Hype, boom, and bust

It was in the year 2000 and I had the best, and the best-paying, job I’ve ever had for any length of time, a job that had lifted me out of the San Francisco taxi business. I’d been there a few months, long enough to start taking my new standard of living for granted, when, one day, I was looking at my boss, one of a few I had at Linuxcare. His background was not in technology, but rather in business. I don’t remember his name and I don’t remember what extravagance was playing out before us, but I asked him, “This doesn’t make any sense at all, does it?”

“No,” he answered softly, “it doesn’t.” I sat down beside him and we watched the spectacle. In the hallowed name of getting “professional management, our venture capitalists had displaced Linuxcare’s founders (who would later return to try to recover a company that was by then perhaps beyond repair). It may only have been rumor that “professional management” really meant people the venture capitalists had met on the golf course, but we were definitely spending a lot of money, apparently attempting to achieve success by projecting the illusion of success, and acting as if we were in a contest to burn through incredible amounts of venture capital cash in record time.

My boss took his business background and moved on shortly after that conversation. His departure went unnoticed and unremarked. He was just gone and it seemed like it was a while before I had a new boss.

We moved to new, more expensive, and definitely nicer looking offices downstairs that were meant to be permanent and I eventually got bumped up from an independent contractor to an actual Linuxcare employee. That meant that where I had before been barred from “all hands” meetings, now my attendance was mandatory.

I rapidly learned that “all hands” meetings were not about any deep, dark company secrets, but instead were really pep rallies for the employees. Thankfully, there were no chants in unison, but there were certainly cheers. We were supposed to feel good coming out of these meetings, even if some of the promises of a bright future seemed a little hollow.

I’m still in contact with a couple of the founders of Linuxcare and even though I landed hard (and still haven’t recovered) coming out of the Dot-Com Bust and they landed on their feet, I still think well of them. Honestly, I think Linuxcare was one of the few good ideas in the Dot-Com Boom, but like a lot of start-ups, both good and bad, it was reduced to a shell of its former self, then swept away entirely, when venture capitalists folded up their checkbooks. Even so, I remember one of the founders speaking at one of these “all hands” meetings and thinking to myself, “He really believes his own hype, doesn’t he?”

I have not been gainfully employed since and the Dot-Com Bust seems like ancient history now. In that time, I’ve finished a Bachelor’s degree, earned my Master’s, and am now about to begin work on a dissertation for a Ph.D. While I was finishing my Master’s degree, I was encouraged to teach public speaking, at a wage even lower than that offered adjuncts, and I remember getting into a classroom discussion with my students. They were—and honestly, I was surprised by this—transfixed by my story of the Dot-Com Bust. But I was also warning, based on the accounts I saw in the news, that we were headed for another possibly devastating crash, which indeed materialized in 2007 through 2008.

Now, late in 2014, the financial markets are taking a dive, and already, it seems, we may be headed for yet another crash.[1]

And I read Laura Gottesdiener writing about oil workers on the Bakken field in North Dakota:

Many proved surprisingly aware of the way that flaring off the natural gas that surges out of the drilled wells contributes to global warming or how spilled wastewater from the hydro-fracking process can sterilize land. I’d even met one former river guide turned oilfield worker who texted me an entire Terry Tempest Williams poem upon my departure.[2]

And, she writes,

[T]he region displays all the classic contemporary markers of hell: toxic flames that burn around the clock; ink-black smoke billowing from 18-wheelers; intermittent explosions caused by lightning striking the super-conductive wastewater tanks that hydraulic fracturing makes a necessity; a massive Walmart; an abundance of meth, crack, and liquor; freezing winters; rents higher than Manhattan; and far, far too many men. To oil companies, however, the field is hallowed ground, one of the few in history to break the million-barrel-a-day benchmark, earning it “a place in the small pantheon of truly elite oil fields,” as one Reuters market analyst wrote.[3]

You might not call a Wal-Mart extravagant, but Gottesdiener’s description of this boom in North Dakota[4] is, in its own way, just as unreal as my experience with the Dot-Com Boom. One could, I suppose, insist that the economy is separate from the environment and thus ignore the dissonance of workers knowing that what they’re doing on a massive scale can’t go on.

