A couple less than stellar posts on the investment op-eds since this morning. This is a particularly bad one from Matt Yglesias.
He notes that the change in investment is doing OK right now. It's a fair enough observation. It is true we are not going through doomsday. Investment is occuring.
But using this to say that weak investment isn't our problem right now is like pointing to the fact that the unemployment rate hasn't increased and saying that that means unemployment isn't a problem.
Matt is right to highlight what Andrew Bossie has been saying here in the comment section and what most people who have weighed in on this have acknowledged by now: residential investment is particularly bad.
So - is investment such that we have achieved an equilibrium in the labor market? Sure. Take a look at employment-to-population ratios. They've been pretty stable. Investment - the change in K - has been keeping pace with changes in L. So we have something like a stable equilibrium. But it's not a full employment equilibrium, and that's the whole point. Decisions are made on the margin, and change depends on the margin, but life is lived in levels.
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