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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: TimF who wrote (300017)	8/15/2006 7:28:37 AM
From: combjelly	Read Replies (1) \| Respond to of 1575523

"You seem to be arguing that government encouragement of spending is the best way, or at least a good way, to achieve long term economic growth." No. It s just a way with positive and negative aspects, just one of many tools. Spending is spending, in the hands of the government is doesn't get somehow magically transformed into good or evil spending. "The only way that putting the money in the hands of poor people increases demand and velocity is by biasing the system towards spending." Tim, I know you don't really deal in the real world much, but the poor are biased towards spending. It is called "living from paycheck to paycheck". In fact, not only just the poor do this, but arguably they have a stronger case than, say, yuppies. Tim, you do realize that without consumer spending the economy collapses? Investment is a good and necessary part of the economy. So is spending. Your highly theoretical arguments tend to ignore this. In addition, you have several hidden assumptions that don't necessarily map to reality. For example, higher resource individuals aren't necessarily efficient investors. Higher income and higher resource people tend to spend more on high margin, low velocity goods and services. They also disproportionately spend on high margin, imported goods so more of their spending tends to go out of the country. If more of the resources are shifted to them, consumer spending declines, making investment in this country less attractive, thus shifting the investment to other countries. Redestributing spending to the lower incomes means more spending on low margin items, increasing the velocity of the money and making investment in this country more attractive. Of course, taken to extremes and you see the factors that you seem to think are automatic. Which is why it is a game of tradeoffs and isn't anywhere near as black and white as you want to paint it. Your model ignores a lot of factors that make a real economy work, and only focusses on a small part of the overall equation. Economics is one of many areas where a purely ideological approach yields a distorted system because it, by its nature, ignores key aspects. You treat consumer spending at a net negative, when it is the whole reason an economy exists. I am not sure what you would call investment without spending, which seems to be your ideal, but it wouldn't be an economy.