Weak Economy…. So What?

One would think that in a weak economy there would be little innovation and a healthy dose of fear in creating new products. Not so, according to

by James Surowiecki (The New Yorker, May 16, 2011). While all this moaning and groaning is going on in government and by the talking heads in the business media, history offers a glimmer of hope for this tired economy. Americans are venturesome risk takers, and that fact bodes well for our economic future. After all, we lead the world in genetically manufactured crops. Dropbox, an initially risky concept where one can store and synch computer files at remote servers launched in 2008 and is up to 25 million users. And remember back to the inception of the minicomputer by IBM in the 1950's and 1960's? IBM believed it wouldn't sell more than twenty five. Although disparate examples, innovation never stops. In fact, the recession of 1981-82 spawned the popular P.C. Americans embrace new innovation and ignore the risk of being a first adopter. After all, look at the iphone, ipad, and countless ereaders; no recession or slowing economy has stopped the relentless consumption of these burgeoning technologies. What causes this great propensity to try new and unproven products, and why is it important?

These encouraging facts bode well for technological growth and future prosperity. Human psychology causes us to project the present into the future without regard to the cyclical nature of the changing economy. Don't let this propensity turn to pessimism. It's so easy to watch the news, the employment numbers or the international struggles and believe that the future world and national economies are hopeless. Step back from the pessimism a bit. Even though we are a growing developed economy, Americans continue to hunger for new and better inventions. This hunger propels investors and venture capitalists to search for the next best opportunity. Following the dot com crash at the beginning of the century, there may have been a respite in new start ups, that period is stuck in the far annals of our collective minds. Yet a decade later, it is old news. Since consumers are willing to take risks on new products, investors are motivated to fund those speculative opportunities. Even though there are complaints that consumers have held their pocketbooks too tightly recently, the current consumption of new inventions disproves that theory. Further proof of the this trend is given by economic historian Alexander Field, Santa Clara Professor of economics, as his new book,

, reminds readers that even during the Great Depression, business continued to fund research, development and productivity-enhancing technologies.

History offers evidence of the resilient consumer, hungry for the new and better products. Entrepreneurs and investors are happy to fulfill the consumers' desires. Although we are in an economic slowdown, there is and will always be room for some growth, innovation, and new product development.