In the 29 September  issue of Businessweek, Michael Mandel says the current financial crisis has a bright spot. Yes, that’s the term he uses.
“The US has had a distorted economy since 2000. Money flowed into housing and consumer goods, while business and infrastructure investment got short shrift. In other words, productive assets had to go to the back of the line.” Rather than stressing homeownership and consumption, we should focus on investment and innovation, education, and R&D.

Makes sense to me. The idea that just about everyone should own a home doesn’t make sense. The elderly, single moms, people living on the financial edge? Rent let someone else be the landlord.

Mandel doesn’t mention tax policies, such as federal tax deductions for mortgage interest and property taxes, which encourage people to buy large homes. England phased out the mortgage tax deductions some years ago – might be difficult to do in the US with the powerful real estate and construction lobbies.

But that goes to the core problem of American political economy – the power of special interests.

Filed under: Technology