Published on September 10th, 2007 | by Tom0
Traditional Economists do not Understand the Power of the ‘Jump Point’ Economy
Another business report issued today amplifies the pronounced lack of understanding by traditional economists for the underlying forces driving the emerging global economy. That report, released by by the National Association for Business Economics, paints a gloomy growth picture for the US economy in the year ahead. The report tapers back growth expectations for this year to 2 percent, compared to 2.2 percent in its May outlook. Moreover, the economy, it says, is now projected to grow by only 2.8 percent in 2008, versus 2.9 percent in its previous survey. The biggest risk factors cited? Of the 46 "forecasters" surveyed, 60 percent felt that recession was the biggest worry, only 25 percent cited inflation.
Given that these predictions are pulled out of a dimly-lit rear-view mirror, it is hardly worth calling them forecasts.
The truth is, subtle and not-so-subtle changes are taking place in the fundamentals of the global economy; these changes are profoundly altering the old rules and measures of economics. We are now much closer to finally realizing the post-scarcity economics espoused by New Growth advocates like Stanford’s Paul Romer. In effect, we are rapidly approaching what I call a Jump Point in world affairs and global economics.
Every day, 70 thousand new players join the global economy via mobile devices and the Internet (often they are one in the same very affordable entry point). Every hour the old arbiters of "equilibrium" and command and control are vanishing from the scene, as people all over the world connect directly. Every minute new value is being created by and exchanged among new economic participants not captured in any business survey. A new crop of economists believes this new growth surge will reach its fly-wheel stage in the next 1000 days. Then, the old rules and metrics will matter less because they will measure less of what really matters.
Reading through these dismal reports makes me realize that it would be a grand waste of creative power–one of the inexhaustible and abundant resources of New Growth economics–to spend my time navel-gazing about subprime loans and job statistics. Does anyone ever look at the big picture any more? I think we simply love to wallow in our own waste matter (another thing apparently in ready supply) when we don’t understand change. Hand-wring if you must, but the coming economy is going to be big, very big. Get over it, already.