June 24, 2002
The Mysterious Incident of the High-Tech Boom Confined to the United States in the Nighttime
Posted by DeLong at June 24, 2002 06:12 PM
The 1990s saw a boom in America--a boom all agree was driven by modern high-tech. But why was the boom seen only in America? There's nothing in the water that makes high-tech work better here than in France or Germany.
Sherlock Holmes once noted the "mysterious incident of the dog in the nighttime." What was mysterious? That the dog did not bark. The absence of the boom elsewhere is our puzzling not-barking dog. And this puzzle has four possible answers:
- First, the dog is barking but we are wearing earplugs--that poor quality statistics elsewhere keep us from noticing.
- Second, the dog is muzzled--that red tape in Europe makes economic transformation hard and slow.
- Third, the American dog barked too much--and then the NASDAQ crash spanked it with a rolled-up newspaper.
- Fourth, the dog is just waking up--for there is a range of places from Finland to Sweden to Ireland to Australia where the high-tech boom is clearly audible.
I bet on the fourth possibility.
I'm Brad DeLong
Muzzled by red tape? Would you not think that a more Keynesian explanation has just as much explanatory power and makes smaller claims about comparative economic organisation?
France, Germany and Italy all went through a period of fiscal and monetary austerity between 1992 and 1999 in order to meet the Maastricht criteria for economic convergence in order to get the AMU project off the ground. For this reason, they spent that period in recession. When the fiscal and monetary strait-jacket was loosened in 1999, France and Italy began to grow at a rate; even Germany looked like it was going to recover until it started hitting debt ceilings. Why is any other explanation needed?
Brad says he's betting on #4. He didn't say why the dog was "asleep," & we know that the red tape hasn't changed much,* so that leaves open the possiblity that he agrees with you.
I certainly do!!
*And not all red tape is bad. It's funny that neo-cons like to froth and foam at the undisciplined underclass, but when Society tries to apply standards of conduct on business enterprises, they scream and yell even louder. (Often from their homes in those communities that have more rules and regulations than the USDA).