We need to spend to save the economy

[admin]

After reading Prof Livingston, I think that he’s on to something.

Consumer spending can save the economy of the world — America, Europe, Asia.

Consumer spending is not only the key to economic recovery in the short term; it’s also necessary for balanced growth in the long term. If our goal is to repair our damaged economy, we should bank on consumer culture — and that entails a redistribution of income away from profits toward wages, enabled by tax policy and enforced by government spending. (The increased trade deficit that might result should not deter us, since a large portion of manufactured imports come from American-owned multinational corporations that operate overseas.)

http://hereandnow.wbur.org/2011/12/13/spend-thrift-economy

[scaredyclassic]

Probably true but I’m not buying it.

[sdduuuude]

[quote=walterwhite]Probably true but I’m not buying it.[/quote]

HA ! Perfectly stated.

[UCGal]

[quote=walterwhite]Probably true but I’m not buying it.[/quote]
Me either.
Maybe Brian will buy it for both of us.

[urbanrealtor]

[quote=walterwhite]Probably true but I’m not buying it.[/quote]
Is it because you control the banking and media?
Inquiring minds want to know.

DON’T IGNORE ME!!!!
PLEEEEEAAASE!!!!

[scaredyclassic]

No. It’s just spending money causes me actual physical pain and distress. Any amount. Except for groceries.

Over $300 and I start to get dizzy.

Over $1500 and I need a bucket on standby to puke in.

[SD Realtor]

Or in other words….

Saving Money = Very Bad

and

Spending Money = Your obligation. So if our economy sucks it is your fault for not spending enough!!!

So really, the article above presumes that you are going to blow all your wages on more crap you don’t need rather then saving it, investing it wisely, or travelling abroad.

[briansd1]

The author talks about spending and but he doesn’t say spending on what.

Maybe spending on junk and little trinkets is wrong, but what about spending on leisure and education and infrastructure?

Of course, it good for individuals to have nesteggs that increase financial security.

But it’s good for society to spend for the general well-being of the population, to spur and encourage investments and innovation.

Isn’t that what capitalism is all about? Capitalism is about using money and debt to accelerate development so that people living today can have better lives and so that the people of the future have even better lives thanks to the innovations of today that lead to innovations of the future.

For example, you could save all your life to pay cash for a house… But you could borrow to buy a house in better neighborhood so that your kids can grow up in a better environment. You kids then grow up to be more accomplished adults because you borrowed to provide them good shelter and good education. Your purchase of the house on credit spurs construction, appliance and furniture sales, etc…

I believe the author is correct that businesses don’t invest without the demand for their products and services. If they is slack capacity, then why would businesses revinvest their profits?

In order to have business investments, we need demand growth to exceed productivity growth.

So we could take the excess corporate profits that do nothing but inflate bubbles, turn them to wages that consumers spend, that money will grow the economy faster and create an even wealthier society.

This receipe might work very well for China that has a great export economy. Couple that with a great consumer market, and China could be several times wealthier.

[The-Shoveler]

Well I am all for my employer giving me a raise so I can spend more.

Maybe everyone gets a raise.

It will be interesting to watch what happens in China, seems the bubble starting to go, seeing as that is about 40% of their economy it will be interesting to see when their gov decides maybe it would be better to give everyone a raise (Again), hmmm maybe I should buy that flat panel TV and laptop I did not get at thanksgiving,
Speaking of spending, maybe watch what happen in Canada and Australia, not saying that they have benefited form the china housing boom but you know.
I don’t have Gold (except my ring) so I will stay out of that one.

[sdduuuude]

[quote=briansd1]Isn’t that what capitalism is all about?[/quote]

No. Capitalism in a free society is about making your own decisions about your own money, regardless of where that might take the economy.

[an]

[quote=briansd1]Isn’t that what capitalism is all about? [/quote]
According to Wiki, capitalism is: There is general agreement that elements of capitalism include private ownership of the means of production, creation of goods or services for profit, the accumulation of capital, competitive markets and wage labor.

[briansd1]

AN, I agree with the wiki definition.

On the accumulation of capital part, nowhere does it say how much, as in what amount or percentage of the economy.

The main feature of capitalism is money lending or leverage in excess of the funds you actually have to acceralerate (bring forward) consumption and/or investments to create wealth.

I think that real capitalists would want to manage society’s money to create maximum wealth for the whole population. It would be a waste not to deploy capital to get idle resources working.

[an]

[quote=briansd1]AN, I agree with the wiki definition.

On the accumulation of capital part, nowhere does it say how much, as in what amount or percentage of the economy.

The main feature of capitalism is money lending or leverage in excess of the funds you actually have to acceralerate (bring forward) consumption and/or investments to create wealth.

I think that real capitalists would want to manage society’s money to create maximum wealth for the whole population. It would be a waste not to deploy capital to get idle resources working.[/quote]
So, who get to dictate where the capital get deployed? If your goal is accumulation of capital and in high risk time, wouldn’t it be prudent to hoard you cash waiting for the bottom? Isn’t that what a lot of smart home buyers did by not buying in 2005 and waiting at least to 2008 if not longer? You don’t see a limit of capital accumulation, because there shouldn’t be one. You can accumulate as much capital as you want.

[jstoesz]

When does short term become long term?

We have been in short term mode for 4 years and I have yet to see it pay off long term. We need to enact long term thinking. It’s our only way of getting out of short term thinking. We are in the new normal, now it’s time for a new future.

Stop bribing and start investing. Btw, investing is getting long term benefits for current outlays. I heard someone say yesterday that the bed they just bought was an investment! No depreciating good is an investment unless it brings long term profit. We need to use language more precisely.

[scaredyclassic]

A good bed probably does bring long term benefits.

Ultimately my biggest asset is my health and ability to work.

Invest in barbells, mattresses, massages, psychotherapy, and good food.

[Author]

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