>"The most obvious spillover effect of the telecoms boom was that the oversupply sent the price of internet traffic plunging. That made the economics of bandwidth-gobbling services, such as internet video, much more attractive. The rapid rise of companies such as YouTube would not have been possible without all that extra cable."

I thought extensive edge caching is what really enabled this. The backbone never had a chance, even if much more of it were lit up. However, it probably did help youtube when they were small, and it certainly helped things like Justin.tv (though I believe they now have their own caching solution; youtube live announced they were using Akamai).

>"The second thing that a bubble can do is to make a more profound impression on the public mind than a more conservative period of economic development can manage. The 1920s land boom implanted the idea of Florida as a glamorous holiday destination that has lasted to this day. Fisher, who displayed an unending genius for promotion, can take much of the credit."

Why does he give, "implanted the idea of Florida as a glamorous holiday destination," as a positive effect on its own. I was expecting him to list some positive outcome of this, like say, "This was a good thing because Florida actually is a glamorous holiday destination, and people really had mistaken ideas about this that were really cleared up when he implanted this idea. Plus [insert some convoluted means, along the lines of the rest of the article] it helped Florida farmers grow more oranges." All he did was show that this specific outcome of the bubble was good for Florida, not that it was a good outcome overall.

>"He reckons that the introduction of general limited liability in Britain in 1856 was hastened by the experience of limited liability for authorised railway schemes during the boom."

Just my opinion, general limited liability nets out to be a terrible, very un-free market invention. Reasonable people can disagree, and it is somewhat made up for by the voluntary corporate tax that investors take on when they choose to be an LLC. Though Reagonites see this as a "double tax", it really isn't (because those investors are free to remain a private partnership and avoid the tax entirely). Corporate income taxes are completely voluntary payments made in exchange for some very lucrative benefits.
Anyway, I'm not convinced at all by his arguments. Bubbles leave behind remnants and have side effects that can be beneficial, be they are ultimately misallocations of capital and human labor due to incorrect speculation on the future. When and if we find out a bubble was helpful and better than alternatives, we generally revise our history and no longer call it a bubble. It's sort of a definitional thing--there isn't much way around it. Perhaps the author would have been better changing his thesis into an argument in favor of such a revision for the specific case of Florida and the telecoms.

"Dubai's developers similarly fashioned a city out of the desert."

Time will tell whether those resources could have been better spent elsewhere. What could Dubai have achieved if they had invested even half of all of that sovereign cash directly into education and general welfare for the migrant near-slave-laborers who built the place, rather than rely on some sort of exercise in trickle down theory involving indoor ski slopes in the desert?