Late in 2008, when it was becoming apparent that the economic downturn was not a simple blip but a serious recession, Warren Buffet confidently predicted that the American economy would bounce back and be as strong as ever. However, he observed, "the economy that emerges will not be the same economy that entered the downturn."

Since then, one could hardly pick up a newspaper or a magazine without seeing another article in which economic gurus describe with great confidence what this 'New Economy' will look like. For this trend report I have waded through tons of these forecasts to cull out a few areas where there is high agreement. In this issue of Exchange I will present what I see as the three pillars of the new economy; and in the next issue, I will lean on trusted trend watchers in the early childhood field to foretell how child care will be fare in the new economy.

Before launching into the pillars bit, I will offer two disclaimers:

• First, one must note that many of the folks talking with great certainty about the new economy are the same folks who failed miserably to predict the current economic meltdown.

• Second, as I burrow through dozens of commentaries, I can't help but wonder if these articles are sometimes more about the future that the commentators want to happen than what they think will happen. I tend to be a bit skeptical when they forecast a world "where people live happy, productive lives in balance with one another and Earth. It is democratic and middle class without extremes of wealth or poverty. . . . Everyone has productive work and is respected for his or her contribution to the well-being of the community."

Pillar #1: Small is beautiful

Over the past two decades we witnessed the emergence of huge international conglomerates in every phase of business from finance to coffee shops. Giant companies triumphed, small home-grown companies were driven out of business — the Walmart® economy prospered. However, Chris Anderson observed in Wired magazine, "The era of the huge conglomerate is over. The future of business will be more start-ups, fewer giants, and infinite opportunity."

Although no prognosticators are forecasting the demise of the multi-nationals, most do look to the new growth and excitement to occur among the 'Fortune 50,000' instead of the Fortune 500. A number of reasons are cited:

Trust in big business is running out. Harvard Business Review (July/August, 2009) reports that "62% of adults in 20 countries trusted corporations less in December 2008 than they had a year earlier." Organizational guru Warren Bennis explains that "until recently, the yardstick used to evaluate the performance of American corporate leaders was relatively simple: the extent to which they created wealth for investors. . . . We won't be able to rebuild trust in institutions until leaders learn how to communicate honestly — and create organizations where that is the norm." On the other hand, people are inclined to place trust in small, local businesses.

Big corporations have lost their innovative edge. In Businessweek, Michael Mandel observes that ". . . outside of a few high-profile areas, the past decade has seen far too few commercial innovations that can transform lives and move the economy forward . . . rather than being an era of rapid innovation, this has been an era of innovation interrupted."

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