opportunities driven by true innovation.

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