Quick Rant on Capitalism, Deflation, and Entrepreneurship

A fellow entrepreneur forwarded me yet another link about a logo design competition that got me thinking about entrepreneurship and the economy.  Summarizing this particular site, it listed a variety of projects that artists could enter to submit a logo, and the winner would take home a modest amount of prize money for their efforts.  Specifically, this particular site had hundreds of entries for each submission, giving each artist a very low chance of winning for not a lot of money.

Something about this really rubbed me the wrong way for a variety of reasons.  But I think the thing that really got to me is the realization that deflation is hitting our information workers just as hard as it is hitting our auto workers, our iron workers, and our manufacturing base in America.  And when a Web site can go live, effectively helping a single company with a meager budget find hundreds of fantastic logo designs... then maybe the Web has truly become a deflationary force of its own.

I'm as much a hard core capitalists and disciple of Ayn Rand as anyone, but I can't help but think that sites for things like logo competitions are ridiculously exploitive and ultimately bad for everyone involved.  NOBODY benefits from a winner-take-all economic system where just about everything is a commodity... where there is no middle-class... and where there are a few winners and a whole lot of losers. 

Ordinarily, I would say that this is a positive step.  People can/should redefine themselves to be more productive members in society.  But what is our next step as a country?  Put differently, if you could retrain or re-educate yourself, what would you do?  As far as I can tell, anyone who isn't in the health care business is in for a rough patch... and especially if we use available technologies to commoditize work and not maximize economic value from it.

Comments

[Adam Leonard]

If you really want to see evidence of this go to a site like stockphoto.com. It used to be that full time photographers would work full-time on their art taking really high quality pictures and licensing them for use and make decent living on them (assuming they were any good).

Now anybody with 3.2MP digital camera can take hundreds and hundreds of pictures for fun and if some of them come out really good (or can be easily photoshopped), they can upload them to stockphoto.com and get paid if someone is interested in using them. Of course, since they are amateurs who aren't using this as real income, they accept a lot less than the pro.

[Chris Treadaway]

Another great example.

I guess it's the nature of technology. But at a certain point, there isn't enough work for all the pros to move up the value chain. So deflation occurs -- more people chasing after fewer dollars means that everyone's wages are reduced. If large #s of formerly professional people can't find gainful employment and others make a fraction of what they were making before, there will be civil unrest.

But what bothered me more than anything else is the realization that the Internet has swung dramatically from being an inflationary force to a deflationary force with little/no warning.

[Monty Kerr]

First comment: Love the blog; it's really fantastic work and I suspect that I'll be a regular reader. I'm also looking forward to meeting you tomorrow.

Secondly: Here's a place where we diverge in our opinions, but I think you are missing another angle on this one.

I recently used one of these services to get a new logo for our company (here's the link to the contest: http://99designs.com/contests/12834). It was a fantastic experience.

Most of the entries were from people trying to improve their skills in graphic design. Winning would've been nice, but that's not why they were there. They commented and gave feedback on other designs and they learned about working with a client to iterate their designs.

I don't think that this is the technical equivalent of a Nike sweat shop or a new way of outsourcing graphic design. Its a fantastic B2B model that puts skilled artists within reach of small businesses. Sure, it's a new model but one that is uniquely suited to the new socially networked world we live in. There's always fallout when business changes, but that's not always a bad thing.

Regards,
Monty