We are now close to the end of the first half of calendar year 2002, and the U.S. economy just can't seem to recover. For the record, the stock market faithful were told by the "trusted financial analysts" that there would be a recovery in the second half of last year. But there was no second-half recovery. Instead markets have continued to decline, and, to make matters worse, there has been a massive accounting scandal involving the now bankrupt Texas-based energy firm Enron that has rattled markets further. The faithful are now being told that there will definitely be a recovery in the second half of 2002, so just hang on a little longer. One thing that has not been said is that if stocks keep losing ground through the second half of 2002--which seems highly likely at this point--then they will have been a losing proposition for three years in a row, something that hasn't happened since the 1930s and the period know as the Great Depression. In other words, it now looks like the U.S. is headed for a long slump similar to the one Japan is currently in.
A lot of these "trusted financial analysts" are quick to point out that the U.S. is different from Japan. It has more flexible capital and labor markets, they say, and hence it could never end up where Japan is today--digging itself out of a deep hole of debt. But I disagree. The U.S. is headed exactly where Japan is today for the simple reason that, like Japan in the latter half of the 1980s, the U.S. allowed credit creation to get out of hand in the 1990s, and the result is a deflating bubble economy in the U.S. Just as there was massive over investment in certain industrial sectors in Japan during the 1980s, the U.S. massively overinvested in telecoms and dot-coms in the 1990s; and, just as housing prices shot up to ridiculous levels in Japan in the 1980s, so they "continue to do so" in the U.S. in 2002. In fact, for those who love delicious irony, it should be pointed out that even the number of golf courses in the U.S. doubled during its bubble economy of the 1990s!
If there are differences between the U.S. and Japan, the advantage in those differences usually lies with Japan, not the U.S. For example, the majority of Japanese continued to save at a high rate during Japan's bubble economy, and considerably less people invested their life savings in stocks. In Japan, investing in stocks is considered a form a "gambling," and rightly so. Conversely, in the U.S., the savings rate at one time dropped to below zero, and nearly half of the population got involved in the U.S. stock market, which over the last couple of years has destroyed several trillion dollars of wealth. With the P/E ratios on the Dow and the NASDAQ still at very high levels, it is almost for certain that stocks will continue to decline in price, and when the U.S. housing bubble begins to deflate, the last store of wealth that Americans hold will begin to diminish in value. In short, the U.S. is about to head into a Japanese-style, decades long slump less prepared for it than Japan was.
So what does all this have to do with the TRON Project and computer technology? Well, as a result of a sinking economy in the U.S. and a stagnant economy in Japan, the profitless high-tech sector is no longer capable of paying the "Microsoft tax," and thus there is probably going to be a huge shift to open source/open architecture operating systems. IBM Corporation has gotten involved in GNU/Linux in a big way, and Apple Computer Inc. is betting its future on FreeBSD with a proprietary interface. Next month in Japan, the T-Engine project--which represents nothing less than a full blown revival of the TRON Project--is going to be launched, and there is tremendous interest in it by Japanese high-tech firms, probably because of the TRON success in the field of cell-phones. And so, the stage seems set for a significant realignment in the high-tech sector, not as the result of a fiendish plot against Microsoft, but rather as a consequence of harsh economic realities.
Those who remember the history of the TRON Project might say that this could lead to another round of USTR attacks on the TRON Project, but it is going to be exceedingly difficult for U.S. diplomats to face Japanese diplomats and demand Japan's high-tech firms purchase Microsoft operating systems while American firms move away from them. As I have written in a previous opinion piece, Microsoft's biggest mistake was to try to stamp out open systems, TRON being merely one of their targets. If Microsoft had participated in the TRON Project in good faith in the 1980s, it would have had a viable operating system to supply to Japan's cell-phone and handheld information appliance makers--no, Windows CE is not viable; it's already been tried--in the 1990s. Sure, they would have had competition from clone makers, but clone makers grow the market to the benefit of the dominant players, something they should have known from the history of the IBM-PC.
The moral of the Microsoft-versus-open-systems story is that it takes a decade or two for big mistakes in business to become obvious. But by the time things do become obvious, the course of business history has already been decided. Or, to put it more succinctly, great enterprises do not survive by paranoia alone. In addition, they also require a knowledge of history and a vision for the future. These are two things the TRON Project is firmly grounded upon.