Friday, October 10, 2008

A Different Take

Univ. of Chicago Economist Casey Mulligan writes this op-ed in the NY Times. Dr. Mulligan is also a new blogger. Like any Chicago economist, he's arguing against all of the bailout and intervention because the fundamentals of our economy really are strong:

"And if it takes a while for banks and lenders to get up and running again, what’s the big deal? Saving and investment are themselves not essential to the economy in the short term. Businesses could postpone their investments for a few quarters with a fairly small effect on Americans’ living standards. How harmful would it be to wait nine more months for a new car or an addition to your house?

We can largely make up for this delay by extra investment when the banking sector reorganizes itself. Americans waited years during World War II to begin private-sector investment projects (when wartime production displaced private investment), and quickly brought the capital stock (housing and big-ticket consumer items) back to normal levels when the war ended."

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