Arnold Kling

Cheerful about Collapse

Arnold Kling, Great Questions of Economics
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Hal Varian is cheerful about the collapse of the dotcom boom. In High Tech Will Rise Again, he predicts that

a generation of Web-savvy techies...will now spread Internet productivity gains outside the technology industry.

What Varian is saying is that the dotcom craze caused a misallocation of talent toward flawed business models, and the collapse of the Internet Bubble will release this talent to help improve productivity in the rest of the economy. I agree with his assessment, but it depends on people finding new jobs reasonably quickly, before a downward spiral of higher unemployment and lower demand develops too much momentum.

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