Arnold Kling  

David Leonhardt Signals a Bottom

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Progress, Academics, Streetlig... Caught My Eye...

He writes,


The most worrisome aspect about our current slump is that it combines obvious short-term problems -- from the financial crisis -- with less obvious long-term problems. Those long-term problems include a decade-long slowdown in new-business formation, the stagnation of educational gains and the rapid growth of industries with mixed blessings, including finance and health care.

Pointer from Tyler Cowen, who might as well have ghost-written the piece.

All this gloom and doom might be right. But it might be a buy signal.

--I keep reading stories that say that we have discovered a fair amount of good old-fashioned oil in this hemisphere. It will be a great day when we can replace our Nobel Laureate energy secretary with somebody whose understanding of physics consists of "Drill, baby, drill."

--Our housing policy of "extend and pretend" with delinquent mortgage borrowers will eventually peter out. We'll let the market work, after we have tried everything else. Once we do, housing construction will soar.

--The stock of consumer durable goods, like cars, is getting old. When other sectors turn around, production and distribution in this sector will expand rapidly.


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COMMENTS (7 to date)
Andy writes:

You really don't think drilling has an adverse environmental impact, or don't care?

dm writes:

"You really don't think drilling has an adverse environmental impact, or don't care?"

You really don't think cost/benefit analysis has a role to play in this issue, or don't care?

Shayne Cook writes:

On "Drill, baby, drill." ...

I was driving through northern Montana last year - where there is a great deal of oil/nat gas development activity in progress. I stopped by a small cafe in one of the boom areas for breakfast. They had tee-shirts for sale (as well as good food.) My favorite tee-shirt had "EARTH FIRST" printed in big letters. Then, just below that, in only slightly smaller letters, "(We'll Drill the Other Planets Later)".

I bought 5 of those tee-shirts for myself and friends, and I may buy more. Remarkable how drilling inspires all sorts of secondary innovations and economic activity.

Floccina writes:
--I keep reading stories that say that we have discovered a fair amount of good old-fashioned oil in this hemisphere. It will be a great day when we can replace our Nobel Laureate energy secretary with somebody whose understanding of physics consists of "Drill, baby, drill."

Yes energy and food are the bright spots in employment. It seems Julian Simon's Principles still stands.

I think part of the problem might be the correlation issue.

The inter-connectedness of financial markets cause asset prices to move together more often.

The same reasons cause the tides of creative destruction to work the same way.

Bill writes:

"You really don't think cost/benefit analysis has a role to play in this issue, or don't care?"

It's really tough to do a cost/benefit analysis when public choice and regulatory capture issues play such a large role in the domestic market. So much of the land is held by the federal government, which makes decisions thousands of miles away from the drilling, with little meaningful local input. And on private land, due to the split estate, the owners don't hold the mineral rights and cannot obtain them. Political rhetoric plays a larger role in domestic energy than markets do.

Mike Rulle writes:

I enjoy it when your natural undertone of irritation shows thru against doom and gloomers, particularly when your views match mine---which is about 80% of the time perhaps.

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