Idealog

A new economy? Not yet

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I REMEMBER SEPTEMBER 1998 with great clarity. It was the month I was first employed as an editor for start-up magazine Unlimited. Earlier that year I pitched an idea to the publisher for a new approach to business journalism, styled on American mags such as Red Herring and Fast Company.

Full of verve for the ‘New Economy’ I imagined Unlimited as the champion of change as we bravely overthrew the shackles of old management styles, old industries and old excuses for New Zealand’s failure to thrive, such as distance to markets or a lack of capital.

New Zealand was on the cusp of a major upheaval for the better and we would be there to record the action, if not foment it.

Sixteen years on it’s easy to dismiss that enthusiasm as naiveté. It’s true that the New Economy never really happened. Dairy remains our dominant industry, commoditie­s have actually grown as a proportion of exports, capitalism remains largely unchanged and funky Silicon Valley start-ups are now global behemoths who behave much like their Old Economy predecesso­rs.

And yet as the cover story in this issue shows, profound change has occurred. John Raine from AUT is right to remind us that in 1998 there was no venture capital, incubators, tech-transfer offices or even a tech sector to speak of. These now all exist, sometimes even profitably. Telecom’s been busted up, we’re installing fibre across the land, the largest listed company for a moment was Xero, TradeMe is now so embedded it’s become wallpaper and the ‘disinterme­diation’ (now there’s a word from 1998!) that these companies bring is rolling across all industries.

The revolution didn’t happen quite as I expected, but I suspect that Roy Amara’s law applies: “We tend to overestima­te the effect of a technology in the short run and underestim­ate the effect in the long run”. The Digital Economy, as it is better named, is powerfully disruptive and the changes it brings are profound.

The New Economy hasn’t happened. It’s only just begun.

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