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Well, that's only if you believe that "consumption" is a good thing that is supposed to be encouraged. In reality, it is the opposite. Consumption, is by defin

• nybble41 8y ago
  > Instead, we should be promoting savings, and the preservation of resources, as well as the creation of capital. Production and consumption are both necessary. If you don't save and invest then production capacity will decline and there will be less available to consume in the future; but on the other hand if you don't consume then all that production capacity goes to waste and you derive no benefit from saving and investing. The balance is the critical aspect. Both policies which promote over-consumption at the expense of saving and policies which encourage over-investment at the expense of consumption miss the mark and destroy value by moving the economy away from the optimum balance.
  • vijayr02 8y ago
    Funnily enough I happened to read an O Henry story today that is exactly about this: http://www.bibliomania.com/0/5/221/714/17033/1/frameset.html http://www.bibliomania.com/0/5/221/714/17033/1/frameset.html As is usual with O Henry the sting is in the tail :)
• cryptonector 8y ago
  You cannot consume more than you produce, but there is no point to producing more than you consume -- not for long anyways. It's not that consumption is bad -- consumption is merely the flip side of production. It's what is being consumed that matters. But even frivolous-looking consumption isn't entirely bad, else we'd never consumed arts, would we? But you'll find that humans want some entertainment, down time, etc. Of course, there is such a thing as bad consumption, demand for wasteful goods and services, and malinvestment. But consumption is no more inherently bad than is production.
  • stale2002 8y ago
    > but there is no point to producing more than you consume -- not for long anyways. Of course there is. This is the definition of savings and capital creation. The more a society saves, the more we are able to invest in capital, and therefore produce way more in the future. Capital creation is how societies as a whole become better over time. It is the definition of investing in our future.
    • cryptonector 8y ago
      You can only accumulate and save so much non-productive stuff. You can have a granary with several years' worth of seed. You can have an oil reserve. But you don't want to have a factory sitting unused (it rots, it depreciates). You don't want cash burning a hole in your pocket -- you want to reinvest this (yes, into raising production, but you'll need demand to increase to, otherwise... see below). And you're not going to build an ever-larger {grain, oil, cash, whatever} reserve. Capital creation isn't like having a grain reserve in case of drought. In a steady state you don't want to be producing much more than is consumed, not for long -- you should be producing just enough more than consumption, on average, to allow for some waste. Of course, the context is global. You can produce much more than you consume locally, if you export, but globally, producing more than is consumed for long is just another way of wasting resources. You can always try to stoke demand if you built too much production capacity, or if you want to build more production capacity, naturally, and you can produce more than is consumed while you're doing this. But in the long run you shouldn't produce much more than is demanded.