Business World: Lies of the Post-Bubble
When the Senate acts in unanimity you can be sure you're getting a substandard product, as with Monday's 97-to-0 bill on accounting reform. But much worse may be coming. Now is when false dogmas are born, such as the universal belief that the Great Depression was caused by the stock market crash of 1929 rather than gross policy errors originating out of Washington.</br></br>Herewith, some of the canards that are likely to harden into myths, though at the moment they merely exist as lies.</br></br>Myth: CEO stock options led to telecom overinvestment.</br></br>How can this be true when virtually every major company in the country uses stock options, yet we don't have groaning overcapacity in the supermarket business or kitty-food industry? Indeed, the most visible trend in the economy has been toward leaner inventories and more efficient use of resources (aka higher productivity).</br></br>What happened in telecom was an aberration but not a novelty -- the same overinvestment and shake-out were seen in the early PC industry, the early auto industry, the early railroad industry, etc.