An amateurish attempt at explaining current events large and small.
Tuesday, April 07, 2009
There's a lot of truth to Ilya's post but I have to quibble with it. It is clear that over the last decade there was significant overbuilding in housing, excessive capacity in auto manufacturing, etc. Ironically, it is now that I appreciate Galbraith's old bit about the private sector being rich and the public sector poor. Much of our resources over the last decade or so have been misallocated due to poor tax incentives, easy credit, regulatory arbitrage, and rampant stupidity on the part of the entire finance industry. Our schools do a piss poor job of educating the next generation, our health care system is incredibly expensive yet an ungodly amount of people are uninsured, come summer parts of the country will experience rolling blackouts (not to mention the fact that the grid could come down entirely as it did a couple of years ago), and people lose more and more of their time wasted commuting (and thus their standard of living decreasing as both their disposable income and time diminish). We need more mass transit, a smarter grid, cleaner energy generation, etc. That requires building and should have been built a long time ago. Instead we built McMansions in the exurbs financed by easy credit extended on the basis of foolish models and fraud.