[quote=FlyerInHi]
How is that relevant to increasing goods and services for everyone?
More consumer spending does generate more goods and services.
[/quote]
It really depends. If I give everyone in America a check for 1 million dollars and they immediate quite their job and go out and spend the money did I grow the economy or shrink the economy. I have more consumer spending initially but I also encouraged people to stop being productive at the same time.
[quote=FlyerInHi]
It’s not about morals or individual choices. It’s about total aggregate goods and services for everyone.
So how is the ivory tower getting it wrong?
[/quote]
Well more people working to produce something of value increase total goods and services but how does handing out food stamps, welfare checks, medical subsides, etc. encourage people to do productive things in the economy. Freeing up more money to buy iPhones built in China and enrich a company that already has tons of money isn’t doing much to help the main street economy in the US. Yet that’s where the problem lies, we can encourage demand but we can’t necessarily direct that demand to something that will benefit the US economy on the whole.
There is no free lunch or painless solution to the problem of too much debt. The ivory tower keeps thinking they can grow their way out of this problem but they are wrong. Doesn’t stop them from trying and claiming that the reason it didn’t work is because it wasn’t a big enough stimulus package. Those plans fail because they don’t understand that people act in their own self interest and often irrationally.