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Use it to sell buggy whips. |
Some years ago I met a fellow who sold fine art prints out of a store here in my town. Buyers either stumbled upon him or heard of him by word of mouth. Why don't you put your business on the Internet? I asked.
He hadn't heard of the thing -- this was awhile ago. But he got someone to do a website, and soon he was connecting with buyers all over the world.
How will we solve our very serious problem of unemployment -- more than 16 percent of our population is out of work or working less than they want? My friend pointed the way.
The answer won't be propping up the industrial dinosaurs like the Detroit automakers. The era of a gold watch at 65 and a pension and healthcare forever is gone. So what comes next?
You've heard of Skype, right? It's a new kind of enterprise, what Hal Varian calls a
micromultinational.
Just as the mechanical innovations of the 19th century led to dramatic changes in our way of life, the still-evolving computing and communication innovations of the early 21st century will have a profound impact on the world's economy and culture. For example, even the smallest company can now afford a communications and computational infrastructure that would have been the envy of a large corporation 15 years ago. If the late 20th century was the age of the multinational company, the early 21st will be the age of the micromultinational: small companies that operate globally.
Silicon Valley today seems to be overflowing with these enterprises, Varian writes.
They can already draw on email, chat, social networks, wikis, voice-over-Internet protocol, and cloud computing -- all available for free on the web -- to provide their communications and computational infrastructure. They can exploit comparative advantage due to global variation in knowledge, skills, and wage rates. They can work around the world and around the clock to develop software, applications, and web services by using standardized components. Innovation has always been stimulated by international trade, and now trade in knowledge and skills can take place far more easily than ever before.
Think of all the information technology you use for free. The browser you're reading this on, for example. To go geek on you for a moment, here's the technology of the micromultinational.
Today, a substantial amount of software development on the web involves connecting standardized components in novel ways. The Linux operating system, the Apache web server, the MySQL database, and the Python programming language are prominent examples: the LAMP components that serve as basic building blocks for much of the web. Once your application is developed, the cloud computing model offered by Amazon, Google, Microsoft, and others changes fixed costs for data centers into variable costs for data services, lowering barriers to entry and increasing the pace of innovation.
Change is scary, but there has always been change, and it's always been scary. If you've got a nice little buggy whip business going there in Detroit, you can always form a union to protect your healthcare benefits. That'll stop the change.