But there’s more. Rents in San Francisco are sky-high as a few technology companies are riding high again, as Silicon Valley has spread out to encompass San Francisco and Oakland, as tensions have arisen between relatively flush technology workers and longer-term residents who are being displaced, and as technology companies choose which workers are worth relatively high wages and which are not.[5] Just as in the Gold Rush, not so far from San Francisco, people working in the boom need a lot of people outside the boom, people who provide essential services, and who need to be able to afford a cost of living that has escalated because of the boom. But I guess to accommodate service workers’ needs would be called redistribution and with a neoliberal ideology, that’s out of the question.

The result, I think, is that both these booms, in the Bakken field and in San Francisco, are unsustainable, even in the very short term.  And yes, I’m feeling that feeling of deja vu all over again.

Neil Irwin writes of the bust the markets are worried about, “It’s a lot better than being in the throes of a financial crisis the way the world was in the fall of 2008. But it’s not a terribly sunny place to be six years later.”[6] I hear the rumblings of deflation,[7] however, and one fear with deflation is that people and companies will defer spending in hopes of lower prices in the future. For a deleveraging economy,[8] where there already isn’t enough spending,[9] this would be about the worst possible scenario. If I’m understanding correctly, it could be a lot worse than in 2008.

  1. [1]Neil Irwin, “The Depressing Signals the Markets Are Sending About the Global Economy,” New York Times, October 15, 2014, http://www.nytimes.com/2014/10/16/upshot/the-depressing-signals-the-markets-are-sending-about-the-global-economy.html; Paul Krugman, “Revenge of the Unforgiven: How Righteousness Killed the World Economy,” New York Times, October 12, 2014, http://www.nytimes.com/2014/10/13/opinion/paul-krugman-how-righteousness-killed-the-world-economy.html
  2. [2]Laura Gottesdiener, “A Trip to Kuwait (on the Prairie): Life Inside the Boom,” TomDispatch, October 12, 2014, http://www.tomdispatch.com/blog/175906/
  3. [3]Laura Gottesdiener, “A Trip to Kuwait (on the Prairie): Life Inside the Boom,” TomDispatch, October 12, 2014, http://www.tomdispatch.com/blog/175906/
  4. [4]Laura Gottesdiener, “A Trip to Kuwait (on the Prairie): Life Inside the Boom,” TomDispatch, October 12, 2014, http://www.tomdispatch.com/blog/175906/
  5. [5]Ian P. Beacock, “Silicon Valley’s Empathy Problem,” Chronicle of Higher Education, October 9, 2014, http://chronicle.com/blogs/conversation/2014/10/09/silicon-valleys-empathy-problem/;  Projjal K. Dutta, “The Dark Side of Tech Buses for Cities,” UBM’s Future Cities, February 25, 2014, http://www.ubmfuturecities.com/author.asp?section_id=348&doc_id=526610&; Erica Goode and Claire Cain Miller, “Backlash by the Bay: Tech Riches Alter a City,” New York Times, November 24, 2013, http://www.nytimes.com/2013/11/25/us/backlash-by-the-bay-tech-riches-alter-a-city.html; Andrew Gumbel, “San Francisco’s guerrilla protest at Google buses swells into revolt,” Raw Story, January 25, 2014, http://www.rawstory.com/rs/2014/01/25/san-franciscos-guerrilla-protest-at-google-buses-swells-into-revolt/; Claire Cain Miller and Erica Goode, “Making San Francisco Accessible to More Than the Tech Elite,” New York Times, November 26, 2013, http://bits.blogs.nytimes.com/2013/11/26/who-is-responsible-for-making-sure-san-francisco-is-accessible-to-everyone-not-just-the-tech-elite/; Nathaniel Mott, “From Amazon warehouse workers to Google bus drivers, it’s tough working a non-tech job at a tech company,” Pando Daily, October 9, 2014, http://pando.com/2014/10/09/from-amazon-warehouse-workers-to-google-bus-drivers-its-tough-working-a-non-tech-job-at-a-tech-company/; Will Oremus, “Eviction