Crocodilian

What If the Economic Model Is Wrong?

What aspect of "the model" would seem to you to be in question?

Good economists and businessmen long ago identified high levels of debt, low investment in our own infrastructure and human capital, low savings rate and arcane financial derivatives as a threat to prosperity.

They turned out to be exactly that. "The models" indicated that our policies would end badly, and they have.

Neither the Starbucks nor the Microsoft case are convincing. Microsoft has been fantastically successful, but the whole point of "the model" is that if a firm stops innovating, its _supposed_ to lose market share. That's how Microsoft ate IBM's lunch after all. Microsoft's been on top in the technology world for two decades. That's a good run, and "the model" all suggests that we'll all be better off if their position erodes. As Microsoft fades, Google and Apple have innovated dramatically . . . that's what "the models" say we _want_ to see happen.

Similarly, Starbucks grew extremely rapidly, saturated the market, and now will retrench, and adjust its business model to a low-growth environment. There's nothing in "the model" that suggests that a company with nearly 20,000 stores can grow quickly.