Not enough investment in IT?
One of the blogs I read regularly is Mandel on Innovation and Growth. While I agree that you need to be a little skeptical about what he writes, as is true of anything written by an economist. I always wonder about the stats he does not discuss. But, he is very focused on the communications industry (broadly defined), an industry that interests me as well.
If there is any sector of the economy that seems to have more entrepreneurial vibrancy than others it is communications (broadly define). Think about all the stuff that is happening in the world of broadband (in healthcare, education, security, advertising, location related services, etc.), or mobile, or social networking to name the big obvious ones.
Anyway, Mandel has a chilling post titled “Why We Struggle: Too Much Housing, Too Little Information Technology.” Reproduced below is the chart that forms the heart of his most recent post.
Below is the gist of his post:
“the net real increase in housing fixed assets was more than triple the net real increase in IT fixed assets. That may help explain why we are in such dire straits now—plenty of new homes, not enough investment in IT.”
If you think about the stats noted above and consider the stagnation in the housing market (the drop in sales of new homes announced last week), it does seem like we (the U.S.A.) spend the last decade overinvesting in stuff we no longer really want (housing) and not enough in assets that produce something we all want – jobs.