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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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.
an expansion of production capacities due to saved capital would be quite nice
One of the problems is that they just take savings as a signal that they can tax more heavily.
Maybe in the short term but if they are buying a bunch of useless crap with borrowed money probably not in the long term.
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.
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.
agree
supply side is more important than demand side
Spending into yourself, education, heath, whatnot, is always good for the economy.
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.
Not always and not when others are paying for your education and health
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Consumer Spending is not important.
Producing goods and services is important.
Wouldnt the economy improve, too, if people saved their money and made prices drop because people arent just buying in excess?
Yep, but our flawed metrics would be interpreted as the economy crashing.
I think this is something people need to realize. Spending money doesnt always make the economy better.
It only does if you really want the things you’re buying. Mindless consumption may as well be setting useful resources on fire.
Right, and in this society people are buying things just to buy things. They need to get that dopamine high.