As
one can see there are many striking parallels between the Gilded Age or the era
from the eighteen eighties to the eighteen nineties compared to the Silicon Age
of the nineteen eighties to the nineteen nineties. The preconditions for these
two massive economic booms share similar birth paths laid in laissez faire
policy, no regulation or deregulation and innovative booms. Before the 1880’s
there was no real conflict between the welfare of the American people and that
of its business units. That happy relationship lasted only until the 1880s. Big
business or Trusts, appeared in the United States during that decade. Once they
were established, it grew faster and to a larger size than it did elsewhere. One
reason was the absence of any countervailing force in America. A new country
made up almost entirely of immigrants, who needed jobs, big business was
welcomed and a favorable economic policy provided a catalyst for there birth.
These economic conditions gave rise to innovators, monopolists, and most
importantly, rugged individuals who changed the landscape of the worlds economy
forever. Their huge personalities went hand in hand with the vast size of their
empires. The problems big business raised provoked a powerful public response
that immediately moved into the realm of the political economy and provided for
a change in the leniency of laissez faire. In the closing years of the
nineteenth century, the United States became the only major industrial power to
enact legislation explicitly designed to curb the power of large corporations.
Congress passed the Interstate Commerce Act in 1887, the Sherman Antitrust Act
in 1890, and the Federal Trade Commission and Clayton acts in 1914. The Sherman
Antitrust Act remains the most stringent in the world. The nineteen eighty’s and
more importantly Ronald Reagan’s election victory was the catalyst for the
Silicon 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 off
enforcement of these anti trust and anti business laws, but went as far as
dropping the Governments case anti trust cases. The stagnant equity markets
began to take flight and the greatest bull market continues 15 years later.
Coupled with major tax cuts and financial market innovations, an era of
technological revolution appeared. This Era would witness innovations and Titans
the likes as we have never seen before. What we call the New Economy is truly
the 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, plus
rising real wages, even for the lowest paid workers. The 1990’s have all the
ingredients in place for a further surge of innovation that could rival the
Gilded Ages. Over the next decade or so, the New Economy, so far propelled
mainly by information technology may turn out to be only the initial stage of a
much broader flowering of technological, business, and financial creativity. The
economy seems to be undergoing a wholesale rejuvenation. Businesses, financial
service firms, and universities are reinventing themselves. Even politicians and
policymakers are starting to grasp the new technological and economic
realities.(Business Week). The New Economy or Silicon Age of the 21st Century
Economy will still resemble the economies of old in market behavior though. Each
innovative surge creates economic and social ills, from recessions to
stock-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 dynamic
change.
