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He's right that all savings are someone else's debt. But, if that is your big sticking point, you can literally load up on the cans of pork and beans as your r

He's right that all savings are someone else's debt. But, if that is your big sticking point, you can literally load up on the cans of pork and beans as your retirement fund. "Savings account" is an abstraction for that, and it's important to realize how abstractions leak and fail, but for most people the abstraction is just fine.

rayiner 14y ago
Savings accounts are not abstractions for loading up on cans of pork and beans. If everyone simultaneously did that, then stopped working, everyone could still eat. If everyone put money into a savings account, then stopped working, they'd all starve. I think this is a deeply meaningful distinction. "Saving for retirement" in the modern financial sense is really more akin to having your kids take care of you when you can't work, except the transaction is severed from the familial unit and carried out in the market.
- danielweber 14y ago
  If everyone simultaneously did that But, they won't. Not everyone is of the same age, for one. So, it's an abstraction that usually works. Instead of accumulating pork bellies, you can accumulate pork belly futures. This is another abstraction. Not everyone can do this at once, either, but the price of pork belly futures will rise in response, telling people to stop accumulating so much of that good. It feels like you are saying -- based on my experience talking with other people who think economics is just a sham, so perhaps I'm too sensitive to that and applying their thinking to you, unfairly -- that any savings are just a confidence game. This is what I'm arguing against.
  - rayiner 14y ago
    I'm using the difference in edge case behavior to illustrate why I think the analogy is flawed. I don't think saving in a bank is just an abstraction for putting away non-perishable food. Not just that it's a leaky abstraction, but that it's the wrong abstraction. I think that distinction illustrates a deep difference between the two scenarios. "Saving" in the sense of storing away pork and beans is retrospective. How well you eat depends on how much you saved, but not on what else is going on. "Saving" in the financial sense is prospective. How well you eat depends heavily on what the future looks like. That isn't to say that savings isn't an abstraction for something. Saving money in financial instruments isn't a "savings" game. It's a growth game. By saving, you make available capital. That capital goes towards growing the economy. Ideally, the growth in future production resulting from your capital offsets the share of production you take out in retirement. It's this element of growth that distinguishes financial savings from "savings" in the pork and beans sense.
- jimbokun 14y ago
  "If everyone put money into a savings account, then stopped working, they'd all starve." And if everyone doesn't do that, there is a very good chance you can withdraw your money and buy some pork and beans. Which is the point about leaky abstractions. Unless you believe there is a significant chance your scenario will play out, the distinction isn't very meaningful.
- 205guy 14y ago
  "the transaction is severed from the familial unit and carried out in the market." And this is one of the good things about a capitalist free market, it reaches certain efficiencies and spreads the risk (and rewards) across the whole economy (and all its participants).
- sopooneo 14y ago
  There is not enough "pork and beans" any more than there is enough labor.

rayiner 14y ago

Savings accounts are not abstractions for loading up on cans of pork and beans. If everyone simultaneously did that, then stopped working, everyone could still eat. If everyone put money into a savings account, then stopped working, they'd all starve. I think this is a deeply meaningful distinction. "Saving for retirement" in the modern financial sense is really more akin to having your kids take care of you when you can't work, except the transaction is severed from the familial unit and carried out in the market.

danielweber 14y ago
If everyone simultaneously did that But, they won't. Not everyone is of the same age, for one. So, it's an abstraction that usually works. Instead of accumulating pork bellies, you can accumulate pork belly futures. This is another abstraction. Not everyone can do this at once, either, but the price of pork belly futures will rise in response, telling people to stop accumulating so much of that good. It feels like you are saying -- based on my experience talking with other people who think economics is just a sham, so perhaps I'm too sensitive to that and applying their thinking to you, unfairly -- that any savings are just a confidence game. This is what I'm arguing against.
- rayiner 14y ago
  I'm using the difference in edge case behavior to illustrate why I think the analogy is flawed. I don't think saving in a bank is just an abstraction for putting away non-perishable food. Not just that it's a leaky abstraction, but that it's the wrong abstraction. I think that distinction illustrates a deep difference between the two scenarios. "Saving" in the sense of storing away pork and beans is retrospective. How well you eat depends on how much you saved, but not on what else is going on. "Saving" in the financial sense is prospective. How well you eat depends heavily on what the future looks like. That isn't to say that savings isn't an abstraction for something. Saving money in financial instruments isn't a "savings" game. It's a growth game. By saving, you make available capital. That capital goes towards growing the economy. Ideally, the growth in future production resulting from your capital offsets the share of production you take out in retirement. It's this element of growth that distinguishes financial savings from "savings" in the pork and beans sense.
jimbokun 14y ago
"If everyone put money into a savings account, then stopped working, they'd all starve." And if everyone doesn't do that, there is a very good chance you can withdraw your money and buy some pork and beans. Which is the point about leaky abstractions. Unless you believe there is a significant chance your scenario will play out, the distinction isn't very meaningful.
205guy 14y ago
"the transaction is severed from the familial unit and carried out in the market." And this is one of the good things about a capitalist free market, it reaches certain efficiencies and spreads the risk (and rewards) across the whole economy (and all its participants).
sopooneo 14y ago
There is not enough "pork and beans" any more than there is enough labor.