"We decided to innovate our way through this downturn, so that we would be further ahead of our competitors when things turn up."
The "downturn" was not the Great Recession of 2008. It was the 2001 recession that was fading (after about three years) at the time these words were said. The speaker was Steve Jobs and the "innovations" included the iTunes Store, which had just launched eight months earlier.
220 million iPods, 30 million iPhones, 8.5 billion songs sold, 1.8 billion mobile apps downloads later it's easy to miss that the foundation for all of that was set during the darkest part of the 2000s downturn. When many companies were retracting fearfully, and while dot-com companies were exploding like evil pinatas.
I thought about that old quote as Steve Jobs triumphantly returned (after a liver transplant) to the public stage, looking weathered, but happy. He was in his element: showing off new candy-colored camera enabled iPod Nano's, poised to enter another new category for Apple, the home camcorder marketplace.
What we've just faced makes the dot-com recession look quaint. We came as close as one could to complete economic meltdown. As it became clear what we were facing, then President Bush summed up the state of the US financial system in a perfectly Bushian phrase: "This sucker could go down."
Later, as President Obama was first proposing the emergency stimulus -- to act as a sort of national defibrillator -- conservative friends of mine emailed me, panicked. They wrote: "What the Hell is Obama thinking? You can't spend your way out of an economic collapse!" I replied with something entertainer and libertarian Penn Jillette wrote. He too was worried, but admitted that the spending might be needed, and that sometimes metaphorically you have to steer the car into the skid to regain control.
We as a country were scared and didn't know if we were, in Jillette's words "turning into a skid" or "accelerating into a concrete wall."
All the sturm and drang over the stimulus has become somewhat academic. Thankfully, we're seeing the beginnings of good news. Most economists say that the Great Recession is over and the early stages of recovery are at hand, and the stimulus seems to be working as Obama promised -- as a buffer against deeper pain and loss until the recovery can really kick in. Even Google search patterns are showing this. But economists also agree that recovery will feel less like a weight lifted, and more like a slow march out of a deep and wide crater. So we've escaped the Abyss and the Recession from Hell, how do we navigate the Recovery from Hell?
The answer I suggest -- for the entire country -- is the same as it was in 2000 for a pre- iTunes and pre-iPod Apple Corporation: we innovate our way out.
America is a generative, innovative nation all the way down to our DNA. In the technology sector, but in all sectors(including governance) innovation will be our north star as we rebuild a 21st century new, new economy. Obama quotes Lincoln at the drop of a hat, but mostly with cause. On several occasions talking about our economic path forward, Obama alluded to wisdom from Lincoln's second State of the Union Address:"The dogmas of the quiet past, are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise with the occasion. As our case is new, so we must think anew, and act anew."
In other words: Think Different.
Follow Tim Chambers on Twitter: www.twitter.com/tchambers
Jose Antonio Vargas: Apple's Next Chapter (PHOTOS)
No other electronics company -- no other technology company, really -- has dominated the past 10 years the way Apple has. Which, of course, explains the buzz surrounding Apple's latest creation.
HBR - Restoring American Competitiveness
by Gary P. Pisano and Willy C. Shih
They suggest:
Decades of outsourcing manufacturing has left U.S. industry without the means to invent the next generation of high-tech products that are key to rebuilding its economy.
• Thanks to destructive outsourcing and faltering investment in research, the U.S. has lost or is on the verge of losing its ability to develop and manufacture a slew of high-tech products.
• To address this crisis, government and business must work together to rebuild the country’s industrial commons —the collective R&D, engineering, and manufacturing capabilities that sustain innovation. Both must step up their funding of research and encourage collaborative R&D initiatives to tackle society’s big problems. And companies must overhaul the management practices and governance structures that have caused them to make destructive outsourcing decisions.
• Only by rejuvenating its high-tech sector can the U.S. hope to return to the path of sustained growth needed to pay down its huge deficits and raise its citizens’ standard of living.