protesters block Google bus in San Francisco: Fake video of Google employee goes viral,” Slate, December 9, 2013, http://www.slate.com/blogs/future_tense/2013/12/09/eviction_protesters_block_google_bus_in_san_francisco_fake_video_of_google.html; Norimitsu Orishi, “New San Francisco Tech Boom Brings Jobs but Also Worries,” New York Times, June 4, 2012, http://www.nytimes.com/2012/06/05/us/san-francisco-tech-boom-brings-jobs-and-worries.html; David Streitfeld, “Activists Accuse Tech Community of Throwing San Francisco Under the Bus,” New York Times, January 21, 2014, http://bits.blogs.nytimes.com/2014/01/21/activists-accuse-tech-community-of-throwing-san-francisco-under-the-bus/
  6. [6]Neil Irwin, “The Depressing Signals the Markets Are Sending About the Global Economy,” New York Times, October 15, 2014, http://www.nytimes.com/2014/10/16/upshot/the-depressing-signals-the-markets-are-sending-about-the-global-economy.html
  7. [7]Paul Krugman, “Revenge of the Unforgiven: How Righteousness Killed the World Economy,” New York Times, October 12, 2014, http://www.nytimes.com/2014/10/13/opinion/paul-krugman-how-righteousness-killed-the-world-economy.html; Neil Irwin, “The Depressing Signals the Markets Are Sending About the Global Economy,” New York Times, October 15, 2014, http://www.nytimes.com/2014/10/16/upshot/the-depressing-signals-the-markets-are-sending-about-the-global-economy.html; Alison Smale and Liz Alderman, “Germany’s Insistence on Austerity Meets With Revolt in the Eurozone,” New York Times, October 7, 2014, http://www.nytimes.com/2014/10/08/business/rift-opens-among-eurozone-leaders-over-germanys-insistence-on-austerity.html
  8. [8]Ryan Chittum, “The ‘downright dangerous’ Paul Krugman,” Columbia Journalism Review, October 30, 2012, http://www.cjr.org/the_audit/inside_the_bubble_with_cnbc_an.php; Paul Krugman, “Is Our Economy Healing?” New York Times, January 22, 2012, http://www.nytimes.com/2012/01/23/opinion/krugman-is-our-economy-healing.html; Paul Krugman, “How the Case for Austerity Has Crumbled,” review of The Alchemists: Three Central Bankers and a World on Fire, by Neil Irwin, Austerity: The History of a Dangerous Idea, by Mark Blyth, and The Great Deformation: The Corruption of Capitalism in America, by David A. Stockman, New York Review of Books, June 6, 2013, http://www.nybooks.com/articles/archives/2013/jun/06/how-case-austerity-has-crumbled/; Paul Krugman, “Revenge of the Unforgiven: How Righteousness Killed the World Economy,” New York Times, October 12, 2014, http://www.nytimes.com/2014/10/13/opinion/paul-krugman-how-righteousness-killed-the-world-economy.html; Robert Reich, “Tim Geithner and the Wall Street Bailout Redux,” May 13, 2014, http://robertreich.org/post/85654652535; Robert M. Solow, “How to Save American Finance from Itself: Has financialization gone too far?” New Republic, April 8, 2013, http://www.newrepublic.com/article/112679/how-save-american-finance-itself
  9. [9]Jared Bernstein, “How the Jobless Rate Underestimates the Economy’s Problems,” New York Times, October 1, 2014, http://www.nytimes.com/2014/10/02/upshot/why-the-fed-needs-to-keep-fighting-to-lift-the-job-market.html; Elias Isquith, “The economy still sucks: Economist Stephanie Kelton on why we can’t declare victory just yet,” Salon, October 4, 2014, http://www.salon.com/2014/10/04/the_economy_still_sucks_economist_stephanie_kelton_on_why_we_cant_declare_victory_just_yet/; Lynn Stuart Parramore, “50 Is the New 65: Older Americans Are Getting Booted from Their Jobs — and Denied New Opportunities,” Alternet, December 22, 2013, http://www.alternet.org/economy/age-discrimination-workplace; Jennifer Rubin, “Getting the voters who reject Obama economics,” Washington Post, October 7, 2014, http://www.washingtonpost.com/blogs/right-turn/wp/2014/10/07/getting-the-voters-who-reject-obama-economics/

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