Christmas as economic savior

Walter Russell Mead has a short critique of this idea.

This of course reflects on the assumptions underlying a consumer economy. I discussed Mead’s ideas about this in this post, and followed up here.

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3 comments

  1. Since spending is a common indicator of economic health, I can see why it is often talked about longingly, but it also seems like people flip that causality around and turn spending metrics into an inherent good, which they are not.

    One example is government spending simply to help the economy, as if it knows better than we do what we should value.

    Another example is eliminating wasteful expenditures, which happens all the time but especially in recessions. e.g. If gifts are bought, given, and left unused or otherwise valued less by the recipient than the money spent (or its equivalent time value with a parent, for example), then the economy is actually improved by not making that purchase. Even though spending metrics decline, the economy is made more efficient and reflective of what people actually value. This is good.

  2. Would you say that the miscalculations that you refer to are partially because we value consumption way more than production?

    It kind of makes me think of something that Kevin Williamson said in National Review: businesses’ function is not to create jobs, which are an expense. We should be thinking more about doing productive and valuable work rather than hoping that a job exists for everyone. I think that in the future more people will need to create their own jobs, which will be a tough transition (for me as well).

  3. Scott wrote: “Would you say that the miscalculations that you refer to are partially because we value consumption way more than production?

    In a sense, yes, our over-valuing consumption is a motive for wishful miscalculations, and economists prescribing consumption feeds into our natural desires, but within the framework of a free market we can only consume by producing. Our greed motivates us to serve others, and we find a balance.

    The real problems arise from distorting the rules of the free market. For example, the government over-values production when it funds green energy startups, but that’s a distortion just like their subsidizing the demand side of the exchange.

    My general view is that if the economy represents what we value rather than merely indicators of value (like spending, jobs, etc.) and if we are each the final arbiters of what we value, then we should be highly skeptical of the idea that forcing variables in economic models creates value as opposed to simply degrading the symbolic link to real value.

    Great comments about jobs! I agree we should be focusing on value. Jobs are another indicator like spending that is misleading when it becomes an end unto itself.

    I also agree that creating your own jobs — being an entrepreneur — is scary. I don’t think we’re culturally prepared for it; quite the opposite, in fact. But if we truly are on the cusp of tough times ahead, as I think we are, necessity will be the mother of invention.

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