>Brad De Long wrote:
>>No time. I only managed to say a quarter of what I wanted to say. Bob
>>Edwards wanted to talk about self-help. So all my points about how the
>>wealth-to-income ratio is high; how the skewness of the wealth
>>distribution has grown; how we have the seeming paradox of low personal
>>saving with high domestic investment, and so forth got lost...
Doug responds:
>Domestic investment isn't *that* high. Computer investment is high, and is
>further inflated in "real" terms by that wacky deflator, but other forms
>of investment - business and residential structures, for example - are
>actually pretty low. ...
On investment, Dean Baker has a good point: gross investment (and thus GDP)
has been boosted by the inclusion of "investment" in software. We really
care about is net investment (and thus NDP), but we usually don't write
about those since depreciation is so hard to measure. The problem is that
software depreciates extremely quickly, which implies that net investment
(and NDP) have not risen anywhere as quickly as gross investment (and GDP)
as a result of the US Department of Commerce changing of definitions. In
fact, it seems like the software industry's main business is to cause the
depreciation of software. (Some of Microsoft's software seems to have
depreciated already when it's new.)
On the high wealth-to-income ratio, Al "our Hero" Greenspan seems highly
concerned that the ratio has been artificially -- and temporarily --
boosted by the stock market bubble. When the stock market returns to more
reasonable levels (or overshoots as a hangover from the current euphoria),
the wealth-to-income ratio will collapse, along with personal consumption.
Jim Devine [EMAIL PROTECTED] & http://liberalarts.lmu.edu/~jdevine