Greenspan prediction, where he starts with the "recovery" party:
"He told me this morning he now expects economic growth in the third quarter to hit 3%, higher than his previous forecast of 2.5%."
But then the from Hell part:
"But he also expects unemployment to penetrate the 10% barrier and stay there for some time."
http://blogs.abcnews.com/george/2009/10/greenspan-predicts-3-growth-10-unemployment-.html
Tim
The trouble with the U.S. is that it's delusional. How else could W even come close to being elected?
Despite clear evidence to the contrary, large portions of our population currently believe that private concerns are *always* much more a) productive and b) honest than public ones. How else could the current health care "debate" occur?
Representative government, not private concerns, is what breeds corruption -- never mind that public ones must disclose what goes on in their meetings, make their accounting available for public scrutiny etc. Large portions of our population believe taxes are theft, not the price we pay for civilization.
A significant portion of the trouble with the U.S. is that it believes some magical "innovation" will overturn the laws of thermodynamics, too.
Things like delaying gratification, accepting responsibility, dedication to truth, and balancing are what is needed. These are so far from innovative that they are a summary of ancient wisdom.
They amount to conscious suffering, an acceptance of the difficulty of life.
Read a little Jung about the "shadow" and get back to me (here: http://psikoloji.fisek.com.tr/jung/shadow.htm)
I'd like to know how you come up with "Most economists say that the Great Recession is over." These must be the same ones that said if we don't spend another trillion dollars (that we don't have), there'll be a catastrophe.
Your other evidence that the recession is ending is Google search patterns showing hits on unemployment are down and hits on real estate are up? Give me a break. Unemployment probably hasn't even peaked yet and real estate is hot because any one who has any money is buying foreclosures.
You failed to mention what Varian (your Google economist source on search trends) said: "more help for private companies, such as tax incentives, could help spur an earnest recovery." Tax incentives in the stimulus bill are conspicuously scarce. That's the fast track to economic recovery, but we can't do that. That would be too much like "the failed policies of the past" and we don't want any capitalist's getting rich out there.
I do agree that innovation through corporations like Apple and other smaller businesses is our way to a brighter future. I just wish the government wasn't spending like there's no tomorrow.
You asked:
I'd like to know how you come up with "Most economists say that the Great Recession is over."
Here was one source:
"Meanwhile, the majority of the economists The Wall Street Journal surveyed during the past few days said the recession that began in December 2007 is now over...After months of uncertainty, economists are finally seeing a break in the clouds. Forecasts were revised upward for every period, with 27 economists saying the recession had ended and 11 seeing a trough this month or next."
http://online.wsj.com/article/SB124993702311020493.html
"The Shoals Of Depression Have Been Avoided, But The Economy Still Faces Strong Headwinds
Here's the bottom line:
* The recovery is off to a nice start
* The odds of a double dip are low
* The recovery will NOT be v-shaped, because consumer spending will not recover strongly (too much debt)
* The financial system is still not lending aggressively and won't until it repairs its own balance sheets
* The unemployment rate will keep rising until the middle of next year, peaking at 10.5%
* The Fed's "money printing" is not CURRENTLY inflationary, but it has the potential to be if the Fed doesn't handle the recovery right
Apple is Palo Alto, California, one of the most privileged, wealthy, affluent, nothing bothers me, and everything must be perfect places in America. It is not America. Steve Jobs is Palo Alto, California.
Apple's products are 3 to 4 times as expensive and it is intentionally elite.
Apple Computer's Guy Kawaski was the mover of its success. Steve Jobs had spleen against flaws in computer engineering during the many decades he oversaw development. But it was Guy Kawaski who strategized Apple's success by analyzing that Apple needed only a small part of the market, a small segment of the Market share, to be profitable.
Apple is not an American model. If it were, 80 % of the population would be excluded from a livelihood and possessions.
"FedEx Corp. (FDX) Chief Executive Frederick W. Smith reiterated his view Monday that the overall economy is on the mend, saying a recovery appears "slow but certain."
Certain, good. But slow.
