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Example: Eniola Odetunde/Axios
Every 15 years or so, the U.S. economy seems to roll into a hole — and the tech industry pulls something amazing out of its labs. Here we are again!
Game Mode: Silicon Valley’s favorite bank is failing, as its flagship firms continue to lay off more employees — but at the same time, industry leaders are predicting a big new boom fueled by AI.
Be smart. If that split-screen moment is confusing, remember that the history of technology is one long boom-bust cycle. Each new era builds on the ruins of the past.
Look closely at that story And you’ll see that all the great technological transitions happened during financial turmoil.
- Experts and economists agree that the main reason behind the industry’s problems today is the Federal Reserve’s inflation-preventing interest rate hikes.
- But if you think today’s rate of 4.5% is high, turn your clock back to the summer of 1981 when the IBM PC was introduced. Around 17%.
The first great platform jump In modern times – from mainframes and minicomputers to the personal computers we use today – when Fed Chairman Paul Volcker triggered the painful recession of 1981-82.
- Volcker rates set then, duplicated today, 2023 will destroy overextended banks and businesses.
The next leap in technology, What happened in the early 90s on the global Internet was that the US was struggling to restart its business engines after another recession – and Bill Clinton occupied the White House under the banner of “It’s the economy, stupid”.
- The industry’s third great transformation in the late 2000s—as the arrival of the iPhone ushered in the smartphone era—took place against the backdrop of the business collapse we now call the Great Recession.
what’s happening: Today, tech optimists are touting ChatGPT and the new generation of AI as the industry’s latest platform revolution.
- As in previous eras of business collapse and technological transition, they predict that innovation will once again kick the American economic machine into gear.
Yes, but: Tech’s early leaps included breakthroughs that promised to empower individuals, streamline businesses, and spark whole new waves of startups.
- For now, today’s generative AI projects like ChatGPT, the new Bing, and visualization tools like Midjourney and DALL-E require extensive computing resources and are expensive to run.
- That means they are being developed directly by tech giants or with their partnerships and support.
Between the lines; Those big firms are the same ones that are laying off a lot of workers right now.
- Some of these reductions involve specialists in ethics, diversity, and privacy, and otherwise have the opportunity to guide the technology’s early development in socially beneficial ways.
The big picture: Although technology has become an increasingly central economic player over the past decade, the economy is a very large machine, with sectors such as retail, real estate, energy, healthcare and others following their own dynamics.
- Technological innovations have changed the way we work and play, but their impact on productivity is a controversial question among economists.
- The jury is still out on whether the generative AI boom will change the world as dramatically as its proponents believe.
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