Just finished reading the book, "The Return of Depression Economics" by Paul Krugman, this year's winner of the Nobel Prise in economics. I read it straight through, could not put it down. I liked the language and the understandable explanations.
If you will, I would add two comments: The book refers to the so called dot-com bubble. I think there is an angle greatly overlooked and that is the actions of the incumbent phone companies: crying poverty, buying unnecessary inventory, turning in financial statements jimmied downwards (who would ever think) and triggering the sell-off of communication stocks. (I would argue that this action was the needle that burst the bubble.) Ah, thus dispensing with the new vigorous innovative competition and eliminating the need to deploy needed bandwidth. I think the seemingly devious actions might have been deliberate, fraudulent and should have been investigated. I've said this before.
Mine is a view from the street, so conspiracy theories play well, but if we don’t see the conspiracies we don’t do well in the market. I was writing at the time and researching the telecoms stranglehold on the net. At that time the technology was ripe for the computer to become part of the net. Some of the exuberance was somewhat rational -- based on Moor’s Law and Metcalf’s expectation of even more rapid expansion of the Internet with falling prices. The relative size of the world market -- at that time for the Internet and its applications -- resembled infinity. The cost of distributing information approached zero -- “free information” – the ultimate abundant cheap exploitable resource.
Secondly Krugman in the last chapter mentions a solution of roads and bridges, critical infrastructure, built out with government funding. Great, but that was Eisenhower back then. Now, why not nationalize the Internet and build out the bandwidth with fiber-optic technology, extending to homes, small business and rural villages; thus, creating the abundant very cheap exploitable resource that was such a dream at the turn of the century. That piece of government spending might indeed create a new bubble to replace the last one, and with new banking reform may even be sustainable.[i]
Better still – for short-term relief – Do the same with the electric grid. There are certainly things that private management will never do – even with regulation – and that is to: extend electric service to remote villages, make distributed generation a reality and most specifically make electricity an abundant, cheap, exploitable resource. That is after all what Eisenhower did with Interstate Highways after WWII. Then it dovetailed with Oil, our designated exploitable resource; today the grid should be analogues to the highway in support of “free” energy. An additional bonus might be a bit of relief for the housing foreclosures. I submit some families are abandoning their over leveraged homes not so much for the negative equity or the higher payments but because of the soaring heating bills (not to mention property taxes). In Alaska, families are fleeing the remote villages because of un-sustainable fuel costs. (It’s whale-oil of Anchorage.)
My economics is strictly undergraduate and agrarian, and my view from Alaska must be suspect. Raven is a trickster, however, and travels far. In her embodiment of our Governor, she slyly claimed that she could see Russia from her perch. I write an Alaska blog, Inflection Point or http://hughesair.com, if you will. I write about technology, medicine and Alaska aviation – things raven knows something about.
If you want an explaination of what is happening both in depth and with an understandable explaination, this is the book. I would almost make it required reading for any home owner with a check book.
[i] There seems to be with both political extremes a complete blindness to the reality of critical public infrastructure that cannot serve both the public and stockholders at the same time. “One cannot be slave to two masters.” Conversely the bureaucratic management of these critical resources falls short with inefficiency and corruption.
If you will, I would add two comments: The book refers to the so called dot-com bubble. I think there is an angle greatly overlooked and that is the actions of the incumbent phone companies: crying poverty, buying unnecessary inventory, turning in financial statements jimmied downwards (who would ever think) and triggering the sell-off of communication stocks. (I would argue that this action was the needle that burst the bubble.) Ah, thus dispensing with the new vigorous innovative competition and eliminating the need to deploy needed bandwidth. I think the seemingly devious actions might have been deliberate, fraudulent and should have been investigated. I've said this before.
Mine is a view from the street, so conspiracy theories play well, but if we don’t see the conspiracies we don’t do well in the market. I was writing at the time and researching the telecoms stranglehold on the net. At that time the technology was ripe for the computer to become part of the net. Some of the exuberance was somewhat rational -- based on Moor’s Law and Metcalf’s expectation of even more rapid expansion of the Internet with falling prices. The relative size of the world market -- at that time for the Internet and its applications -- resembled infinity. The cost of distributing information approached zero -- “free information” – the ultimate abundant cheap exploitable resource.
Secondly Krugman in the last chapter mentions a solution of roads and bridges, critical infrastructure, built out with government funding. Great, but that was Eisenhower back then. Now, why not nationalize the Internet and build out the bandwidth with fiber-optic technology, extending to homes, small business and rural villages; thus, creating the abundant very cheap exploitable resource that was such a dream at the turn of the century. That piece of government spending might indeed create a new bubble to replace the last one, and with new banking reform may even be sustainable.[i]
Better still – for short-term relief – Do the same with the electric grid. There are certainly things that private management will never do – even with regulation – and that is to: extend electric service to remote villages, make distributed generation a reality and most specifically make electricity an abundant, cheap, exploitable resource. That is after all what Eisenhower did with Interstate Highways after WWII. Then it dovetailed with Oil, our designated exploitable resource; today the grid should be analogues to the highway in support of “free” energy. An additional bonus might be a bit of relief for the housing foreclosures. I submit some families are abandoning their over leveraged homes not so much for the negative equity or the higher payments but because of the soaring heating bills (not to mention property taxes). In Alaska, families are fleeing the remote villages because of un-sustainable fuel costs. (It’s whale-oil of Anchorage.)
My economics is strictly undergraduate and agrarian, and my view from Alaska must be suspect. Raven is a trickster, however, and travels far. In her embodiment of our Governor, she slyly claimed that she could see Russia from her perch. I write an Alaska blog, Inflection Point or http://hughesair.com, if you will. I write about technology, medicine and Alaska aviation – things raven knows something about.
If you want an explaination of what is happening both in depth and with an understandable explaination, this is the book. I would almost make it required reading for any home owner with a check book.
[i] There seems to be with both political extremes a complete blindness to the reality of critical public infrastructure that cannot serve both the public and stockholders at the same time. “One cannot be slave to two masters.” Conversely the bureaucratic management of these critical resources falls short with inefficiency and corruption.
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