Soros Peddles Doom as New Global Economy Booms
While Soros warns that the good times are over, the Internet is quietly creating the biggest, most dynamic economy the world has ever known.
Billionaire financier George Soros made headlines again this week with his warning that the global “super boom” that drove the world economy since the Second World War is over. In a documentary that aired on the BBC, Soros asserted that the current malaise in the U.S. financial markets signals the end of the age of leverage, easy money, and rapid growth. The new danger, he worried, would be that growing protectionism would send the global economy into a recession, “or worse.”
Oddly, he went on to say to the makers of the aptly named documentary Super Rich: the Greed Game that the benefits of the super boom weren’t evenly distributed; in reality, relatively few people, like himself, benefited from the boom of the past 60 years. The implication: average folks have been fighting over table scraps for decades. Hardly makes one nostalgic for the good old super boom days.
Soros is right about one thing: the next global economy is going to be very different than the last one.
Consider this: 700,000 people around the world log onto the Internet for the first time every day. At that rate, by 2011 — a mere thousand days away — the number of Internet users will exceed 3.5 billion. At that point, more inhabitants of the planet will be online than off.
More significantly, those three billion people approximate the world’s entire labor force. That means for the first time in history, all the world’s workers will be connected in a single, seamless economic system — a system, remember, that encourages each of us to buy from, sell to, and trade with each other directly, unimpeded by middlemen, brokers, or even governments. After that “jump point,” the global economy will be bigger, flatter, more diverse, and more competitive than ever.
The one thing economists seem to agree on is that when you add more people to an economic system, you get more wealth. More people, more ideas, more innovations, more new markets.
Soros’ discomfort, however, is not unwarranted. Ours will no longer be the orderly market of classical and neoclassical theories, the “magnificent dynamics” espoused by Smith, Malthus, Mill, and Keynes. Instead, the emerging structure will likely be a chaotic amalgam of decentralized agents, nodes, and confederations, a market that will mimic viral forms found in biology, an environment characterized by rapid, unchecked growth, geometric progressions, and unpredictable combinations and permutations. I call it “pandenomics.”
Going forward, we will need a new understanding of economics for a networked world. We will need to better understand the theories of people like Stanford economist Paul Romer and his New Growth School of economics.
Unlike the old view which was defined by scarcity and limits, the new networked world offers unbounded opportunity: new ideas beget new products, new markets, and new wealth. Old Growth theories ask us to allocate scarce resources among alternative uses. New Growth says that neither resources nor alternatives are scarce. Since humans possess a nearly infinite capacity for new ideas and new ways to reconfigure physical objects, we live in a world of abundance.
But Romer understands why people like Soros and fellow billionaire Warren Buffett might be anxious.
“Every generation has perceived the limits to growth that finite resources and undesirable side effects would pose if no new recipes or ideas were discovered,” he has written. “And every generation has underestimated the potential for finding new recipes and ideas. We consistently fail to grasp how many ideas remain to be discovered. The difficulty is the same one we have with compounding. Possibilities do not add up. They multiply.”
Like an old general fighting the last war, maybe Soros really does despair for the world economy, or perhaps like an old lion, he has simply lost his stomach for the hunt.
Things look very different from where I sit in Silicon Valley.
Short-term disruptions aside, technology, culture, and economics are all coming together in just the right way to assemble the biggest, most dynamic wealth-creation network the world has ever known. The mass adoption of personal computers, the Internet, and mobile telephony, combined with the ready use of voice, data, video, and email communications, are forging a powerful, new global nexus. Since we have never experienced a market quite like this before, old yardsticks don’t do it justice. Neither does old nomenclature.
What comes after a “super” boom? How about a “googol” boom?
Tom Hayes is a Silicon Valley executive and the author of the new book, Jump Point: How Network Culture is Revolutionizing Business (McGraw-Hill). His blog is Tombomb.com and you can contact him at tom@hayesmail.com.
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18 Comments
1. Temporary Test Blog » Blog Archive » Soros Peddles Doom as New Global Economy Booms:[...] Original post by Tom Hayes [...]
Apr 4, 2008 - 1:32 am 2. jeff:Soros wants you to believe things are bad so Obama gets in. He and the rest hate Bush. The drivel that moveon.org and dailykos.com puts out on a regular basis is so false, you wonder how its constitutional. I believe in a free press, and freedom of speech, but it comes with responsibilities.
Soros should stick to currency trading.
Apr 4, 2008 - 5:14 am 3. Linda Frank:The reality of Soros is that he hates himself. He is a fundamentally dishonest man who made his fortune gaming the British pound (which of course put many out of work) and then asks us to revere him as a big liberal. Actually he is the modern liberal world view write large (very large in his case)
Apr 4, 2008 - 7:04 am 4. jdaly:Soro’s is probably right. His “game” of currency manipulation and the hoarding of information is dying. He’ll still make money because money begets money but he won’t have the power he once had, and to an egocentric gasbag like him that is the same thing.
Apr 4, 2008 - 7:15 am 5. jdaly:And maybe he can throw more money at moveon.org. That has really paid off hasn’t it?
