Wackonomics

[mary]

Originally Posted by alexamenos

some good news mingled with more wackonomics



Americans are saving more, consuming less, and ala John Maynard Krugman, prudent living is deemed bad for the economy. This notion that a good economy is built by shopping is such a horrible misconception. It is akin to saying that while it may be good for the economy to spend $1,000 to dig a useless hole in the ground, it is 10x better to spend $10,000 to dig a useless hole in the ground. Babbling nonsense, wackonomics.

Economics is about the efficient use of scarce resources -- getting more out of every dollar is good for the economy, Keynsians and Krugmans are wack.

I think your hole analogy is off. He's not saying its better to spend $ 10,000 on one hole. He's saying less holes are being dug - which really sucks for hole diggers.

[alexamenos]

Originally Posted by mary

I think your hole analogy is off. He's not saying its better to spend $ 10,000 on one hole. He's saying less holes are being dug - which really sucks for hole diggers.

I don't think I'm missing the mark by much if it all, and at the least the hole analogy is a logical consequence of thinking of this type:

That kind of scrimping may be good for stressed family budgets, but it's bad for the nation's overall economy

This is the notion that a reduction in consumption causes a bad economy -- this sentiment permeates the thinking of Keynesians and Krugmans (ie, every Washington politician, save perhaps one, and every mainstream economic pundit). This is backwards, and they just don't get it. It's like saying that sneezing and sniffling and eating chicken soup causes one to have the flu.

Scrimping and saving is what you get when you have a bad economy, it is not why you have a bad economy. A bad economy, by definition, is one where resources are poorly allocated and inefficiently used. You can't fix problems of resource misallocation and inefficient utilization by spending more money on the same old things...this is something Keynesians and Krugmans don't get, so their answer to everything is to spend more, to encourage people to spend more, to cut credit card rates so people will spend more, etc., etc...