Posted on 04/16/2015 9:57:34 AM PDT by fredericbastiat1
If you listen to the news on the economy or financial markets, you have probably heard statements like “consumption drives the American economy,” or “consumption is 70% of the economy.”
But in a new book out that follows in the footsteps of Henry Hazlitt’s classic “Economics in One Lesson” — though in a much more fun package — titled “Popular Economics: What the Rolling Stones, Downton Abbey, and LeBron James Can Teach You about Economics,” Forbes and RealClearMarkets Editor, and senior economic advisor to Toreador Research and Trading John Tamny challenges this and much other “conventional wisdom” on taxes, regulations, trade and money.
In an in-depth interview with Mr. Tamny, I asked him in particular about the notion that consumption drives economic growth, to which he responded:
(Excerpt) Read more at theblaze.com ...
Well, the drugs used to treat tuberculosis ARE expensive...
Did "consumption" create the iPhone?
It used to be EXPORTS...................
It’s pretty basic that production drives an economy. Without production, there is nothing to consume to begin with, and nothing to trade to others to get things to consume either.
ping
Chicken and egg.
Consumption can create a need that didn’t exist before. The PDA and basic cell phone created a need for the smart phone. Also, the need for a music player created the ipod which in turn created the Iphone. The iphone may not exist if it weren’t for the Ipod and the huge business that it created.
And as a side note: energy (cheap energy) drives production which drives the economy. Important to note these days when Democrats are talking about a carbon tax to curb global warming.
Appreciate Mr. Tamney’s views on the economy, and making the obvious point that what we produce, rather than consume is the true measure of economic health.
I’m concerned that his nuanced statement that: “deficits don’t matter”, will be misinterpeted by willing ears all too eager to print money, and continue insane fiscal and monetary policy.
I got into a big argument with someone here on FR a while back about the same subject, he just could not stop insisting that consumption is what makes an economy. Those of us who grew up on the farm walking behind a plow know very well that you must produce BEFORE you can consume. You can easily thrive by consuming half what you produce but you cannot make it for one day by consuming twice what you produce unless you can borrow the difference and only an idiot still believes he can borrow his way to a surplus.
It would be difficult to find a better teacher.
Your dad?
Without consumption the economy is 0. Without supply the economy is 0. Together you have an economy.
We’re hurting consumption by offshoring manufacturing. People without jobs don’t consume much.
The imports are temporarily cheaper and provide more supply. But that will stop when we run out of money and no one is willing to buy the government’s debt.
Raise the import tariffs, which will put Americans back to work and bring back American manufacturing.
I know nothing about economics, but basically I think it is a perceived or actual need being filled. Need water? Need food? Told you need an iPhone?
The people in Venezuela "need" toilet paper.
The "need" for a product does not cause it to come into existence.
The only products that can be "consumed" are products that have been produced.
Savings grow the economy. Money which is saved can be invested in new growth. It can fund opportunities that are unavailable to the impoverished. It allows one to ride through the tough times without being economically destroyed. Savings increase confidence in the future and investing for future opportunities.
“Also, the need for a music player created the Ipod which in turn created the Iphone.”
No, it didn’t, SOMEONE created the ipod in response to a PERCEIVED need but need has never created anything and the Ipod certainly did NOT create the Iphone. All the needing that I have ever experienced did not create so much as a crumb.
Bm
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