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April 28, 2007

More Bubble Reading: Why Bubbles are Great for the Economy

Yesterday I pointed to Jeremy Grantham's provocative piece on why all the world's a bubble. Today, to give the other side, I'll suggest people read Pop! Why Bubbles are Great for the Economy, a new book by Dan Gross (the Moneybox columnist at Slate).

Gross makes more or less the argument you would expect -- that a little (and sometimes a lot of) excess isn't a bad thing. Dan points to railroads, the Net, and fiber optics "enthusiasms" and the myriad good things that have come of them, even if many of the original participants, and their backers, didn't do very well. As Gross writes, by extension, a similar bubble in alternative energy -- even in solar, much to my friend Herb's misguided dismay -- wouldn't be such a bad thing.

Definitely worth reading.

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