Sex, Technology and The Economy

Glad to get into Valleywag for something funny – this little piece called Chris Heuer’s grand unified theory of porn, tech, and the economy is from a short video interview I did with Sarah Meyers. Follow the link to Valleywag to view the video…

I could have actually gone faster to get it under a minute as she requested, but thought I would try to make some of it understandable. This isn’t something I would normally speak on, but since Sarah asked, I obliged – her stream is a probably a more thorough exposition of some of my thoughts on this, though perhaps equally incoherent in spots as I was digging deep to remember the correct citation while trying to make the story structure support my point – which I failed at as evidenced by the Valleywag commentary.

In the session at BarcampBlock before this interview, entitled Web 2 dot oh (or uh oh), we were discussing the economic state of Web 2.0 and leading indicators. Sarah wrote about the session, and showed I did not o well at making my point there at all – you try explaining the economics of population size in 140 characters or less…

My point was related to the fact that economic cycles, the upturns and downturns, are driven by many different factors. I brought up the point that one of the biggest factors driving the economy is actually sex (and I am getting this from esteemed authors, not from deep dark corners of the net). By this I mean, all the returning soldiers from WWII came home and created the Boomer generation. As that huge burst in our population ages and moves through life stages, there are different major spending events – go to college, first house, big promotions, enterpreneurism, kids in college (how many kids are they having), kids move out/downsize house, kids have kids, retirement, grandkids, grandkids in college etc…

This cyclical aspect of the economy, predicated on how large the population is growing or shrinking relative to their life stages, makes a major impact on whether the economy is strong or weak. It is not the only factor, but a large one nonetheless.

I referenced the work of Paul Zane Pilzer in this regards, but the book that I should have referenced, where such theories were featured more prominently, was in the Roaring 2000’s by Harry S Dent. Dent is more of a management consultant, coming out of Harvard Business School whereas Pilzer is an economist.

According to a 2000 Businessweek article based on Harry’s predictions entitled “Call it a Boomer Boom

“The 80 million or so boomers–those born between 1946 and 1964–are hitting their peak earning, spending, and investing years, and that’s what’s driving the economy’s incredible performance”

An interesting metaphor he used was in this quote on the Stone Creek Wealth Advisors site:

Studying the spending and investing habits of this current “Baby Boomer” bulge that is rapidly changing our society, is like a snake that swallowed a pig. You can easily see the progress of the snake’s meal as it moves through the snake.

While Dent is ostensibly way off in his 2000 prediction of a 40,000 level Dow by 2008, his basis for such optimism holds water. The Businessweek article goes further to state

“In Dent’s view, the economy goes into a deflationary funk for another 10 or so years, until the boomers’ children–the 83 million ”echo baby boom” generation–reach their economic prime.”

Where Dent was seemingly right on track was in regards to his predictions from 2004 for the second part of this decade. From an article from Bank Technology News on Finadarticles called Harry Dent Say Prepare for Boomer’s Aging, he shaes some interesting and timely insights

He paints several broad trends. The first is that thanks to Boomer spending and increased productivity, the economy will be stronger in the second half of this decade than is generally believed. Second, financial services will be stronger than the overall economy as Boomers pick up their savings rate in preparation for retirement. The growth areas will be investment services, not lending and consumer finance. “Banks should be positioned for stronger growth, and growth will come from the investment side and retirement, more than mortgages and consumer finance,” Dent says.

In a Wired Magazine Interview in 1999 with Kevin Kelly, Dent said

Bull markets end when a generation stops spending and stops being more productive as workers. Our growth boom will end around 2008 or 2009, as the boomer generation begins to cut its spending. We’ll see falling prices, high unemployment, and massive consolidation in industry.

Of course, at the time, the trends did not show how much longer boomers were willing to stay active in the work force, nor did it accurately predict the productivity enhancements that the widespread adoption of the Web brought forth. Most importantly, the procutivity gains to be realized should Enterprise 2.0 become a widely adopted trend will further alter the timing of any potential bust he references. This however, does not totally remove the microeconomic impact on spending that population and life stages has on the overall economy – but it certainly does change the odds and the possibilities.

Despite many incorrect predictions from Dent and other economists, I still maintain that sex drives the broader economy, it certainly has influenced technology and it plays its own unique role in all emerging markets (and marketing).

It was a great session though – I wish someone would have posted the notes to the wiki

  1. #1 by Tris Hussey - August 21st, 2007 at 20:53

    You’re right on the money Chris. Have you read Boom, Bust, and Echo? Similar ideas and such.

  2. #2 by Chris Heuer - August 22nd, 2007 at 03:05

    Not yet – but I will add it to the pile of great books I should read attentivvely but choose not to in order to watch 24/Lost/Heroes, play video games and drink great wine 🙂

  3. #3 by lelord - November 26th, 2008 at 06:26 the facebook porn

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