By Patrick Barron
The standard Keynesian line is that increases in consumer spending always are good for a nation's economy. Yet, there is much more to economic growth than simple spending.
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84 sats \ 1 reply \ @TomK 30 Jul
an expansion of production capacities due to saved capital would be quite nice
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68 sats \ 0 replies \ @Undisciplined OP 30 Jul
One of the problems is that they just take savings as a signal that they can tax more heavily.
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63 sats \ 3 replies \ @grayruby 30 Jul
Maybe in the short term but if they are buying a bunch of useless crap with borrowed money probably not in the long term.
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71 sats \ 2 replies \ @Undisciplined OP 30 Jul
I think it's just a fundamental misunderstanding of Keynesians. It's a little ambiguous though, because it entirely depends on how much satisfaction people get from that consumption.
In general, people are better off when production > consumption is the norm.
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63 sats \ 0 replies \ @grayruby 30 Jul
Consumptive satisfaction tends to be fleeting though so I tend to agree that people are better off producing more and consuming less but we have a monetary system that incentivizes the opposite.
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20 sats \ 0 replies \ @Bell_curve 31 Jul
agree
supply side is more important than demand side
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42 sats \ 2 replies \ @oliverweiss 30 Jul
Spending into yourself, education, heath, whatnot, is always good for the economy.
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38 sats \ 0 replies \ @Undisciplined OP 30 Jul
Maybe not always, but human capital development is important. That's what I decided to focus on during the Great Recession, when economic opportunities were limited.
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0 sats \ 0 replies \ @Bell_curve 31 Jul
Not always and not when others are paying for your education and health
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21 sats \ 0 replies \ @Bell_curve 31 Jul
Consumer Spending is not important.
Producing goods and services is important.
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21 sats \ 4 replies \ @Satosora 31 Jul
Wouldnt the economy improve, too, if people saved their money and made prices drop because people arent just buying in excess?
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20 sats \ 3 replies \ @Undisciplined OP 31 Jul
Yep, but our flawed metrics would be interpreted as the economy crashing.
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21 sats \ 2 replies \ @Satosora 31 Jul
I think this is something people need to realize.
Spending money doesnt always make the economy better.
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20 sats \ 1 reply \ @Undisciplined OP 31 Jul
It only does if you really want the things you’re buying. Mindless consumption may as well be setting useful resources on fire.
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21 sats \ 0 replies \ @Satosora 31 Jul
Right, and in this society people are buying things just to buy things.
They need to get that dopamine high.
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