Keynes 0 Hayek 1
During the famous rap contest between the two greatest economists of the past century, Hayek certainly got it right with low interest rates, malinvestments and his mistrust of the boom part of the cycle. Wherever you look, it's pretty much the same story everywhere.
The Irish Times - Saturday, February 20, 2010
IRELAND “LARGELY wasted” its years of high income during the boom, with private enterprise investing its wealth “in the wrong places”, according to a new report by Davy Research.
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Capital stock soared by 157 per cent in real terms from 2000 to 2008, but almost two-thirds of the increase was accounted for by housing – an “unproductive asset” in economic terms.
In the eight years to 2008, the net capital stock of the State more than doubled from €222 billion to €477 billion, data from the Central Statistics Office (CSO) shows. But once housing is excluded, “productive” capital stock rose by only €70 billion to €174 billion.
Davy said most of the increase in “core” productive capital stock was related to the State or semi-State sectors.
The report catalogues “pitiful” levels of investment by the private sector and states that as a result of a “glut of investment in the wrong places”, Ireland’s technological capacity has “not advanced much over the last decade”.
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Source: Irish Times
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