Sunday, October 3, 2010

Comment on Krugman post comparing economic theories

I'd be a lot happier with theories that clearly distinguished between price increases caused by general inflation and price increases caused by the increasing scarcity of some universally used resource input. To rephrase that: if you don't think about money at all, then one expects there to be pain when transitioning a large part of society's infrastructure from one technology to a different one, particularly if it is less efficient. Indeed there have to be a lot of inefficiencies associated with running parallel technologies (like maybe cars and horses in the 30s?). So how do we expect that sort of thing to play out?