Atrios writes about a discussion of economic bubbles here at the conference. I had heard before that some economists believe that bubbles are necessary to a mature, dynamic economy, (adding, "you didn't see bubbles in the Soviet Union, do you?")but I didn't know who they were: The Oracle himself, Alan "irrational exuberence" Greenspan Naturally, he didn't worry about the effect of popping bubbles on "the parasites." After all, they aren't productive like hedge fund managers so they deserve to lose everything.
One of the speakers here, Suzanne Berger from MIT, made a very interesting case that even if we want more bubbles, we aren't likely to get anything very impressive in the future because the kind of industrial innovation that used to be undertaken by private industry, such as Bell Labs, are so atrophied from the past couple of decades of short term financial pressure that they just don't exist anymore. Therefore, it falls to the government to filo the gap --- which isn't a problem as long as the innovation has something to do with killing people or supplying an army.
In fact, we have the vast amount of federal welfare for educated white guys -- defense spending --- to thank for a rather large amount of the growth we have in the economy generally. Too bad Americans are mostly a bunch of overweight, mall shopping TV watchers or we'd have a future as the Sparta of the 21ast century. Our economy is gearing itself up to focus almost exclusively on war making. Support the surge, support the workers?