Dave Mahorney
WRIT 121
23 February 2006

Riding the Techno Cycle

Most people remember the internet bubble that began before the turn of the last millennium. That bubble soon burst just a few years after it began. Many people can recall that their investments, IRAs, or 401k took a big loss when the bubble burst. The reason for the loss was many people had money invested in small businesses as a general fund. The small businesses that the portfolio managers were investing in were new dot com businesses. The market fell as a result of these businesses not creating enough revenue. This caused the loss of a significant amount of money from the average person’s investment. It in turn created an apprehension toward investing in new technology. However, booming technology bubbles and their bursting tendencies are a cyclical trends inevitable in the United States’ economy. Technology has three stages of development. The boom is the raising of capital and lying of the material framework. The bust is what happens when the masses start to acclimate to the technology and prices to utilize the technology fall. Finally, the true impact of the technology is when other sectors of the economy grow as a result of its culturization into society. This concept is brought to light by Daniel Gross’s article in the February issue of Wired magazine. I was surprised to find someone who agreed with my views, but I feel they need some elaboration.
The initial hype of a new technology brings with it an increase in the flow of money and economic prosperity. The building of the initial framework for a new technology brings with it new job opportunities. The US funded a grant for 30,000 dollars to help build the first telegraph lines. Later in history a railroad company capitalized on 100 million dollars in funding (Gross 120). The money raised by Exodus Communications and PSInet to build fiber optics was in the range of 30 billion dollars (Gross 120). These companies raised an amazing amount of capital to develop the latest technology. The amount of jobs that were created provided money for their workers. This helps money flow through the economy.
Culturization of a new technology creates a foundation that spurs economic turn-around after the technology bubble bursts. A culturization of technology comes when the masses have adapted to utilizing the new technology. This usually happens when the price of using the technology has decreased and can be afforded by the average person. Daniel Gross describes the building of these technological foundations and their results. From 1843 to 1852 the span of telegraph lines jumped from 2,000 to 23,000 miles. The companies that created it soon went bankrupt by 1860. Price per word fell and soon long stories from the Civil War battle fronts were transmitted over these lines. This resulted in the rise of the great newspaper empires (Gross 120). The railroad was another technology doomed to bust. Northern Pacific laid approximately 500 miles of tracks before going bankrupt. Thousands of miles were laid between 1870 and 1890. It wasn’t until the 1890s that the prices for transportation fell. People started using the trains for leisure travel. Sears Roebuck was one of the corporations that utilized the rail for transportation of catalog items (Gross 120). The recent development of the internet fell susceptible to the same cycle. Since inception people have been clamoring to get a piece of this technology’s real estate. Companies like Exodus Communications and PSInet initially produced 90 million miles of fiber optic cable for broadband use (Gross 120). The framework was laid but consumers were slow to follow. A Harris Interactive Poll reveals in 1995 there were 17.5 million subscribers to the internet in the US (Taylor par. 3). Nelson Ratings show that number has increased to 143 million subscribers (Burns par. 3). It takes some time before the masses can accept a new technology. People’s leeriness or inability to include the technology in their lives is what causes the bust of the technological bubble. The initial hype creates the framework, the masses soon follow and the technology becomes culturized.
The Phoenix like rise of a technology bubble after its burst helps to develop other sectors that surround or utilize the technology. Gross gives an example of certain sectors that exploded after certain technologies were culturized. The newspaper moguls flourished after the price of telegraph transmissions fell. Whole stories were transferred through wire across the continent enabling the rise of newspaper moguls. The stock market was introduced soon after the culturization of the telegraph. People were able to get up to date company information which resulted in the buying and selling stocks over a wire. Once the price of transportation on the railroads became feasible, other industries started benefiting. Retail began to boom due to the ability to sell across the continent. The housing market began to explode because people could relocate further. Leisure travel became popular and hotels thrived off the expanding business (Gross 120). Today is no exception. The lowering of broadband prices has enticed more people to be online. Retail has again benefited from online sales. Financial groups have thrived with the instant accessibility to portfolios. Mortgage and Loan companies and the housing market have seen a tremendous boom since the internet bubble. Part of the increase is due to low interest rates but the other is due to the online presence of these companies. People can refinance or look for a new home without leaving their living room. Technology has a way of reinventing itself that will help improve many different aspects of commerce as well as our lifestyles.
In conclusion the infamous technology bubble and its bursting are nothing more than cycles. The cycles are nothing to be frightened by. The economy may fall into a slight recession after the initial boom or hype of a new technology but it will soon recover. One suggestion for people is to start utilizing the technology. Once a person understands the new technology’s benefits it is possible to profit off a new enterprise. The US economy has seen many of these cycles and has come out of each bust driving the future.
Works Cited

Burns, Enid. “Active Home Web Use by Country, December 2005.” Par. 6 Nelson Net Ratings. 27 January 2006.
Gross, Daniel. “In Praise of Bubbles.” Wired February 2006: 120
Taylor, Humphery. “Those With Internet Access Continue To Grow But At A Slower Rate.” Par. 14. Harris Interactive. 5 February 2006.