Sunday, July 23, 2006

We're irrationally exuberant about alternative energy—but that's good:

So, why isn't anyone panicking? In 2001 and 2002, when the postmortems of the dot-com era were written, it was easy to declare the whole thing a failure and a scam. But with the passage of time, another picture has emerged. In a process that has repeated itself throughout history—with the railroad and telegraph, for example—investment bubbles frequently kick-start new industries and leave behind innovations and commercial infrastructure that others can use. The fiber-optic cable and dot-com business infrastructure that was rolled out in the 1990s wasn't simply abandoned. Second-generation entrepreneurs and companies have used it to great effect. The excessive investment in infrastructure may have set off ruinous price wars in 2000. But it also led to the swift rollout of broadband and sharply reduced prices of Web-hosting and data transmission. Google, MySpace, Flickr, YouTube, and iTunes—all these highly successful, quality-of-life-improving businesses—were built on the wreckage of the dot-com era. As consumers, investors, and workers, in other words, we've all been enriched by the fruits of the dot-com boom. It just took a while.