The hardest economic question is, What comes next? What, in other words, are the new sources of economic value? How can businesses grow and our standard of living rise?
Sometimes the answer is simply more of the same. Growth comes from rolling out existing goods and services to new markets, until there’s a chicken in every pot and a car in every garage. This kind of progress may be hard to achieve, but you at least start with a clear notion of what it would look like.
That’s why catch-up economies like China today or South Korea in the past can grow so fast. Their businesses don’t have to figure out what to make or sell. They know what’s possible by looking abroad, and have a reasonable idea of what consumers, local or international, want to buy. Refrigerators and air conditioning are popular; so are shampoo and disposable diapers.
At the economic frontier, the hardest question gets much harder. You no longer have a clear vision of the future. You know neither what’s possible nor what people want. You can only guess. Starbucks or FedEx may sound obvious in retrospect, but they were once crazy ideas.
Virginia Postrel, “Would Bogie Wear Gore-Tex?: The next big thing often consists of lots of little things”, Wall Street Journal, 2011-02-12
February 13, 2011
QotD: The hardest economic question is “What comes next?”
Comments Off on QotD: The hardest economic question is “What comes next?”
No Comments
No comments yet.
RSS feed for comments on this post.
Sorry, the comment form is closed at this time.
