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Thinking back to the wild wage escalations and spot talent shortages, we're wondering if that wasn't precisely the case. Attempting technical transformation on a national cultural scale, the armies of talent that joined various internet organizations were full of 'can-do' attitude (and a spot of greed here and there). For some it was confirmation of their entrepreneurial instincts. For others it was a clear message that any job is better than the rigors of ownership. For many, it was a lesson in learning to restrain the desire to dream big dreams.

We're so close to the story and so occupied with post-crash issues that this perspective never dawned on us. Of course, we knew and worked with many managers who had been thrust in to situations in which they were over their heads. We waded through staffing issues here at interbiznet, trying to find shreds of competence. The running joke around the Valley was that a pulse was all that was required to find employment.

That is what a labor shortage is like. The desire and financial means are not enough. Competent talent (excluding the occasional lottery ticket winners) is the foundation of a strong portfolio of Human Capital. It takes focused teams with the right mix of talent to convert capital into a technology company.

Instead, we all faced increasing burdens of supervisory requirements as our lieutenants won field promotions because they were the last person standing. 

It's a surprisingly difficult set of issues to reconcile. You work with the people you work with. It's surprisingly difficult to replace one player with a more talented person once operations are up and running. It can take years and feels, on the personal level, like a kind of disloyalty.

The point Mr. Spiers raises is an important one. If the dot com crash was an example of the impact of the labor shortage, imagine the future. As labor becomes scarcer, standards relax. Perhaps the worst forecast that we can make about the demographic changes we face is that it makes a more mediocre world more likely.

You can already see that in healthcare today. With the college graduate unemployment rate at 3% today, it's becoming clear to us that knowledge work is headed in the same direction. Instead of cataclysm, shortages bring the water torture of slow erosion.