>Much of the investment is of
>the sort that depreciates very quickly. As a result, the accumulation of
>capital is far less than the gross figures suggest.
Yes, that's true, though if we're evaluating the investment effort, the gross figures do indicate some pretty heavy spending out of current resources - i.e., not the collapse that Patrick is claiming.
Here are some net stats.
NET PRIVATE FIXED INVESTMENT % of net domestic product
equipment &
total structures software 1929 4.3% 3.1% 1.3% 1930s -1.4% -0.4% -1.0% 1940s 1.9% 0.5% 1.4% 1950s 3.6% 2.0% 1.6% 1960s 4.2% 2.2% 2.0% 1970s 4.6% 2.3% 2.3% 1980s 4.1% 2.5% 1.6% 1990s 3.2% 1.3% 1.9%
1990 2.9% 1.8% 1.1%
1991 1.9% 1.3% 0.6%
1992 1.8% 1.0% 0.8%
1993 2.2% 1.0% 1.3%
1994 2.6% 0.9% 1.7%
1995 3.1% 1.1% 2.1%
1996 3.5% 1.2% 2.3%
1997 4.1% 1.5% 2.6%
1998 4.6% 1.6% 3.0%
1999 4.8% 1.5% 3.3%
Note: 1) the falloff in the total in the 1990s is mainly a result of fewer structures being built, with equipment and software holding up pretty well (and a fellow named Brad DeLong co-wrote a famous paper on how that was the key to future growth, right?), and 2) the 1990s average is pulled down by the incredibly low, almost depression-level figures from the early part of the decade; the late 1990s figures are among the highest on record. It'll be interesting to see how they hold up as the economy slows.
I'm certainly not arguing that the kinds of investment these stats cover is contributing substantially to human welfare; I'm just trying to engage the debate on orthodox measures of investment.
Doug