Embrace Investment Bubbles (But Maybe Don't Invest In Them)
from the all-depends-on-your-perspective dept
Of course, while all we've done is mention it here and there on a blog, Slate columnist Daniel Gross went out and did some research in order to write an entire book called Pop!: Why Bubbles Are Great For The Economy which he's now summarized in a column. His book (obviously) digs a lot deeper into this issue, and he highlights two additional areas beyond the "rapid testing" focus that I've discussed. He notes that bubbles consistently have been periods where tremendous infrastructure growth occurs. Once the bubble goes away, the infrastructure stays. Another area where bubbles are beneficial is that they educate the masses about these innovations much faster than in non-bubble times. That is, bubbles act as their own marketing effort, getting individuals excited about the innovation and more willing to check it out and make use of it than otherwise. Again, there are losers when bubbles pop -- but the net effects tend to be quite positive. So, while we are certainly among those guilty of warning about the latest signs of bubble mania, that doesn't mean the overall impact of bubbles is necessarily a bad thing. Of course, the real lesson in all of this might be that you shouldn't necessarily invest in the bubble era -- but in the surviving infrastructure right after the bubble pops. That's when it's at its cheapest and people are least likely to realize how valuable it really is.