Wednesday, December 10, 2008

Recession + Information = Comeback

Media is all different now. As this week's bankruptcy filing by Chicago Tribune illustrates, nothing is sacred in media any more. Almost all print media is laying off employees, and only those who were extremely forward thinking about the web and its potential will survive intact and profitable. "News" is still available in newspapers, and on the tradition news sites online, like and There is some analysis in the papers as well, in the form of editorials and columns, but, the vast majority is local news or newswire stuff. For better or worse, it seems like the real brunt of the "thought-work" has shifted onto the web. Obviously, since the barriers to entry on the web are low-to-nonexistent, so the existence of authoritative sources of news and analysis on the web are not a product of a name brand, but of the amount of followers the given site has. This is dangerous, but the good definitely outweighs the bad.

In the face of this, the way we react as a nation to the current state of the economy is quite interesting. The last time we were in a situation this dire (by most accounts the Great Depression), the knowledge and understanding about the technical minutiae of the crisis was concentrated in the brains of a very small group of people like Keynes, Schumpeter, Robbins and Hayek. Now, the science of Economics is much more mainstream, and there are far more people out there who understand (at least at some level) what is going on in the economy, what it means, and what to do about it (to a somewhat lesser extent). There are amazing modeling tools that make the what-if part of economics and econometrics so much more productive. Even more fascinating is that these economists are talking to us directly about what is going on, and what it all means. You can read near-daily blog posts from some of the great economic minds of our time about the current events, putting all the economic theory into context.

When I was taking these economics classes during my time at James Madison University, it was pretty rare to get economic theory and context in the same class (thank you Dr. Kreutzer for being one of the good ones who made a real effort to do this). Gregory Mankiw wrote the book I used for microeconomic theory. Now I can read his blog every day. You get real-time comment about such nebulous topics as bailouts, credit markets, unemployment, and whatever else you want. All this from brilliant folks who just want to share. Incredible.

I think that this information availability, and the wisdom of crowds will speed up the business cycles in our country. We have already seen the cycles speed increase on the way up - now we are seeing a blitzkrieg-style downturn. I believe that we will see a similarly quick end to this crisis. (I hope).
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