One other poster here described our recovery akin to recovering form cancer. What we were facing with the financial meltdown may have been that grave. And with that in mind a "certain but slow" recovery is about the best that you'd reasonably hope for.
"So, true, true, true, innovation is our way out, but it must not be the short-sighted Bush 'enterpreneurship.'"
There clearly is a distinction between longer term creative innovation and quick gimmicks. In the example of this article during the downturn of 2000 Apple used that time to build out iTunes Music Store...a long term platform that has since evolved from selling music, to ringtones, TV episodes and movies, and has been in a very real way the core of the iPod and iPhone evolution since....
To describe Apple's business strategy in geo-political terms only takes one word: unilateralism.
My observation is that many businesses and politicians and leaders are acting scared versus stepping up and looking to "think anew" about how to move our way out....
"Thank you for responding to my Post!
Glad to, I think we've sparked some good discussions here including your own.
...we agree that "innovation is always good..."
And I think we agree that rethinking and innovation should "every sector" governance as well... (which would include education and fiscal policy) ....A point I made in a glancing way, and maybe could have stressed more.
Thanks for the good discussion and feedback...
Tim
Sure they need lots more things too....but those other things didn't fit into a post this size.
Thanks for reading and posting.
It took just one Alexader Gram Bell or Thomas Edison or Nenry Ford to employee millions for decades.
Each innovation lifted many. When you innovate and then ship the MFG offshore, far, far fewer boats are lfited!
Today when we innovated for with the Ipod, it meant more jobs for China than here! Great for APPLE, but not so great for the coutry and likely added to the trade deficit. Thus maybe a negative for the country.
MFG jobs are the highest mulitplier in an economy and the most important.
KFC opening restaurants in China is wonderful... but restaurants being built in China by Chinese, staffed by Chinese using appliances made in China does little for middleclass America.
So unless we are going to change our trade laws, adopt the protective tarrifs that China has even with its much lower wages, goto VAT taxes with reimbursments for exports, and have mad it here policies and an industrial plan like the rest of the world, lower cost single payer so we can compete or the innovation will lift many boats elsewhere and increase are trade deficits, just like the IPOD.
Regards
The US International Trade Deficit must be corrected by any means possible! This is the basic structural economic foundation problem that will destroy the US economy.
The USA is Bankrupt! The USA is selling our privately owned land and other assets created by previous generations to pay for imported products (rather than have US citizens work to produce the things that we consume) and also to pay for growing US government expenses that are in excess of our federal tax collections.
Real wealth and real monetary value is created only when the members of a family (or a tribe, nation, city-state, etc.) plant, grow and/or harvest something of commercial value from the earth, extract something of commercial value from the earth, provide professional services (medical, legal, dental, engineering, architecture, accounting, land surveying, technology, etc.), and/or manufactures or constructs something of commercial value that is consumable (or permanently useful for income or rent) and then sells, leases or rents these items and/or services to parties outside of their family in return for a net transfer of gold, currency or commodities from other parties outside of their family into their own family. The members of that family can reflect their real wealth with the accumulation of grain, gold, cattle, jewels, land, buildings, commodities and/or other marketable products for reserve use in times of emergency and/or also to raise the standard of living for the members of that family.
Free trade is not good if you are the party with the deficit. We need FAIR trade. No one elses practices free trade. We did not get on that silly band wagon until the rest of the worlds MFG had been destroyed by WW1 and WW2 and we had no competition.
The world changed and repugs held to their 1917 Views.
Regards
Without import tariffs, most all products will be available for less money if they are manufactured in foreign countries where labor costs are minimized. The US labor force has no future without high import tariffs to prohibit foreign imported products.
After the American Revolution there were probably many shopkeepers that imported goods from England and they probably objected to having to deal in more expensive US manufactured goods.
The Wal-Mart, Home Depot, NTB, GM, Ford, GE, Chrysler, GE, Westinghouse and etc. will probably object strenuously when and if the US Government prohibited them from importing the products that they sell to US consumers.