Sunday, May 19, 2019

Asset Bubbles and Social Improvement

In his tail-covering memoir The Age of Turbulence, Alan Greenspan says that the rolling asset bubbles of the 21st century are the result of the enrichment of high-savings Asian societies; all this additional saving circles the globe, seeking profitable investment, competing up prices before moving on to the next market.

What if the owners of these resources were interested in advancing human welfare instead of maximizing their return? I'm not asking them to give their money away. But there is room for a lot of welfare-improving development that, because it would increase productivity and well-being, would have a positive return, even if not necessarily the highest possible return. Replacing Indian slums with modern housing seems like a better project than inflating a cryptocurrency bubble.

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