The Biggest Business Story of the Next Five Years

The Biggest Business Story of the Next Five Years By Conor Sen June 7, 2016 One of the most influential business opeds of the decade was Marc Andreessen’s August 2011 piece in the Wall Street Journal, “Why Software is Eating the World.” It was written during a period where business and economic people were still focused on the financial crisis, while European government debt was imploding, and while the U.S. Congress was contemplating defaulting on the national debt. Not many people were focused on technology. Fast forward five years, and “software is eating the world” and “disruption” have become business and tech gospel, akin to expressions from the late 1990s like “new paradigm.” Over that time period, the stocks of Apple and Microsoft are up more than 100 percent, Google and Netflix 200 percent, Amazon 300 percent, Tesla 800 percent, and Facebook has become a public $300 billion company. Uber has a private market valuation of more than $60 billion. The combined market caps of those seven companies is over $2.3 trillion. Collectively, they still have much growth ahead of them, but from a business power standpoint, these companies have become like WalMart and General Electric in the 1990s, and they’re best thought of as incumbent titans rather than small upstarts with a large greenfield in front of them. Regulators have begun kicking the tires on the business practices of most of these companies. Some are even talking with confidence about self-driving cars and drones and virtual reality. Marc should declare victory. The bigger business story over the next five years is, however, going to be something different: a capacity on strained U.S. economy where the housing sector is taking “inputs,” like labor and capital, from all other sectors. Housing is set to eat the U.S. economy. One way to show how much more growth housing, and construction more generally, has in front of us is to look at construction’s share of total employment. It’s currently 4.6 percent, and in every cycle...