Advocacy & Safety - Consumption based economy

I've noticed our economy is based largely on using up resources.
So much so, in fact, that "economists" can, with a straight face, suggest everyone spend more to stimulate the economy and bring prosperity to all.

:confused:

Excuse me, that may put more money in someone else's hand, but if I spend more money, how do I know it'll get back to me?
I prefer the old, "a penny saved is a penny earned" philosophy.
I believe it's more realistic than the "a penny spent makes the economy a penny stronger."

Someone is pulling my leg, here.

The problem that I see with the North American philosophy (this applies to Canada as well and much less so to Europe) is that everything must continually be growing, everything must get larger. More people consume more. If the GDP or GNP remain constant for a month the economy is "lagging". Why does everything have to be predicated on eternal growth. If everything remained constant wouldn't that be fine?

The "Paradox of Thrift", taught in almost all economics classes.

ok, this is a super-simplification and just off-the-top-of-my-head...

basically, most of the world is less developed than the US/Canada/Europe and is catching up fast with resources and labor galoure...

so if a country doesn't grow and increase it's productive capacity, then rest of the world catches up and/passes by really fast and products get cheaper or better elsewhere, so there is a continual competition to stay ahead. for example, when the US lagged in electronics and automobiles in the 80's and Japan took the lead. you can really see this in the super-short cycle time of products now where a new cell phone or disk dirve or computer chip is obsolete as soon as it is produced so the companies are working on multiple product generations at one just to stay alive... if a great company today were still making IBM XTs for $2000, they obviously would have a hard time staying in business when you can buy a $200 PDA handheld with more capabilities...

basically, a "no-growth" or "status quo" would mean that the whole world would stay at a certain level... but since most Americans don't want to equalize their standard of living with those in China/Africa/India or wherever, the US must continue to grow to stay ahead and make more and better products than other places so they can SELL more and stay RICHER than the rest of the world...

that's my super-simple, slightly naive, explanation... i'll try and think about it over the weekend and come up with something more and/or critique my own view here...

in the "ideal", all people of the world would share a high standard of living, but it's a lot easier (for those at the top) if there is a major INEQUALITY so that the successful ones have more options, more control, more power and ultimately more wealth...

although it seems like perpetual growth is impossible, i'm not so sure... obviously resources are finite, but what you do with the resources can always be improved, that's mostly what the whole "information revolution" is about: the change from simply creating more stuff from natural resources (basic production) to the better and smarter use of these resources, particualrly abstract resources like information services and information management... smarter ways of doing things with the same or fewer resources

i personally of more of the "conserve and use wisely" mindset and it's a good personal motto, but for the country as a whole it's better if everyone buys lots of stuff (if there's no market things don't sell and if things don't sell, there's no incentive for investment b/c potential for return is so low/risky, so no jobs are created) ... but basically, if everyone else buys a lot of stuff and you earn a lot from it, that's every better - but obviously this doesn't work b/c the "everyone" is made up of all the "individuals"

ok, all off the top of my head here, so i hope this wasn't too incoherent... i'm pressing send now...

Nathan makes some excellent points. Addressing some earlier comments, also consider the following:

Adam Smith wrote the words "invisible hand" once, possibly twice. He wrote the word "frugality" hundreds of times. Spending money wisely (and investing it wisely) was an essential part of his economic message. Not that any Republicans in the 1980, nor in the current decade, seemed to have noticed.

Cheers,
Jamie

P.S. Good old A.S. was also in favor of government intervention, especially when it came to inhibiting what we would call today "big business interests." This was pointed out at least as early as 1927. Again, not that anyone ever heard that from the free-market fundamentalists.

A economy based on a market is just speculation. Everybody is trying to get more out of it than what they put in. PROFIT. We accept to have loosers just so there will be a chance for ourselvs to be winners. We can see it everywhere. We in industrial west are not only using up the resources here, but also in the third world leaving nothing to people in developing countrys.

Anders K

The key, to which some of the other posters have already alluded, is to generate economic prosperity efficiently; the post-industrial, information-based economy makes this feasible. We need to use resources more intelligently, as we move away from a growth- and consumption-based economy.

I believe that the information age has allowed us to utilise our resources more efficiently. For example many manuals are sent as PDF and not as a hardcopy, saves paper. Buying online is defintly less polluting than having every package picked up by a 1.5ton steel cage.

As I said before though, I think the main obstale to overcome is this continual expectation of growth.

and that is why the buddists have a saying that goes something like: the only wordly possession worth having is a possession that you can let sit out in the rain - and not have it ruined.


if you want to boil down the life of a sedentary person: he goes to the store to buy food & TP and waits around till the digestive processes take their course....then craps it out. and he needs to buy some pleasantries (magazines, CD's, etc) to while away the hours till the process is repeated all over again...and again....now that's consumption for the sake of consumption.

sorry in advance for the harshness. must be my blood sugar.

A person's life does not consist in the abundance of things they posess.

The reason consumption is seen as so important for the growth of the economy is that when people buy things, it creates a market for those things. In order to fulfil that market, these things need to be made, and hence jobs are created. Granted, this is an oversimplification, but that is, on a basic level, how it works.

Of course, the otherside of this is that when people turn 65 and leave the workforce (or whatever age they do it), it's imperative that they do have a substantial amount of funds put into various investments or saved or whatever in order for them to support themselves, otherwise it's left to the government to do it. You can all now see why economics is referred to as the dismal science.

The fact is that most marketing and media coverage is going to be directed at the first point, while the second point is likely to be entirely neglected in these areas. The reason for this is that someone else will make money out of me spending mine, but none of them will get anything if I save it.

Nathank did make some valid points about learning to do things more efficiently. However, while this would undoubtedly be of benefit to the economy in the long term, there are other forces (for example, 50 year old oil company executives) who basically couldn't care less about a long term future that will, in all probability, out live them.

Originally posted by LittleBigMan
A person's life does not consist in the abundance of things they posess.

This is true.

Originally posted by Chris L
The reason for this is that someone else will make money out of me spending mine, but none of them will get anything if I save it.
My point, exactly.

Read the papers lately. The highly-paid CEO's would rather make their big money by selling off stock before it becomes worthless rather than help a few hundred families to stay afloat.