Wednesday, April 16, 2008

3 Takes on Investment in the United States: 2

Today's Wall Street Journal also has a piece that mentions the aging of the U.S. airlines' planes. I wrote a book almost 20 years ago that discussed how Keynes neglected replacement investment. Keynes, Investment Theory and the Economic Slowdown: The Role of Replacement Investment and q‑Ratios (NY and London: St. Martin's and Macmillan, 1989). Financialization has greatly compounded the problem. Here is an extract from the article:

Lunsford, J. Lynn. 2008. "Fleet Could Be Just Plane Trouble." Wall Street Journal (16 April): p. B 1.

Delta has roughly 119 gas-guzzling McDonnell Douglas MD-88s with an average age of 18 years, and Northwest has a fleet of more than 90 Douglas DC-9s with an average age nearing 40 years old. During the past three years, the bulk of the U.S. airline industry has sat largely on the sidelines while carriers from the rest of the world placed roughly 7,000 orders for the newest, most fuel-efficient jets. As a result, both Boeing and Airbus are largely sold out of planes until at least 2012.

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