Apr 4, 2008 - 7:18 am 6. Tonto (USA):Gotta be careful. Remember, a lie told often enough is eventually accepted as truth. That’s a mainstay of libermorons in the Democratic party. They buy it because they’re too stupid to think.
Apr 4, 2008 - 8:30 am 7. Johnm:This is a very encouraging article, and we need more like it. When these old lions age, they begin to think that no one will come along as smart or smarter than they were and the world is doomed to a downward spiral of mediocrity. The boomers are especially guilty of this. Think Bob Dylan recently saying that no good music has been made in the last 20 years. Anyway, I’d be curious to know some of the specific manifestations of the trends to which Tom refers. This article is pretty 60,000 foot view. (I know, I know, read his book. Just give me some highlights!)
Apr 4, 2008 - 9:20 am 8. Ben Mack:Tom Hayes,
As per your request, I’m posting a comment.
I hope you don’t mind that I invited a few
of my friends to read your refreshing news.
Tom, thank you for the email that brought me here.
Sincerely
Ben Mack
ThinkTwoProductsAhead.com
=> My Friends,
This is the article I emailed you about
and promised you’d see Tom’s email for your
swipe file if you came here. This is spot
on exactly what we were teaching last week
as a Front-end communication, a Back-end content, and a request for up-sell engagement.
(Folks not on my list, this is part of the course The Reputation Economy)
This article is great. Could have come straight from a desk at Hill & Knowlton. very kewl.
I’m mailing one of my lists here to read this article. To those readers… Here’s Tom’s email that brought me here:
Friends,
In a jail yard fight they say you should take on the toughest guy first. In that spirit, today I called out billionaire financier George Soros for his outrageously gloomy outlook on our global economy. By contrast, I believe that the coming Jump Point economy offers more opportunity than we have ever seen before. I took him to task in this article at Pajamas Media. Hope you’ll give it a read and leave a comment too!
Tom
Apr 4, 2008 - 12:46 pm 9. Sue:The most exciting thing for me, a 65 year old female, is that the Internet has changed so much in this world, particularly the West. And, the changes continue and grow expotentially. That is the bit the “powerful” like Soros don’t get: we don’t need newsprint. In fact, we do not need Nightly News, period. We get our news in the morning, the afternoon and evening and usually day ahead of the MSM. Soros and Buffet will soon pass out of the picture and it will be a better world when they and their ilk do too!
Apr 4, 2008 - 3:13 pm 10. How Is our Economy Doing? « Tai-Chi Policy:[...] 2008 Posted by taoist in Bias, Capitalism and Economics, The Economy, The Media. trackback George Soros thinks that the golden era we’ve enjoyed since WW2 is over. The media is idiotically asking people whether we’re in a recession, never mind that [...]
Apr 4, 2008 - 3:36 pm 11. Bill:Yup… those who promote fear are projecting their inner views on the outside world. It just makes sense that those who have a vested interest in the status quo fear change the most. As the rate of change quickens, the waves will crest and they will crash. There has never been a time of greater opportunity in the history of the world, nor a better time to be alive. Ride the wave! (Ben, thank you for emailing this link to me)
Apr 4, 2008 - 4:01 pm 12. Tim:More good news concerning the capacity for global wealth production can be found in this article: “Globalization: The Long-Run Big Picture” at http://www.capitalism.net/articles/Globalization.htm
Apr 5, 2008 - 9:14 am 13. ddc:Tonto,
truer words were never spoke.
Soros is a scourge. A rather dangerous one at that due to the wealth he has behind him, not to mention certain MSM mouthpieces who pimp his agenda of hate to the naive youth. It’s a shame they aren’t aware enough to see how they’re being bought, herded like so many sheep. But that’s youth for you. Every generation has them. haha
In politics, money and egomania are dangerous bedfellows. I wouldn’t be surprised even that this a55 thinks about running for office one day.
Apr 5, 2008 - 11:17 am 14. ToddK:Did anyone else notice this?
Hayes writes of Soros’s thoughts, “the new danger, he worried, would be that growing protectionism would send the global economy into a recession, ‘or worse.’”
Which candidates are bashing NAFTA and every form of free trade they can imagine? Racing to enact barriers to protect local jobs in obsolete industries? It sure isn’t McCain, it is old George’s beloved Democrats. Hillary and Obama are beating the wardrums of protectionism to give us Smoot-Hawley II, and perhaps make a seer out of Soros after all.
Wonder if McCain could swing an endorsement out of Soros on those grounds?
Apr 5, 2008 - 7:17 pm 15. njcommuter:Soros makes money from instability. He has power in the ability to give money to left-wing groups to spend and influence public perception. I wouldn’t trust him as far as his body parts would fly if he were hit by an artillery round.
Apr 6, 2008 - 12:38 am 16. dpw:ask yourself this question: how would soros profit from promoting such negative opinions? think….. short sellers!!
Apr 8, 2008 - 11:26 am 17. Kenny:Ben Mack for President!!!
Apr 9, 2008 - 6:09 am 18. Tim:Soros’ errors are long standing and go deep. This article explains:
Apr 12, 2008 - 12:45 pm“Defending Capitalism Against a Capitalist”
http://www.capitalism.net/articles/soros3.htm