What’s the bubble done for us?
Are bubbles always a bad thing? You can argue they’re not. If an economy is to take great leaps forward it needs the occasional massive injection of capital. Take the railway bubble in the 1840s. Would a government ever have invested the money needed to crisscross the UK with tracks – over 9,500 miles of them? Of course not.
And would private capital have paid for the tracks had its controllers been able realistically to gauge the potential returns (it is estimated that anyone who invested in the 1840s would have had to wait 50-odd years just to get their money back). Of course not.
But despite the utterly uneconomic nature of the building of the infrastructure it would be hard to find anyone these days prepared to argue that having lots of trains wasn’t – and isn’t – a good thing. Same goes for the internet bubble. How else would all that fibre-optic cable that has sent the cost of internet use tumbling and changed the way we work and live have been laid so fast?
But what has our most recent bubble given us? I’m struggling here…
• Read the full editor’s letter here: What’s the bubble done for us?