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While I support redistribution for its own sake, the idea that the economy is driven by consumption is false. Even Keynes would not have said so: it is only du
by JesperRavn 11y ago
While I support redistribution for its own sake, the idea that the economy is driven by consumption is false. Even Keynes would not have said so: it is only during recessions that Keynes (correctly) said that the economy needed to be stimulated.
If there are only 1000 people who can afford an iPhone, or to drive cars on roads, there will be no way to finance the development of iPhones (plus infrastructure) or roads.
This kind of verbal reasoning was replaced by mathematical models in economics. The most fundamental such model is called General Equilibrium Theory, which states that the economy is driven by the creation of value (see sibling post) and as long as the technology to create value increases, so will the total value of the economy. Keynes (who set the tone for all subsequent macroeconomics) pointed out a major deviation from General Equilibrium Theory can occur, where the economy produces less than its theoretical output. To remedy this, he recommended fiscal stimulus (e.g. "coming up with new labor-intensive occupations") but this was only a short term measure. In ordinary times, Keynes did not recommend fiscal (or monetary) stimulus.
Now in practice, zero redistribution of wealth would result in a really terrible society, and the negative externalities from poverty (and extreme wealth) would probably result in much lower economic growth. Wealth redistribution is not only ethical, but also makes a more stable and orderly society. Nonetheless, the fundamental reasoning that growth is drive by consumption per se, is wrong.
- skybrian 11y agoIf you wanted to publish an economics paper then you'd need to come up with a mathematical model, but that doesn't mean all non-mathematical reasoning can be dismissed so easily. We don't need to work out the model to realize that a world in which Apple only manufactured phones for millionaires would be quite different than today's world.
- JesperRavn 11y agoNo you really do need a model, because right now you are talking about the whole economy, but only analysing a part of it. If you want to talk about the mechanisms by which the economy operates, such as consumption driving economic growth, then you need a model.