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WE’RE being presented with a pretty stark choice these days by the competing brands of financial forecasters. On one side are the “new paradigm” people, led by techno-optimists such as Wired magazine, some Forbes editors, and the Weekly Standard. Then there are the prophets of doom, including Jim Grant and his Interest Rate Observer crowd, Norman Macrae, the former deputy editor of the Economist, and naturally, the goldbugs and short-sellers who are still alive. The question is this: Are we in a replay of 1929 or at the beginning of the Age of Aquarius? Does the “technology” revolution mean that the business cycle has been repealed?

No. It doesn’t. I put the word technology in quotes because new-paradigm people seem to forget that there have been technological revolutions in the past. For example, the electric motor and the automobile-which respectively revolutionized the supply and the demand side of American life in the 1920s-did not change human nature. Manufacturers using decentralized power sources still overbuilt their plants, and newly mobile consumers overborrowed for houses and goods and overbought stocks. The U.S. Government, which at the end of the decade was presided over by one of the best educated, most accomplished social planners of the century, still didn’t know what was going on in front of its very eyes.

JD

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John Dizard

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WE’RE being presented with a pretty stark choice these days by the competing brands of financial forecasters. On one side are the “new paradigm” people, led by techno-optimists such as Wired magazine, some Forbes editors, and the Weekly Standard. Then there are the prophets of doom, including Jim Grant and his Interest Rate Observer crowd, Norman Macrae, the former deputy editor of the Economist, and naturally, the goldbugs and short-sellers who are still alive. The question is this: Are we in a replay of 1929 or at the beginning of the Age of Aquarius? Does the “technology” revolution mean that the business cycle has been repealed?

No. It doesn’t. I put the word technology in quotes because new-paradigm people seem to forget that there have been technological revolutions in the past. For example, the electric motor and the automobile-which respectively revolutionized the supply and the demand side of American life in the 1920s-did not change human nature. Manufacturers using decentralized power sources still overbuilt their plants, and newly mobile consumers overborrowed for houses and goods and overbought stocks. The U.S. Government, which at the end of the decade was presided over by one of the best educated, most accomplished social planners of the century, still didn’t know what was going on in front of its very eyes.