Innovation and junk: are both good?

There are small pockets of very bright and industrious people who are collaborating on creating innovative technology, and ultimately higher value for consumers, whether it's faster, smarter computers, faster bandwidth pipes, the treatments or cures for illness and disease, or sustainable technology. Private industry is holding hands with university labs. And there is even cross-national corroboration. But America needs to remain a major player in this innovation process, even if we are no longer the only or even biggest player.

The will to develop new technologies is there, but the government needs to not get in the way of innovation, because that is the only way we'll grow out of this mess. The early 90's recession didn't prevent research labs from rolling out to the masses internet access--in fact, it catalyzed and spawned the great tech boom. Sure, there was the requisite aftermath of a bust, but that comes with the territory (steps need to be put in place to dampen volatility--that's another topic).

But with every boom/bust cycle, there has been a huge residual benefit. The junk bond scandals actually birthed a whole new industry of alternative financing previously inaccessible to most companies. Junk bond financing and deregulation created a multitude of competitors for Ma Bell, ushering in a new era of innovation ranging from long-distance service to internet protocol (much later). Without junk bonds, there would have been no MCI or Sprint--at the time, banks certainly weren't lending to them.

Junks bonds and venture capital also financed innovation in computers, creating a whole cottage industry for funding high-tech startups. Junk bonds also forced incumbents to streamline operations via leveraged buyouts.

So yes, recessions are a necessary cleansing process of excesses. But they also naturally fertilize intense innovation which leads us to the next recovery. The ability to see around corners is priceless. We need to enable these tech soothsayers to play with their toys, because those are the toys that will put food on our tables when they become pervasive.