Yesterday, Paul Krugman on the central economic issue of our day – whether to invest in our future. (“Republicans have managed to come up with spending cuts that would do double duty, both undermining America’s future and threatening to abort a nascent economic recovery.”) Today, the New Yorker’s James Surowiecki on that same topic. He concludes last month’s column:
. . . In 1998, the economists Charles Jones and John Williams showed that the socially optimal level of investment in R. & D. [is] two to four times its current rate. Historically, at least, [investment in R. & D.] was a bipartisan position. Alexander Hamilton argued for the “encouragement of new inventions and discoveries” by government. In the nineteenth century, an era of limited government, one of the few things that people were willing to spend money on was “internal improvements”—canals, railroads, and the like—and Abraham Lincoln supported these as being of “general benefit.” And Dwight Eisenhower created the Interstate Highway System and presided over the post-Sputnik boom in government-funded scientific research.
It’s hard to make a case for investing more when everyone believes we should be spending less, but there’s never been a better time. Interest rates are historically low, so borrowing is cheap. (Corporations have already realized this: they borrowed half a trillion dollars last year.) And the weak economy means that there’s less competition for labor and resources. Yet, instead of taking advantage of this, we’re too often doing the opposite. Only recently, a plan for a new tunnel under the Hudson River was killed. The tunnel would have reduced congestion, expanded commerce between New Jersey ports and New York, and created enormous long-term value for the entire region. But short-term budget constraints doomed it. This is a classic instance of eating your seed corn and of the way that fiscal “responsibility” can actually be irresponsible. At the moment, we’re spending too much on things that consume resources—like the military and earmarks—and not enough on things that create them.
☞ If you read the whole thing, you’ll see why government has an even more important role to play in this than it used to.
Greg San: “What a coincidence – I just bought one of the LG Optimus V phones and activated it on Virgin Mobile on the $25/month plan [you featured yesterday]. I’m switching from a first generation iPhone on ATT which costs about $60/month. But two points anyone considering a similar move needs to consider: First, Virgin Mobile is on the Sprint network exclusively – if you find yourself in an area without Sprint coverage you have no coverage. (Roaming is not provided.) Second, do a Google search on LG Optimus V battery drain. I got the phone Saturday and charged it overnight. Sunday morning I tried out the GPS location feature – cool (my 1stGen iPhone did not have GPS). When I picked up the LG Optimus V again about 5 hrs later, it would not turn on – battery was completely drained. Oops – GPS is a battery-eater. Following various tips, I changed some of the phone settings and was able to have the phone sit overnight off the charger and still have 80% battery charge the next morning.”
Bob S.: “I too have been a Virgin fan, for the last seven years. I recently upgraded my $5 per month plan (for 28 minutes per month!) to the $25 per month plan you detailed yesterday. And I too bought the LG Android phone, directly from Virgin. But it is on sale this week at Target for only $129.99, and it includes a $20 Target gift card! Also, keep in mind that Virgin does NOT require a service contract. It is purely month to month. And the Sprint network it runs on is very good.”
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As long as they're born faster than we can make them hate us, we're in business.~veteran, unnamed airline employee quoted in the New York Times Sunday Magazine
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