The South Sea Bubbles Over

"Irrational exuberance pervades the stock market. Speculators pay ever-higher prices for shares despite scant evidence of underlying value. Skeptics warn that the bubble will burst," read a 1999 Harvard Magazine article about the South Sea Bubble. "This must be England in 1720."

Or, America in 2001. 

In the course of the last 18 months, we have witnessed the meteoric rise of the "dot-com" culture and its precipitous fall from grace. We have seen the hi-tech sector swing wildly from a frivolously innovative, idea-crazed economy to a paroxysmal and insecure market. And we have watched as consumer confidence and corporate capital spending became depressed by the deflation of the North American Tech Bubble. Yet despite the Wall Street tech wreckage, lowered earnings projections for Silicon Valley companies, and the economic doomsday rhetoric meted out by President Bush, this is neither the end nor the culmination of the Internet's promise of a seamlessly wired world. Rather it is a period of synthesis, of the absorption and deployment of many of the brilliant — and occasionally half-baked — technologies that have flooded our minds and our newscasts since the mid-1990s.

In Chicago earlier this week, U.S. House Speaker Dennis Hastert addressed a crowd of Internet executives at the technology trade show Comdex. He said he was "bullish when it comes to the technology economy", and asserted that "the technology sector is going to keep this economy strong. You are our future; your businesses are our future."

Why the apparent dichotomy between economic indicators and Hastert's optimistic address?

The Internet was supposed to revolutionize "everything" — from the way we communicate with one another to the way we plan our daily lives, manage our finances and do business. The reality is that not a whole lot has changed. The technology learning curve is still extremely steep, and no single technology can be expected to be the panacea that every downtrodden entrepreneur hopes will make him successful. Businesses still need to turn a profit. Retailers still must charge customers shipping and freight to offset their own real costs. And ultimately, online customer service cannot succeed unless there is a human voices behind it. Remember, the invention of electric lights in the 19th century dramatically increased the amount of productive hours in a day, but did nothing to improve a person's life expectancy.

Instead, the promise of the Internet is being felt most strongly in specific, information- and communications-intensive sectors of the economy, rather than equally and everywhere, as technologies such as wireless and broadband are more extensively rolled out. These areas include: finance and banking, health care and insurance, education, government, entertainment, information retrieval services, and corporate knowledge-bases used for storing employee expertise. Web- and non-Web-based information technologies will thrive on the Internet because of the ease at which students, corporations and governments can collaborate and exchange ideas, evaluate product lines, or retrieve and store information on wireless hand-held devices anywhere in the world.

Fundamentally, the Internet is a communications infrastructure, a conduit that facilitates the cheap, global and immediate sharing of information across physical and political boundaries. The World Wide Web is just one of those conduits through which to transmit humanity's accumulated knowledge — with text, pictures and sound. Similarly, email, instant messaging and newsgroups create communities out of geographically isolated strangers with common hobbies and talents. Today's cutting-edge technologies promise to filter that knowledge and serve to the consumer only the information they need, wherever they are in the world, without the constraints of centralized servers, phonelines and slow-loading, unwieldy web pages. These devices include highly specialized, "smart" appliances such as wireless Internet-enabled mobile phones, that will enable businesspeople "in the field" to communicate more efficiently than ever, yet without the functions of regular computers that they don't need.

The North American Tech Bubble may have burst, but the promise is just unfurling.


Michael Tanenbaum