Why Bubbles Are Good for the Economy

According to Slate's Dan Gross:

Once you gain a little historical distance from bubbles, it is clear that some bubbles—some, not all—leave behind something that is a little bit boring but extremely useful: infrastructure.

I couldn't agree more. Cities that go through real estate bubbles have all that new infrastructure. Those that don't, well, they don't. I'll be checking out his new book on the subject.

Comments

[Michael Wells]

As I understand it, Indian companies doing American software work was made possible by 90's tech bubble companies that laid trans-Pacific fiber optic cable then went bankrupt, leaving cheap high speed wires across the bottom of the ocean.

[DJM]

while there was lots of infrastructure laid during the internet boom/ bust... i have always believed that the period gave young workers (at the time we were young) a taste of the 'creative class' lifestyle... while the firms I worked for didn't survive in tact... the experience completely changed expectations/ideas about work, creativity. moreover the interenet bubble was democratizing... leaving many of us with the the belief that great ideas, businesses, technology could come from anyone... therefore, everyone was worth listening to (at least for a few minutes)... looking forward to reading this book.

[Richard]

David - Great point. Not just hard infrastructure but soft, that is social, infrastructure as well.