The Skyscraper Curse Comes To New York?
The Wall Street Journal ran a very optimistic article on the rising prices for Skyscrapers and new construction in New York. This is my letter to the editor in response.
Dear Editor, Wall Street Journal:
So what does “Skyscraper Prices Head North” C1, 6/10 tell us? Have perhaps Dr. Bernanke’s “green shoots” from 2008-9 finally taken root? Likewise, is the near completion of the record-setting (US) Freedom Tower an indicator of looming economic stability and growth?
History indicates otherwise. The record setting Chrysler, 40 Wall Street, and Empire State buildings were at various stages of construction just prior to the stock market crash of 1929. The same ugly correlation between record-setting skyscrapers and economic crisis held true with the World Trade Towers in 1970, the Petronas Towers in 1997, Taipei 101 in 2000, and the Dubai Tower in 1997.
When central banks print money and pursue easy credit polices they produce bubbles and malinvestments such as record-setting skyscrapers.
Mark Thornton, Ph.D.
Ludwig von Mises Institute