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For roughly the last 15 years the Fed’s reckless “easy money” zero interest rate policy (ZIRP) has encouraged more than just gratuitous speculation in assets like stocks, cryptos and housing.
In undermining our sense of the value of “money” by encouraging imprudent uses of artificially cheap debt and discouraging thoughtful uses of real earned productive capital, the Fed has warped and distorted our entire economic system thereby creating the “Everything Bubble”.
But this “Everything Bubble” is NOT constrained to just obviously absurd examples of strictly financial anomalies like high flying speculative assets or the seriously distorted and sorry state of public finance; “Everything” truly refers to EVERYTHING.
Over this historically anomalous period, the Fed’s “easy money” worked to “zombify” firms, households and institutions alike creating a massive mis-allocation of resources across the entire spectrum of decisions rendered by all free market actors including those decision related to business investment, household formation, higher education, career planning, campaign finance and ultimately our culture.
It should come as no surprise that while we are witnessing the most historic crescendo in financial markets, we are simultaneously experiencing some of the most outlandish human excesses in our social, political and cultural spheres as over a decade of massive mal-investments in people’s time, attention and resources has materialized as a truly distorted society with ideals aligned with fantasy and delusion.
Fortunately, as goes this financial crescendo so will go all of these excesses too as our economic trends revert to the mean and a harsh reality bears down on humanity forcing a “rightsizing” of sorts on everyone and everything.
For example, the recent “rightsizing” of Twitter by Elon Musk’s aggressive management actions, while still a work in progress, may be a real harbinger of things to come for software tech and technology industry employment in general.
To say that the technology space is bloated is a serious understatement as many years of mal-investment have manifested in epic excesses not the least of which are employment levels that are well over what is truly required for the fundamental viability of individual projects, services, firms and the industry as a whole.
An over-emphasis on the value of STEM disciplines was made possible by loose financing of higher education coupled with the simplistic notion that all students should be funneled into highly technical fields where prosperity was virtually guaranteed.
The problem, of course, is that while many young people may superficially display the capacity for STEM education, there is no guarantee that these fields will be correct for these people’s long-term career viability.
Stated simply, no matter how you encourage education and training in technical fields, probably no more than a few percent of the workforce will ever truly be able to make an entire 40 year career out of highly technical disciplines like physics, scientific research and electrical and software engineering.
That’s not to say that it is wrong to encourage technical and scientific education but only that ultimately all of our educational goals should be aligned with the fundamental workforce demands brought about by a reality-based highly competitive modern economy and NOT the grossly speculative “easy money” debt-fueled period we have all just lived through.
Further still, more recent innovations in technical project management techniques (namely, “agile development”, a full description of the pros/cons of this technology management process would be far too lengthy for this discussion) have allowed significant staff and process bloat where there is an over-emphasize human “storytelling” foibles, a lack of scrutiny of actual hours worked (particularly for remote staff) and ultimately and under achievement of true reality-based accomplished work.
To “rightsize” the technology industry, executives will have to follow Musk’s lead and drastically reform their operations with major layoffs, the implementation of management techniques that verify commitment and real work performed, and a significant curtailing of many of the superfluous luxuries tech workers have grown to expect over the last decade.
As we leave the delusional “Everything Bubble” years far behind, getting “back to basics” will be difficult but ultimately a healthy trend towards a reality-based future.