[lbo-talk] Fitch and Brenner

[Rudy Fichtenbaum]

I don't know that the data below indicates much of anything. Suppose the 
data represented all investment spending was on structures and none on 
software and IT equipment. We could still have a shift of investment out 
of production. Part of the problem is inherent in our NIPA definition of 
investment. Any spending by business on structures and equipment is 
considered investment. From an economic perspective shouldn't investment 
be spending that raises productivity? Just looking at investment won't 
tell us much.  The problem is we don't know what type of structures. 
Maybe all of the investment went into building new banks and shopping 
centers. What is really needed is investment data by industry. Also we 
should probably be looking a net investment not gross investment.

Rudy

michael perelman wrote:
>
> The problem with your data is the trend toward spending less on 
> long-lived plant and equipment & more on software and IT equipment 
> with a short life span.  So, the economy needs more investment just to 
> stay up to where it was earlier.
>
> SA wrote:
>
>> As for whether capital was shifted out of production, the proof is in 
>> the pudding. Here are the numbers I got for private fixed 
>> non-residential investment as a share of GDP:
>>
>>
>>     Inv/GDP
>> 1930s     6.5%
>> 1940s     6.7%
>> 1950s     9.4%
>> 1960s     9.8%
>> 1970s     11.1%
>> 1980s     12.1%
>> 1990s     10.9%
>> 2000-2007     10.7%
>>
>>
>
>

-- 
Rudy Fichtenbaum
Professor of Economics & Chief Negotiator AAUP-WSU
Department of Economics
Wright State University
Dayton, OH 45435
Phone: 937-775-3085
Fax: 937-775-2441