First Look

Pop!: Why Bubbles Are Great for the Economy

By Daniel Gross
Collins, May 2007
219 pp., $23

Gross, a columnist for Slate and The New York Times, takes a contrarian look at rampant financial speculations, celebrating their oft-overlooked lasting benefits. An excerpt:

Thanks to the American penchant for creative destruction and the U.S. bankruptcy system, investors–and the economy at large–tend to get over bubbles quickly. Bourgeois practicality, suppressed during the bubble, resurfaces. The stuff built during infrastructure bubbles–housing and telegraph wire, fiber-optic cable and railroads–doesn’t get plowed under when its owners go bankrupt. It gets reused–and quickly–by entrepreneurs with new business plans, lower cost bases, and better capital structures. And when new services and businesses are rolled out over the new infrastructure, entrepreneurs can tap into the legions of users who were coaxed into the market during the bubble.