Computers and the Economy: What's Up with That?

Computers and the Economy: What's Up with That?

It would be difficult to write an editorial today without saying something about the current U.S. economic climate. No matter how well insulated you are, it's impossible to not notice the meltdown of major financial institutions and wonder what the future holds. This is not the time or place to delve into the politics of why it happened or what should be done about it, but I think it's appropriate to explore the question of what effect (if any) it will have on technology, the tech industry, and how we use our computers.

It certainly seems to be having an impact on everything else. I ran across an article written a few months ago, before news out of Wall Street became nearly so dire, recounting how the tough economy was taking a toll on the, umm, adult entertainment industry:
Adult Entertainment Industry Feels Pinch Of Tough Economy

You have to wonder, though, if hard times might not actually be a good thing for tech, at least in some ways. If we can't afford to drive our cars, if we can't afford the high cost of a movie ticket or a restaurant bill, does that mean we'll be staying home and turning to our computers even more for everything from (not necessarily adult) entertainment to lower priced online stores?

Of course, the prospect of job losses and tighter budgets may, for many, put the purchase of a shiny new, high powered machine on hold for a while. On the other hand, sales of upgrade components and add-on peripherals may flourish, as folks attempt to get the most out of what they have.

It's a well known fact that the entertainment industry enjoyed a boom during the Great Depression. Even though people had less money to spend, they spent it on movies, musical entertainment and the like. Experts say it's a typical pattern during economic downturns, because people are looking for a way to escape their own problems for a while.

Our computers are becoming centers of entertainment for many of us. We play games online, listen to music over the computer speakers, hook up our Media Center enabled computers to our TVs to record programs and watch movies. Of course, those same computers are what keep us connected to the news outlets 24 hours a day, and it may well be the excessive of information (and misinformation) from doom-and-gloom proponents that has helped to exacerbate the economic downturn.

But we're news junkies now, and we're not about to pull the plug and miss finding out that the banks where we have our life savings stashed are the latest to fail (and, if we're lucky, get bought out by a bigger bank. Remember the line in Demolition Man: "All restaurants are Taco Bell?" Instead, the punch line of the future may be "All banks are Bank of America").

Tech stocks are down in the general market sell-off. Apple, Google, RIM and other tech companies suffered double digit decreases on Monday after bailout legislation for the financial sector failed in Congress, and Microsoft was down 8.7%. The NASDAQ was down 9.1%, although the Dow got most of the publicity with its 778 point fall (which, nonetheless, was only a 6.98% decline).
http://www.vistanews.com/081002-Tech-Shares

In all our focus on the financial market, it's also interesting to consider just how dependent that industry has become on technology. An article in the Wall Street Journal two weeks ago noted that a large proportion of trades are being executed by computer algorithms. For more about this, see Wall Street: More Machine Now Than Man at
MarketBeat : Wall Street: More Machine Now Than Man

This article also hints at how a glitch or just an erroneous entry of data in that system can have serious consequences. A five year old story about UAL's former bankruptcy was posted on a news site as if it were current, and the company's stock dropped sharply. The algorithmic trading systems may have amplified the effect.

We've also heard of some online trading websites crashing from an overload of traffic during periods of heavy trading. Imagine how frustrating it would be to be trying to unload falling stocks and be unable to do so because the site is down. Many of us have had the experience of needing to pay a credit card bill or other bill online, and finding that the web site is down or not working properly, or attempting to access online banking information and getting a message that the service is unavailable. Even though we know it's mostly likely a temporary situation and usually everything is back to normal within a few hours or even minutes, it can induce a feeling of helplessness (if not panic) to be unable to control your finances as you're now used to doing.

We may also be looking at big tax increases in the next few years. Will the reach for more government revenues to finance all these bailouts extend to the Internet? Will we see attempts to impose the email tax that has been just a nasty rumor floating around the 'Net for all these years? If so, that could change many things. Newsletters like this one would disappear, or be forced to charge subscription fees to survive. Small tech oriented businesses like mine that depend heavily on email for doing business would have to raise their fees and many of them would probably fail.

If the Internet access tax moratorium is lifted, if the 1992 Supreme Court decision that exempts most online retailers from collecting sales tax should be overturned, if state income taxes go up to compensate for loss of federal funds, if ISPs move to metered pricing at the same time streaming HD content makes the low caps imposed by Time Warner and some others look ludicrous, we may see a future where fewer people - rather than more - have access to the Internet.

In fact, sometimes I wonder if we today live in what will one day be looked upon as the Golden Age of the Internet. Will today's young people one day tell their grandchildren about how once upon a time, people could stay online all day, download whatever they wanted, all for a low set price? Will they tell them how it was once possible to communicate across the 'Net more or less anonymously? Will they brag about how you could buy things online and not have to pay sales taxes, or send as many email messages as you wanted without having to pay "postage"? Will those grandkids look at them in disbelief and think Grandma or Grandpa must just be getting senile and "misremembering?"

Who knows? It's pretty likely that the future will bring more regulation and probably higher costs to the high tech world. Computer technology is just now emerging from its infancy; not that long ago the 'Net was the "new frontier" and largely governed by Wild West rules (or lack thereof). That's changing fast. The economy may slow down those changes - or it may speed them up. We'll just have to play a waiting game to find out.

Tell us what you think. What effect does the current economic situation have on your personal use of technology, and what effects do you anticipate in the future based on whether the economy rebounds or falls further into disarray? Will economic hard times drive people into the arms of their computers for comfort, entertainment and social interaction? Or will we let go of the technology and turn toward other things? When times are tough, do the tough get going to the chat rooms and game sites and download services? Let us know your opinions