A depression now could never be anything nearly as bad as what happened in the thirties, and the reason is technology. We live in the information age. The thirties were in the industrial age. Then companies had to have real estate. Even paper shuffling companies like banks or insurance companies (Oh my!) had to have buildings with desks, chairs, and files. Lots and lots of files. Rooms of them. Floors of them. No more. Now a single computer can hold all the files any company could ever need. Now an entire company can be run from a single computer. All you need is a big enough hard drive. That's certainly cheaper than a 30 story building in downtown LA.
But wait a minute, you say. There are still massive buildings with files. Go to any bank or insurance company office and you see huge extravagant buildings with floors of desks and chairs, and some files too. Yes that's true. But all that isn't necessary to run a company. I think it's all really there only because of tradition, habit, and over inflated egos. Look a little closer at those companies, like one insurance company I worked at. Take out the people, desks, and computers and what's left? A cafeteria, a gym on the 12th floor, and a lobby trophy case. Ah, you're laughing. You think I must be a moron to say take out the people and chairs. A company can't exist without people.
Well, that point is debatable. But I'll give you the benefit of the doubt. Let's say you do need people to run a company, even all those program managers and project managers and project planning departments, and the multitude of other useless rhetorical job positions in a typical company, like the bank or insurance company I worked in. Even if you insist on those five managers for each person who actually works, you still don't need a huge building and you especially don't need the tallest one in the city, which some insurance companies tend to be. You don't need any building at all if you have a virtual company with people who work from home, and you don't need office equipment, furniture or even computers if they work on on their own computers.
So if this is such a great idea, why hasn't it worked for most major companies? Well, it has worked on a limited scale. Many companies have employees who work from home virtually, but not all their employees at the same time and not every day.
I attribute this human condition to tradition and habit. Bad habit. We are slow to change our ways. We're used to driving an hour, the same hour as everyone else, through traffic and yelling at the cars around us every morning, "Why must all these idiots be on the road the same time as me?"
We're used to walking in and seeing the other smiling faces in the office, regardless of how genuine their smiles are. We're used to taking a coffee break and complaining to Joe, the tech guy, about our micromanaging managers, all five of them. We're used to this pain so much that if it were gone we'd be depressed. Sort of a Stockholm syndrome, perhaps?
I attribute this human condition, also, to over inflated egos, especially in the upper management ranks. We build magnificent structures to house our companies with big impressive monikers on the lawn or up on the top floor overseeing the city like some great oracle. In fact, exactly like Oracle. Do we need this extravagance to run a company?
I attribute this human condition to our need for human interaction. We want to be around other people and work with them in person, not over the internet. But, this is more likely a distraction from getting work done than it is a help. I'd venture that on average, if people didn't interact with each other at work, they'd get their work done in one-third of the time and could cut out before lunch and spend the rest of the day playing or whatever grown ups do with each other. At IndyMac, when I worked there, my mangers determined that employees spent no more than 50% of their time actually producing work, and that was only considering meetings and other support functions, not the typical carousing that people do, and especially did at IndyMac with their low walled cubicles where everybody could see and talk to everyone else.
But what about companies that make tangible products like food or sofa cushions? Well you got me there. You do need manufacturing plants and shipping departments in real buildings. But that's one of the few exceptions. Most companies can exist without a company building, or at least without one big enough to house and support all their employees for only eight hours a day, five days a week of which the employees only really work a third of the time.
For all these reasons I believe that if we did face the crisis of a depression economy, I think it is very likely it would be not all that big of a deal, certainly nothing like the Great Depression of the thirties. In tough times it becomes imperative for people to find ways to exist, to generate revenue and commerce and to do it under the toughest economic conditions. It becomes more necessary to invent virtual companies and under that pressure those companies would be hard pressed to thrive or fail. But it could be done, and it wouldn't be very hard.
Even now, with the state of this economy, I don't see any great threat. There may be a threat to certain insurance companies and banks, due to their own mismanagement. But not to the fundamental base of working people with American ingenuity to pull through and prosper. Too bad McCain didn't think of that, huh. It would fit right in with his crazy theory of a fundamentally sound economy.
Of course all this has nothing to do with government regulation or policy. It has to do with people taking care of themselves in spite of this screwed up government and it's failed policies; and I'm not saying the economy is sound. It obviously isn't. I'm just saying it's not going to be another great depression with bread lines and toilet paper rationing. Gas maybe. Not toilet paper. There won't be work camps with people doing hard labor. Laptop groups at a local hangout, maybe. But this can only happen for those industrious enough and ingenious enough to break from the traditional norm of over extravagance and actually get down to business.
This economic crisis isn't about how to better run companies is it? It's about bad investments, over extended credit, and sub prime lending practices. Well yeah, and all that is how people run companies. This may be news to Wall Street, but credit is a bad thing. It gets people over extended beyond their means to repay. Some of that is about regulation, if we leave it to our social form of government to control how we do business. But mostly it's that self discipline that I heard Palin hypocritically talking about; that the people who run companies need to practice. If companies fail and leave us in a depression we have these tools at our feet to pull it all back together.
Barack Obama says the following about technology on his website (barackobama.com):
Barack Obama believes that America should lead the world in broadband penetration and Internet access. As a country, we have ensured that every American has access to telephone service and electricity, regardless of economic status, and Obama will do likewise for broadband Internet access. Obama and Biden believe we can get true broadband to every community in America through a combination of reform of the Universal Service Fund, better use of the nation's wireless spectrum, promotion of next-generation facilities, technologies and applications, and new tax and loan incentives.
Obama goes on into detail about the steps he will take to accomplish this, including investment in science, research and R&D; and then protection of intellectual property.
John McCain has a similar statements on his website (johnmccain.com). But it is preceded by a lot of talk about funding and investments in technology, and a lower corporate tax rate. Don't ask me why technology needs lower corporate taxes to flourish, unless you're concerned about cutting into those big CEO salaries and bonuses that Obama's tax on high income would affect. So it would seem his stance on providing technology for everyone is an after thought and his real plan is to use it to make big companies bigger. McCain's website states the following:
Innovation requires risk capital to turn bold ideas into reality. A ready supply of capital willing to invest in innovative ventures has been a hallmark of America. To maintain our innovative edge, our next President must promote conditions favorable to investment. John McCain knows the stakes - and he knows what it will take for America to remain competitive. Federal tax and fiscal policy must create and protect the incentives to innovate.
Risk capital? Sounds like more of the same mess that got us here. Forget the banks. Get a safe, a computer, and start a company.
That's what's so great about technology. You don't really need huge corporate investments and incentives, if you know what you're doing. You know, that whole internet thing with email and all that. So a depression might not be that bad, depending, maybe, on who's running the government.
See more on the candidates technology views in my piece, Technology: Obama Wants A CTO; McCain, Risk Capital.