Amity Shlaes

Amity Shlaes: The Forgotten Man

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Russ Rides to the Rescue

by Amity Shlaes
November 18, 2008

George Will is being attacked for pointing out that net domestic private investment was negative at many points in the 1930s. But as Russ Roberts points out, George is right.
Why do we care? Because negative net domestic private investment in human language says:
“we have no hope.” And that was the attitude of business in much of the 1930s. Those New Yorker cartoons of people crying into their drink at their second home were accurate. They were not creating jobs.

1 Comment

  • Posted by Rien Huizer

    Negative net domestic investment is negative net domestic investment. Associating that with an investor psychology like you do may appear plausible but there is no proof. I would guess, equally plausibly, that there was a shortage of bank lending capacity, especially for riskier projects and compared to the 1920s. Whether or not regime uncertainty (i feel that it the bogeyman here) played a role is a good question in the early years (say through 1935) but after that policy direction should have been pretty clear. But anyway, it is a very interesting area for enquiry, to be handled with care because the present is not particularly immune to emotional, or even irrational patterns of group behavior. This private investor for instance, is not going to increase his risk, happy to have dodged most of the bullets that killed his mates..