

Blockbuster is going bankrupt.The U.S. falling victim to a similar complacency? - Elite

News broke today that Blockbuster's is going bankrupt.  As I was reading this morning I wondered how the largest video rental company (BY FAR) allowed a newcomer to become a serious threat to their business in a matter of 3-5 years, and force them into bankruptcy in about 10 years.<p>My conclusion after a bit of thought is that as the big player in the game, the incumbent has an incentive to be complacent.  In the case of blockbuster, doing business as usual seemed to be a pretty good option.  The owner (W. Huizenga) was a multi-billionaire and blockbuster was bringing in large profits every year.  Complacency was pretty profitable.  For Netflix howeverr, complacency would have meant non-existence.<p>On the global scale, I now see many countries that are as hungry as Netflix was in the late 90's.  The generation before them grew up dirt poor and this history is never far away from their minds.  They are now training their current generation to adopt the best from the U.S. and reject the worse.  But they ARE changing..rapidly. They're diversifying their economies to build a base of manufacturing for the working man, and research for the intellectuals. In the U.S., the working man is going broke, and the intellectually gifted are often going to finance (take a look at Harvard/MIT recruiting over the past 10 yrs).<p>Software development is the one area where I can say the US is on very solid footing relative to it's peers, but is that enough?<p>It's somewhat cliche to say that China is a rising power, but I wonder if the rise of countries, particularly China, India, Brazil will mean a radically different future for the U.S. There is large segment of the U.S that are nostalgic to a past perceived American glory and yearns for even more complacency than we see today , and I fear what will happen if they get it.
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hga
The biggest difference here is that Blockbuster and Movie Gallery which was #2
and has already Chapter 7 liquidated earlier this year are in a fairly zero-
sum market. To a significant extent the success of Netflix and Redbox was
taken out of their hide. Another very big factor was the development of the
sell-through market for home video (<http://en.wikipedia.org/wiki/Sell-
through>), which was pioneered by Disney and by the time of the DVD was the
model by which they were sold.

"The Wealth of Nations" as Adam Smith put it is not overall a zero-sum game.
We're on very solid footing in a lot more areas that software development,
e.g. aerospace (Boeing) and heavy equipment (Caterpillar); our manufacturing
output has not declined at the same time our manufacturing employment has.

That said, we are excessively complacent in a number of areas where,
irrespective of competition from other nations, we simply can't continue a lot
of our current ... luxuries. NIMBY has become BANANA (Build Absolutely Nothing
Anywhere Near Anything). Unsustainable 1.5 trillion dollar annual Federal
deficits and compensation for public sector employees at all levels of
government. A figuratively criminal education system that was clearly so in
_1955_ (publication of _Why Johnny Can't Read_ ) that just keeps getting worse
with each new top down nostrum. And I could go on and on.

That said, we have some advantages that are simply not shared by many of our
up and coming competitors. The rule of law (or why you didn't include Russia
as is usual when describing the BRIC countries). The world's best universities
(Feynman conceived of his cargo cult science meme during his stay in Brazil).
A society and culture that's friendly to startups.

Heck, start with the theoretically simple detail of starting a company, any
company. Here's the first site I found with Google:
<http://www.doingbusiness.org/economyrankings/>

Look were Brazil scores, 126th "best" out of 183 countries in which to start a
legal company. China is at 159 and India is near the bottom at 169 (the
License Raj has not hardly been dismantled) and all are across the board quite
bad (China is the only country to partly surmount these problems where guanxi
makes all the difference).

As for the " _large segment of the U.S that are nostalgic to a past perceived
American glory_ " the _last_ thing they're doing is " _yearn[ing] for even
more complacency_ ". A whole bunch have been pushed too far and are holding
Tea Parties with the explicit goal of changing the system (back to a past
"perceived" American glory, yes, but perhaps we should give it a try again,
seeing as how the new ways are abjectly failing?).

