In 1998, non-fiction writer Sebastian Junger authored a book entitled The Perfect Storm, wherein he chronicled the deadly progress of a horrific tempest at sea that was "perfect' in the purity of its size, scope, and sheer awfulness. It seems oddly perverse to ascribe perfection to such destructive visitations; yet, the label often fits, and not just in the area of natural phenomena. America's "new economy," which is rapidly coming to dominate our lives, is equally perfect in its own way as an expression of all-consuming greed.
In its prime, the old brick-and-mortar economy, the realm of industry, manufacturing, transportation, and real services, was never ideal, but it at least had the virtue of being reality-based. People did things; they built cars, forged steel, dug coal, raised food, shipped goods, healed the sick, taught school. Such activities -- especially if they're blue-collar in nature -- are now demeaned; they supposedly belong to the mist-enshrouded and irrelevant past. Participation in them is considered a sucker's game. What we're about now, according to the wisdom of the high-tech entrepreneurs and their disciples, is making money the new-fashioned way -- by not earning it.
The new economy, the economy in which little is produced except in a virtual sense, has permitted a renewed lease on the worst instincts of human nature. It has brought to the fore a new round of greedy speculation based on that old standby, something-for-nothing. The new economy generates no tangible assets of lasting value; it moves information, data, and money around and creates the illusion that something substantive is happening. It precipitates the formation of dot-com "companies" that exist only in cyberspace and only for the purpose of raising investment capital to ride the stock market and ultimately cash out-or to merge and continue the ride until returns are maximized. Its footloose CEOs migrate like gamblers seeking out the best action.
If the new economy represents a form of gaming, the Nasdaq composite index, which measures the average stock value of America's new-economy companies, is the big casino. Founded in 1971, the Nasdaq itself exists only in cyberspace; it has no trading floor. Fifteen percent of its investment activity is in the form of computerized day trading. Many of its highly capitalized high-tech firms make no money; some, relying on venture capital and "concepts," frankly foresee no real profits for years to come. Yet, the Nasdaq rose in overall value by 86 percent in 1999, compared to 25 percent for the more traditional, old-economy Dow Jones industrial average; until recently, its stocks were rising so fast that even conservative investors were abandoning the big, blue-chip firms that represent the Dow, not because they were unprofitable, but because they were not profitable enough quickly enough.
If you think this all sounds crazy, you're right. Still, the words "new economy" have mesmerized the American elites, journalistic, financial, and political. Time magazine, the very symbol of the establishment press, selected as its latest person-of-the-year Jeff Bezos, founder and head honcho of the e-commerce Internet firm Amazon.com, who cheerfully admitted that his high-flying company would lose $350 million in 1999 and remain in the red until 2002 at the earliest. As another icon of the print media, Mad's Alfred E. Newman, might have said, "What, me worry?"
This points up one of the endearing features of the new economy to its creators: as an expression of greed, it approaches perfection in that it seemingly carries no entrepreneurial risk. In the present economic environment, sufficient numbers of venture capitalists, rolling in stock market gains, are available to fund start-up cyber companies; and endless numbers of gullible investors, weaned on the '90s expansion, are available -- are, in fact, lining up-to boost the stock values of those companies through initial public offerings.
It's obvious, of course, that prospects could be made even more perfect for the purveyors of high technology, and here's where the political class plays a role. To maximize their profit potential, the new-economy moguls want three things from public-policy makers: universal Internet access (getting everyone "on-line"), limited taxation of Internet usage and commerce, and unlimited immigration of computer-literate but inexpensive foreign workers.
The nation's political leaders, technophiles all, appear more than happy to address these concerns. In 1998, Congress passed, and President Clinton signed, the Internet Tax Freedom Act, which imposed a three-year moratorium on any new federal, state, or local taxes on Internet access or electronic commerce, as well as instructing the executive branch of government to pursue through the WTO a worldwide ban on e-commerce tariffs impinging on the interests of corporate globalization. This legislation flew through the House on a voice vote and was ratified by a 96 to 2 margin in the Senate; it will almost certainly be extended when it expires next year.
The presidential candidates of both major parties are likewise fully aboard the new economy bandwagon; each supports strict limits on Internet taxation. George W. Bush wants a tax-free Internet in perpetuity, including a sales-tax ban, as well as a duty-free zone for international e-commerce. Al Gore has backed off a total elimination of Internet sales taxes, but continues to favor an easing of immigration restrictions calculated to offset Silicon Valley's much-hyped and questionable high- tech labor shortage; he thereby indirectly endorses Bill Gates' self-interested call for expanded H1-B guest-worker visas (already increased in 1999 by 50,000 a year) to more cheaply fill professional positions at Microsoft Corporation. The vice president also advocates closing the "digital divide" by seeing to it that every citizen gets on-line, spending public money, if necessary, to connect every school to the Internet.
Standing against this bipartisan consensus at the national level are many state governors and local officials, who stand to lose millions in crucial sales-tax revenues if unregulated e-commerce ever really takes off. What spoilsports! They obviously lack "the vision thing" when it comes to boosting the new economy.
Time, as they say, for a reality check. Is the new economy really the wave of the future, and should it be? Who really benefits from it, aside from a relative handful of high-tech billionaires, software professionals, and Nasdaq investors pursuing their perfect greed? Certainly not the legions of non-union cubicle slaves toiling away at $10-an-hour "high-tech" jobs. Certainly not the overwhelming bulk of consumers who frequent actual stores and pay sales taxes that subsidize high-end e-commerce tax avoiders. Certainly not the 80 percent of Americans who, according to Harvard sociologist William Julius Wilson, have experienced no real growth in income over the new economy's formative decade.
Maybe that's because to date the new economy is largely a chimera, a fantasy structure built of hope and avarice. At present, just 150 million of the world's 6 billion inhabitants (fewer than 3 percent) are on the "Worldwide Web" -- so called to stress its supposed importance. If the followers of Bill Gates have their way, we'll all be web heads, technology junkies tapping away into infinity, fulfilling the new economy's vision of perfect greed. The good news is: we still have the option to say no.
O'Leary is a writer in Orono, Maine