Krugman and Benchmarks
7 August 2006
The Editor, New York Times
229 West 43rd St.
New York, NY 10036
To the Editor:
Among the omens that Paul Krugman sees for a coming recession is the fact that "nonresidential investment as a share of G.D.P., though up a bit from its low point, is still far below its levels in the late 1990's" ("Intimations of Recession," August 7).
But on September 2, 2001 ("Damaged by the Dow") he wrote in your pages that during the late 1990s "businesses invested frantically, sinking vast sums into information technology. Now, of course, many of those businesses realize that they invested far too much."
So why should investment levels from those irrationally exuberant, bubbly late 1990s be the benchmark against which we measure the sufficiency of investment today?
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
The Editor, New York Times
229 West 43rd St.
New York, NY 10036
To the Editor:
Among the omens that Paul Krugman sees for a coming recession is the fact that "nonresidential investment as a share of G.D.P., though up a bit from its low point, is still far below its levels in the late 1990's" ("Intimations of Recession," August 7).
But on September 2, 2001 ("Damaged by the Dow") he wrote in your pages that during the late 1990s "businesses invested frantically, sinking vast sums into information technology. Now, of course, many of those businesses realize that they invested far too much."
So why should investment levels from those irrationally exuberant, bubbly late 1990s be the benchmark against which we measure the sufficiency of investment today?
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Posted by Don Boudreaux on
Friday April 27, 2007 at 12:55pm