The Failure of Net Investment (as a % of GDP) to Return to its Historic Levels

This began life as a comment on a blog post.  I have decided to post it here...

When I think about investment spending, I tend to focus most on net investment--total investment minus depreciation--as a % of GDP.  Private sector investment is not0riously volatile, falling dramatically during recessions.  So, for example, net investment (as a % of GDP--from here on out, all net investment figures will be as a % of GDP)fell from 7.5% around 1965 to just less than 4% in the 1970 mini-recession, rebounded to 7% by 1973, fell to about 2.2% in the 1974-75 recession, rebounded to 7% by 1980, fell to a little more than 2% in the 1980-82 recession, rebounded to about 6.5% in that recovery, and, from the mid-1980s to about 1992, fell to abuot 1.5%.
During the Clinton years, investment again recovered, to about 6%.  In the recession beginning in 2000, it fell to about 2%.  The recovery was fairly weak--to only about 3.5% by 2007.

Then--the real collapse.  Net investment turned negative for the first time since the late 1940s-- minus 2%.  The recovery was again weak, to just over 4% by 2009.  Since 2009, net investment has not exceeded 3.5% of GDP in any calendar quarter, and is now about 2.5%, which was the bottom-of-a-recession level in the 1960s and 1970s.  
This remarkably low level of investment comes despite the tax cuts, despite everything.  Right now, and, really, since the 2000 recession, the best done in terms of net investment is , essentially, no better than the worst from 1960 to about 2005.  

Incentives and behavior

I read an interesting blog post (well, interesting to someone who spent much of his life teaching and doing research about labor economics). and you. too, can read it here: http://conversableeconomist.blogspot.com/2020/04/are-atternative-work-arrangements.html)

What it did, in part, was to make me think about my third summer job, in the summer of 1966.  I think I got the job because my brother Dave had worked there in 1965 (and was working there in 1966, as well), and he had done a good enough job that they hired me.

We were retail route salesmen...for Banquet Dairy...we were milkmen.  And we did not get paid an hourly wage or a weekly salary, we got paid on the basis of how much we *collected* from out customers.  As I recall, the commission for most of what we sold was 17% (of course, we also had to collect it).  Now, if you're doing this permanently, you obviously have to be concerned both with how much you collected *and* how much you sold.

My routes (Monday-Thursday; Tuesday-Friday; Wednesday-Saturday) had larger than normal unpaid balances; in fact, those routes were open because the guy whose routes they had been sold a lot, but didn't collect very much.  So I figured out fairly quickly that my job #1 was to get people to pay up.  And, yes, I also sold a fair amount of product.  But I spent a lot of time knocking on doors, even of people who were not currently buying anything--and might not have been the people who ran up the unpaid balances, and talking them into paying at least something. [1]

I might add that none of my routes were in a really good part of Indy; they were all in the "near north" neighborhoods.  Basically, for those of you who know Indy, north of Tenth Street, south of 30th Street; Park Ave. east to College.  It's a somewhat better neighborhood now, and probably half of the places I delivered to have been torn down and some replaced--a lot of vacant land these days.  Gentrification there is proceeding *very* slowly.

So I collected and collected and collected, and by the end of the summer, the unpaid balances were somewhat less than half what they'd been at the beginning of summer.  I collected a lot more than I sold.  Earned more that summer than I did in any of my other summer jobs, but I did not try to go back for the summer of 1967...

I had, by that time, learned something about how incentives can shape behavior...and that, sometimes, the usual incentives (in this case, for whoever followed me, and who looked on this job as more-or-less permanent) do not work particularly.  (I felt sorry for whoever got those routes in September 1966; they had a fairly small unpaid balance, which meant they had to sell more than a normal amount, at least for a while--there was no cushion.)

[1] I wondered then, and for some time after, why someone who had not bought that unpaid-for milk would pay me anyway.  I suspect that some of them had moved there with unpaid balances elsewhere, and some of them were just intimidated...not that I thought of myself as intimidating...