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Modern economics seems to treat all spending as valuable; there is no distinction between money spent on bridges vs Netflix vs education. Am I wrong about that?
by dr_dshiv 4y ago
Modern economics seems to treat all spending as valuable; there is no distinction between money spent on bridges vs Netflix vs education. Am I wrong about that? How to know the value add of a fiscal policy?
- ChadNauseam 4y agoKnowing the value add of fiscal policy, but economics does understand the difference between spending on bridges vs netflix vs education – spending on netflix only benefits netflix and the person doing the spending, while spending on a bridge benefits everyone who uses the bridge as well as everyone who benefits from people being able to use the bridge (for example businesses on one side of the bridge who benefit from people being able to drive from the other side and visit their business).
- yowlish 4y agoIn the national accounts [0] spending on bridges shows up as investment, while Netflix is consumption Keynes' book General Theory breaks down GDP into components, of which consumption and investment are two Dynamic choices about consumption vs investment are at the core of macro models. In analysis of long term trends, the Solow growth model admits analysis of national savings rates. In the analysis of shorter term fluctuations, DSGE models explicitly address the household intertemporal consumption-savings question, seen in the Euler equation [0] https://en.m.wikipedia.org/wiki/National_accounts https://en.m.wikipedia.org/wiki/National_accounts
- marcosdumay 4y agoYes, you are wrong about that. Modern economics isn't unanimous about this. Most theories will clearly distinguish a bridge from Netflix. And even that "valuable" word is problematic, modern economics thinks about events and consequences, while "valuable" is a subjective take on the consequences, that is outside of the subject (and are almost always mixed anyway).