Asone can see there are many striking parallels between the Gilded Age or the erafrom the eighteen eighties to the eighteen nineties compared to the Silicon Ageof the nineteen eighties to the nineteen nineties.
The preconditions for thesetwo massive economic booms share similar birth paths laid in laissez fairepolicy, no regulation or deregulation and innovative booms. Before the 1880’sthere was no real conflict between the welfare of the American people and thatof its business units. That happy relationship lasted only until the 1880s. Bigbusiness or Trusts, appeared in the United States during that decade. Once theywere established, it grew faster and to a larger size than it did elsewhere.
Onereason was the absence of any countervailing force in America. A new countrymade up almost entirely of immigrants, who needed jobs, big business waswelcomed and a favorable economic policy provided a catalyst for there birth. These economic conditions gave rise to innovators, monopolists, and mostimportantly, rugged individuals who changed the landscape of the worlds economyforever. Their huge personalities went hand in hand with the vast size of theirempires.
The problems big business raised provoked a powerful public responsethat immediately moved into the realm of the political economy and provided fora change in the leniency of laissez faire. In the closing years of thenineteenth century, the United States became the only major industrial power toenact legislation explicitly designed to curb the power of large corporations. Congress passed the Interstate Commerce Act in 1887, the Sherman Antitrust Actin 1890, and the Federal Trade Commission and Clayton acts in 1914. The ShermanAntitrust Act remains the most stringent in the world. The nineteen eighty’s andmore importantly Ronald Reagan’s election victory was the catalyst for theSilicon Age. Reagan and his re- clothed trickle down economics or “Reaganomics”brought laissez faire to a maximum point.
Not only did he repeal or lay offenforcement of these anti trust and anti business laws, but went as far asdropping the Governments case anti trust cases. The stagnant equity marketsbegan to take flight and the greatest bull market continues 15 years later. Coupled with major tax cuts and financial market innovations, an era oftechnological revolution appeared. This Era would witness innovations and Titansthe likes as we have never seen before.
What we call the New Economy is trulythe dawn of a new age, a Silicon Age. The numbers have been impressive: a 70%increase in real profits since 1990, inflation below 2%, 4. 5% unemployment, plusrising real wages, even for the lowest paid workers. The 1990’s have all theingredients in place for a further surge of innovation that could rival theGilded Ages. Over the next decade or so, the New Economy, so far propelledmainly by information technology may turn out to be only the initial stage of amuch broader flowering of technological, business, and financial creativity. Theeconomy seems to be undergoing a wholesale rejuvenation.
Businesses, financialservice firms, and universities are reinventing themselves. Even politicians andpolicymakers are starting to grasp the new technological and economicrealities. (Business Week). The New Economy or Silicon Age of the 21st CenturyEconomy will still resemble the economies of old in market behavior though.
Eachinnovative surge creates economic and social ills, from recessions tostock-market crashes to widespread job losses, and this one won’t be different. But that’s the price a nation must pay to achieve the benefits of dynamicchange.