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Politics : Stockman Scott's Political Debate Porch -- Ignore unavailable to you. Want to Upgrade?

To: Jim Willie CB who wrote (4455)	8/13/2002 4:30:12 PM
From: paul_philp	Read Replies (1) \| Respond to of 89467

Well that is one point we do agree upon. However, the Vienese solution of raising interest rates to undo the effects of 'malinvestment' would have the side effect of killing most of the infrastructure we just went through the bubble to build. There is a subtle difference between over-capacity and under-utilization. Over capacity is a problem of capital allocation while under-utilization is a problem of innovative applications. If we reduce the incentives for risk taking then the infrastructure will lay fallow and with no incentive to maintain it, it will go to dust. It is one of my problems with the Vienese school. It is self-fulfilling. If you follow their prescription today it will prove they were right all along. It really comes down to my distinction between pure asset bubbles and radical technology bubbles. As Bob Marley said, "Don't kill it before it grows". Paul