This article is part of the On Tech newsletter. You can sign up here to receive it on weekdays.
Let’s talk about what the UK bicycle bubble had in common with the current craze for non-fungible tokens, tech startups and EV manufacturers more than a century ago.
We have been in a technological gold rush for more than 10 years, which in some corners makes absolutely no sense. When the madness subsides, people could lose a fortune. But overall, tech manias bring something good. As my colleague Erin Griffith said, “Bubbles, although messy, lead to progress.”
I recently spoke to William Quinn, a lecturer at Queen’s University in Belfast and co-author of Boom and Bust, a story of financial bubbles including the 1929 US stock market crash and the financial crisis more than a decade ago.
The book identifies three basic states that exist in bubbles: borrowing money is cheap, or people have saved a lot of money. Buying and selling assets is getting easier, as is currently the case with stock trading apps like Robinhood. And there’s a mentality that asset prices can only go up.
All of these conditions are now in place, as Griffith wrote in a hilarious and useful article recently. Partly, that’s why there has been repeated spikes in meme stocks like GameStop, NFT hype, and flashy IPOs, including the one that left Airbnb’s CEO speechless.
But Quinn also told me that technology-related bubbles differ in important ways from other boom-and-bust cycles. For one thing, they don’t tend to ruin the world. “I’m not worried about NFTs causing the next financial crisis or anything,” he said.
Unlike the real estate market bubble, technology bubbles are usually not inflated by borrowed money, which can lead to cascading effects. Speculative technologies are also often somewhat decoupled from the rest of the economy.
And, said Quinn, when tech bubbles burst, they can leave something positive behind. Enter the bike bubble.
The invention of the safety bicycle in the late 19th century was a revelation, and the basic design lives on to this day. We may not think of the bike as a technology, but it was a major innovation for relatively reliable and affordable transportation.
It also sparked a mania among British bicycle manufacturers who went public, saw stock prices rise, and then collapsed. What was left behind, Quinn says, were people and companies who, in some cases, helped usher in new innovations in automobiles, motorcycles, and road tires. Some of the bicycle pioneers are still around.
As with the bicycle bubble, good things happened in the United States after the dot-com bubble in the late 1990s. Companies like Amazon survived and thrived. Bankrupt telecommunications companies left behind cheap and useful internet pipelines that made an online explosion possible.
More recently, a cryptocurrency collapse a few years ago has made more people curious about the benefits of the promising underlying technology like blockchain.
“The bubble craze can be distracting,” Griffith said, but she added, “The perspective of many people in technology and finance is that a delusion or a frenzy drives attention, excitement, enthusiasm and talent to something new.”
I don’t want to ignore the damage done by tech busts. When bubbles burst, people lose their jobs and, in some cases, all of their savings. Quinn said he believes regulators should do more to prevent Hucksters from cheating on people and running away with millions. Griffith said she worried that people who deal with tech fads could get bitter.
Quinn said he believes that bubbles, which were relatively rare between the 1920s and 1980s, are now more common. Money and information travel quickly around the world, which fuels manias. Bubbles can be an integral part of modern life – with all the possible harms and benefits that come with it.
Tip of the week
This is how you get a low airfare
As more of us prepare for when it will be safe to fly, New York Times consumer technology columnist Brian X. Chen tells us how his favorite ticket price prediction app can help save airfare.
If you’re like me and really want to go somewhere, it might be a good time to check for travel deals – even if you don’t plan on traveling until winter because of … it’s a pandemic.
There are nifty apps that use algorithms to predict when airfares will go down. I’ve made some notable deals and saved hundreds of dollars on flights to Hawaii, New York, and Taiwan. These algorithms may be a little less reliable in such an unpredictable year, but they’re still worth checking out.
My favorite app for saving on flights is Hopper. With the free app for iOS and Android, users can register for the price alert, which recommends whether to buy a plane ticket now or wait for prices to drop for your destination. (Hopper also tracks hotel and rental car prices, although I didn’t use those features.)
How to use the Hopper app:
Choose your preferred travel dates. Hopper shows you a color-coded calendar with green dates showing the cheapest days to fly and red dates showing the highest prices. You can choose to only show ticket prices for non-stop flights.
Sit back and wait for advice: once you’ve chosen the travel days, Hopper will send notifications to suggest whether to buy tickets now or wait for the price to drop. I tend to look at the Hopper flight notifications and then buy tickets directly through the airline.
(Note that when Hopper canceled a large number of flights during the pandemic, it was overwhelmed by complaints from people who booked tickets through the app and were having trouble getting help.)
Before we go …
Pushback against Amazon’s eagerness to control: The company needs to lower labor costs and increase productivity, which is why Amazon measures every moment of a worker’s existence, wrote my colleague David Streitfeld. The backlash against Amazon’s desire for control is evident in restless warehouse workers, oversight of Congress, attention from labor authorities, and tweets about bathroom breaks.
App filters can be a real social experiment for girls: MIT Technology Review examines the risks of app features that “beautify” people by removing blemishes, changing eye color, and recoloring faces and bodies. Some of these filters can be playful and helpful, but some researchers and teenagers fear that they will skew the self-image of women and girls.
If Facebook is the local news channel: A Facebook group dedicated to local information in and around Beaver County, Pennsylvania helps spread the word about potholes, business closings, and shoplifting. But NBC News wrote that police also had to step in to dispel exaggeration and falsehoods in the group, including false rumors of a killer at large who unnecessarily scared people and detained officials.
La Verne Ford Wimberly, an 82-year-old woman in Tulsa, Oklahoma, posted her Sunday best for the virtual church service each week. Her selfies on Facebook of her colorful clothes (including hats!) Made her a star.
We want to hear from you. Tell us what you think of this newsletter and what else you would like us to explore. You can reach us at [email protected]
If you do not have this newsletter in your inbox yet, please register here.