For those who’ve made our living in IT, and who are now almost entirely ensconced in a post-millennial frame, one recent recession looms largest. That recession, the 2000-2002 unpleasantness (aka, the “Dotcom Bubble,” which I like to think of as the Millennium Recession), was, for some of us, transformative.
Just as I personally experienced the Great Recession of the 1970s from a regional perspective--that of a long-declining Midwestern manufacturing city--many slogged through the most recent US economic downturn in a puddle of pure metropolitan pain. Of course I’m talking about Silicon Valley. Though I’ve personally been residing in the National Capital Region for the better part of a quarter-century, I felt the pain of those years vicariously through the sufferings of my Bay Area professional friends, associates, and virtual acquaintances who suddenly saw their jobs, careers, companies, business models, finances, and lives crash--or, at the least, veer wildly off course.
Though most of my Bay Area connections recovered reasonably well as the decade wore on, the memory of dashed dreams still stings. No metro area felt the recessionary whomp as hard as the fine folks of that scenic, seismic peninsula. For the IT world generally--and for Silicon Valley as the epicenter of the Internet-driven economic revolution of the 1990s--that nasty bit of business was the rump-end of what economist Joseph Schumpeter called capitalism’s “creative destruction.” It was akin to the sort of creative destruction that global competition has been visiting on Detroit for the better part of my life.
Essentially, the year 2000 turned out to be a sort of temporal fulcrum, counterbalancing the wildly creative bubble years of the extremely late second millennium with a resounding recessionary crunch. Was this a Y2K bug of another sort altogether? Well, it didn’t truly crash the new Internet-centric world economic order, nor did it destroy any of the most fundamental innovations that surfaced in the 1990s. Rather, the Millennium Recession simply introduced further entropy into an already chaotic but very vital system. It atomized and scattered many ambitious ventures, business models, technologies, teams, brands, innovators, etc hither and yon. It spurred them to recombine into more self-sustaining business concerns. Hey there, Schumpeterians, if we’re looking for another euphemism, call this messy process “constructive deconstruction.”
I take little comfort in the prevailing perception that the Washington DC area is somehow “recession-proof.” It is not. For starters, it isn’t (federal) budget-proof. The federal budget isn’t politician-proof. Politicians aren’t election-proof. And elections aren’t recession-proof. Neither are tax revenues, or federal budget appropriations, or IT-centric projects that depend on those appropriations, or the IT professionals who people those projects and who happen to reside in and around this particular mid-Atlantic estuarial basin. It’s the economy, stupid (remember: a candidate got elected president in the midst of the early 90s recession on the strength of that slogan).
But the Washington area--in particular, northern Virginia’s high-tech sector--is doing OK. I should note that we of the DC-area high-tech community have become much more diversified in the past quarter-century, in terms of whence our bread is buttered. Case in point: I’ve been in IT since the mid-80s, all of it in the DC area, and have drawn income from federal work (i.e., contracts) in only a half-dozen or so of those years.
Consequently, I’m semi-abstracted, economically, from my current metro area on a day-to-day business. As an IT industry analyst, my personal geographic siting is semi-irrelevant. My schedule is torn between the demands of people in many time zones. I’m delivering value to customers in many countries. I’m continuously feeling the mixed pain-pleasure equation of every cresting or crashing solution area in every IT market that I cover, wherever those solution providers hail from.
And though my employer at any point in time is a business with a specific HQ somewhere on the globe, each of these firms could just as easily be sited elsewhere and carry on much the same. Many analysts in many firms work remotely and virtually, rarely needing to come to HQ for any operational reason. Over the course of my analyst career, I’ve worked remotely for firms HQ’d in the Salt Lake City area (hands down--the best view from HQ windows in my career--lovely craggy snowy mountains), the DC area (not far from my home/office, as the commute-weary crow might fly--HQ view of a shopping center parking lot), and, now, the Boston area (right next to an awesome world-class science/technology/engineering university--HQ view of semi-nondescript dense-packed office buildings nearby). The local impact of a recession on those particular metro areas concerns me about as much as the jobless rates in, say, Detroit or Jakarta.
Interestingly, I saw an article this morning about Silicon Valley’s primary high-tech bellwether Google, reporting that they’re attempting to diversify by pursuing more federal business. Cool, Google, though beware that the federal budget’s due for a significant dip under the next president, for three main reasons.
For one thing, whichever of these three individuals becomes our next commander-in-chief, they’ll almost certainly pull back our ground forces from Iraq and Afghanistan, and cut the defense budget accordingly.
Second, the current economic expansion is already around 6 years old...the same as the Reagan-presided (and defense-fueled) boom of the 80s and the Clinton-presided (and tech-fueled) one in the 90s--which means that federal revenues, hence spending, are going to take a hit.
Third, I get the sense that the US will find itself increasingly hard-pressed to compete against the one-two-three-four Asian punch of Japan, China, India, and Indonesia. Looked at as “metro areas” in an Asian economic “megalopolis,” these countries increasingly have their ducks in a row: vigorous R&D, IT, services, and manufacturing sectors with ample resources, stable governments, rapidly improving infrastructure, educated disciplined workforces, and a half-the-world-population “internal” market(s).
Something structural is going on that could permanently impact the competitiveness of this “metro area” we called the United States of America, and of high-tech solution providers that operate primarily in the lower 48. Any cyclical 2008-20** blip of a US recession could mask that greater concern. What I saw growing up in declining Detroit tells me that some metro areas don’t recover from structural weaknesses for a long, long time. If ever.
As I said, some recessions are transformative--but not to the benefit of everyone upon which the structural transformation is working its magic.
Personal bottom line: I’m no more wedded to the US than I was to Detroit. It’s an accident of fate, really, where you get planted. Fortunately, homo sapiens has handy skills and opposable rules of thumb.
Plug for my hometown: Detroit has casinos now. Hither there and gamble, if you’re so inclined.