Roger Cass, The Last Optimist
fastcompany.com
The URL to this article was posted on another board. It is a very long article, which IMO makes some interesting observations. Here are just a few paragraphs from that article:
" Roger Cass is the man who invented the idea of the Long Boom -- the notion that we're only 7 years into a 27-year expansion, the likes of which the world has never seen before. The future, Cass says, is already written. All we need is the confidence to accept it."
In the 1970s, when everybody said that the OPEC nations would hold the United States hostage to high-priced oil, Cass said that OPEC's power would fizzle and that the Saudis would enter decades of economic paralysis. He was right.
In the late 1980s, when everybody said that Japan's rise meant the eclipse of U.S. economic power, Cass confidently pronounced that the United States was one year away from its most robust economic recovery ever. He was right.
And as far back as the late 1970s, when everybody was still focused on the economy of the Organization Man, 30 years before anybody else had a glimmer of what would hit in the mid-1990s, Cass saw the new economy coming with the certainty of a wave headed for the shore. He named it as if it were a Hollywood movie, but it was really the most glorious wave of all: the Long Boom.
And what are the waves telling Cass today? True to form, the conventional Cassandras are declaring the end of the new economy and forecasting widespread economic disaster. But Cass isn't short for Cassandra. Where others decry the free fall of a "tech wreck," Cass sees only a "tech transition." The current rise in layoffs and fall of stock prices, he says, is merely an "interruption" in the Long Boom wave -- an interruption that he actually saw coming.
"This thing that we call the new economy, which is really the fifth new economy that the world has seen, is only 7 years old," Cass says. "It should continue for another 20 years." The waves tell him that this new economy is new, but hardly unique. Cass can track how it will behave, based on the other new economies that have washed ashore over the past 200 years. "This interruption will be over by 2002," he says confidently. "Maybe even as early as the second half of 2001."
Now we're ready to ask the big question: How does Cass explain what we're
going through now? Investment, he says, is a psychological state. When
people and businesses hoard their money, growth slows. So what changed the
psychology? "If you look at cultural events -- not just economic factors -- and
the whole mosaic of human experience, it becomes clear that the election
mess in Florida last year had a severe effect," Cass says. "It was very
divisive. It had a negative effect on race relations and the political system in
the United States, and the results of that will be felt for a long time. It had an
effect on confidence, which is the key factor. Americans are upset over the
political direction of their culture, and that affects the psyche of the American
consumer. Businesses simply stopped spending money in November and
December. The loss of confidence in the political system and in the economy,
and the Fed's delayed response in cutting interest rates, are two critical
reasons why we have this falling off of the cliff."
As a student of waves, Cass is steadfast in his insistence that this period is an
interruption -- not a halt: a technology downturn, not a global downturn. "The
main effect of the economic downturn is being felt right now," he says. "By
looking at consumer-confidence numbers and at the National Association of
Purchasing Managers Index, I can get some information about the depths of
manufacturing activity. We had a very short, dramatic downturn last year, and
that damaged consumer confidence significantly. But we still have record
confidence levels. In 1992, a year after the recession, the Conference Board's
Consumer Confidence Index went down to 47.3. We're at 117 right now. We
went up to 144.7 in early 2000 -- that was the all-time high. We're still at high
levels now. Those numbers will come down further in the next few months
before they start to rise again, but the market is bottoming out. To take a
longer-term perspective, this is a period of opportunity for business and for
investors. If the Fed is aggressive, and if we don't have any major external
disruptions, I think we're going to be okay."
"The period that we were in during the 1990s was similar to the one that we
were in during the 1890s," Cass says. The most powerful link: The revolution
in communications, which opened up the global economy, produced
revolutions in the Eastern bloc nations, and spread freedom around the world.
Our current new economy, which Cass calls "The Internet Age," will last
approximately 27 years, until 2020. The adjustment period that follows will last
25 years.
Here are Cass's projections for the fifth new economy, which began in 1994
and will run until 2020.
U.S. productivity will grow annually by an average of 3.5% over the next 10
years in the context of 1% annual employment growth.
In local broadband transmission to the home, the "last-mile" issue will be
resolved, increasing information use enormously and finally delivering on the
promises of the past 15 years.
The United States will shift from making investments in telecommunications
to making investments in fiber-optic technology.
Japan will reemerge in a big economic turnaround, driven by a new
generation of political and business leadership.
Local capital markets will emerge robustly in developing countries -- and
this will be accompanied by a parallel, if not prior, development of human
capital.
Economic and productivity growth will be interrupted as a result of
environmental degradation. Eastern European success stories founded on
environmental ravaging are not likely to persist."
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