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I think you are under the impression that there will just suddenly be a mass freeze in spending and everyone will start saving amongst all age brackets. My argument is that people should spend ONE age bracket saving. Consider that currently most retired people spend FAR less than the rest of the age brackets, where as in a better economy they wouldn't be cash strapped in their elderly years, and would therefore spend. Like I said, youre just shifting consumption from one age bracket to another. The difference is youre building your wealth early and using 50 years of compounding interest to your advantage.
Plus bear in mind that this would have a rolling impact on the generations. I would leave far more wealth to my kids upon my passing, meaning that they wouldn't be struggling as much if they cant find a good wage initially. Today many people leave little to nothing to their kids.
So you are in essence saying that spending cuts by people in their 20s are ok as long as spending goes up by people in their 30s at the same time - it HAS to be at the same time and not 10 years later to avoid high unemployment.*
And people in their 30s could spend more, if they had saved more in their 20s.
But this means that in order for people in their 20s to save without causing high unemployment, people in their 20s 10 years ago would need to have spent less, since those who were in their 20s 10 years ago are the ones that are in their 30s today.
For that to work, people in their 20s 10 years before that would need to have spent less.
Ergo, your proposed system requires an infinite amount of time to implement and is not viable!!!!
* You can argue that 10 yrs of unemployment would be ok as long as they had cash reserves, but remember that we are trying to implement the system. This means in order to avoid the hardships caused by low spending, we need wealth that would only have accrued if people had spent less 10 years ago, which would work only if people spent less 10 years earlier still, and there is still an infinite regress problem.
Your argument is the people should not build wealth in this Nation because it would hurt sales. This is precisely the attitude that I am talking about in Americans today. Weve been trained to believe that our fragile little economy stands upon the edge of a knife that is our weekend trips to Walmart and Target. Clearly if we stop to better ourselves, then our Nation will be thrust into an economic turmoil.
Your argument is the people should not build wealth in this Nation because it would hurt sales. This is precisely the attitude that I am talking about in Americans today. Weve been trained to believe that our fragile little economy stands upon the edge of a knife that is our weekend trips to Walmart and Target. Clearly if we stop to better ourselves, then our Nation will be thrust into an economic turmoil.
I don't think cancelling one weekend of shopping will crash the economy; however if people would live as minimalists until they had a net worth of $100,000 I do believe the economy would unravel in fairly short order (< 1 year).
I don't think cancelling one weekend of shopping will crash the economy; however if people would live as minimalists until they had a net worth of $100,000 I do believe the economy would unravel in fairly short order (< 1 year).
And the downfall of living the way that we currently live is equally as troubling on both the economy and the govt assistance burden. Lack of financial responsibility takes its effect on the economy in one way or another.
And the downfall of living the way that we currently live is equally as troubling on both the economy and the govt assistance burden. Lack of financial responsibility takes its effect on the economy in one way or another.
Right, which is precisely why those of us who want to see improvement in a finite length of time are approaching it as a public policy issue rather than an individual matter of consumption decisions.
I think a repeal of Reaganomics would be a great start, as it would allow sustainable higher levels of government spending without big deficits, and this government spending would stimulate the economy and reduce unemployment.
Am I understanding you properly in that you would rather have government policy determining the strengths of the economy rather than individual decisions?
You do realize that you are arguing AGAINST the middle class building wealth right? Id almost be drawn to ask your underlying intentions here?
I am absolutely not against the middle class building wealth. What I am against is the middle class making an attempt which fails because it crashes the economy and leaves unemployment at sky-high levels.
Right, which is precisely why those of us who want to see improvement in a finite length of time are approaching it as a public policy issue rather than an individual matter of consumption decisions.
I think a repeal of Reaganomics would be a great start, as it would allow sustainable higher levels of government spending without big deficits, and this government spending would stimulate the economy and reduce unemployment.
You guys are debating around the central problem that US industry reshaped itself in the 80s to be a "consumer economy" rather than a production economy. Once upon a time, the US economy was based on manufacturing goods and selling them--mostly overseas--so that wealth was pulled into the country.
That was changed in the 80s. It wasn't secret, it was overt. Pundits applauded it on television: "We're going away from a manufacturing economy!" The first new thing was the "information economy"--everyone was going to become rich selling information (without regard to the people who believed that "information wants to be free!"). Then it became the "consumer economy."
The fundamental problem with a "consumer economy" is seen in the average western ghost town. When the primary "wealth import engine" of the town--like the silver mine--disappeared, the "consumer economy"--the saloon, the barbershop, the restaurant, the general store--eventually dried up.
So we have an economy now that is like a man staying alive by eating his own foot.
Am I understanding you properly in that you would rather have government policy determining the strengths of the economy rather than individual decisions?
Both of those will always have an impact in the short term, but I think government policy has a potentially bigger effect in the long run.
On a somewhat different note, the government actually penalizes saving - assets will disqualify your kids from college grants even if income doesn't, will disqualify you from public assistance if you lose your job, etc.
And the credit industry pushes debt on everyone by telling young people to borrow money in order to later be able to borrow even more money. If you save for things rather than borrowing, you don't need a credit score, but the American financial industry tries to make it seem as though you can't live a good life without being in debt. And lots of people fall for it every day.
An individual person or household is certainly better off if he/she saves than if he/she does not save, all else being equal. I don't deny that. What I deny is that a collective reduction in consumption would necessarily lead to gains high enough to more than wipe out the effect of higher unemployment when considering economic non-ideals such as liquidity and borrowing constraints.
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