How parasitic investments lead to a contraction cycle
This could be seen as an update to our contribution on “The new long wave“.
The following excerpts (see the wiki links) are from a must read article by Thornton Parker, “Reforming Global Finance: From Wall Street Bird Nests to Main Street Growth Cycles”, which appeared in Hazel Henderson’s EthicalMarkets.com.
Parker’s argument can be summarized as follows:
- productive investments lead to a growth cycle, but parasitic investments lead to a contraction cycle.
- after Reagan, the U.S. has been engaged in parasitic investments, leading to the current meltdown
- what then could be the drivers for a renewed growth cycle.
Thornton Parker’s article gives examples of earlier growth cycles in the U.S. and Japan, describes the current drivers of the contraction cycle, and concludes with a two-phase proposal to return to a new growth cycle.
Do read it here.
May 27th, 2009 at 6:59 am
[...] contribution by Robert Pollin can be seen as an update to our previous reference to the essay by Thornthon Parker, who distinguised parasitic investements, leading to contraction cycles, to productive investments, [...]