This sentance wasn’t clear: “Actually, spending 10$ now means spending MORE than 10$ later.”
The emphasis there is NOT “MORE than 10$ later” but ranther “means spending MORE (now)” than the 10$ you might spend later.
Apos, I see that you’re rehashing the same old fallacies. There’s no point, for example, in continuing to insist that increased buying automatically translates to “buying stuff that you don’t want.” I think most people are astute enough to see the difference.
Similarly, “intelligent investing” is NOT the same as “putting more money into something than you think it’s actually worth.” Frankly, I’m baffled that anyone would seek to equate the two.
Both tracer and pldennison have shown other examples of how your view of economics is overly simplistic. For my part, I think I’ll leave it at that, as I’m honestly perplexed at why you keep equating these disparate and tangentially related terms.
—Apos, I see that you’re rehashing the same old fallacies.—
At the very least, my last post would have had to introduce some new fallacies. You’re getting dismissive.
—There’s no point, for example, in continuing to insist that increased buying automatically translates to “buying stuff that you don’t want.”—
Presumably, if people want something in the first place, they’ll buy it, recession or no. What “spending to help the economy” suggests is that someone is buying something for other reasons than that they actually want what they are buying: buying MORE than they ordinarily would have.
—Similarly, “intelligent investing” is NOT the same as “putting more money into something than you think it’s actually worth.”—
Eh? I already suggested that intelligent investing was a good idea, everywhere and always. Again, presumably if someone thinks something is a good buy, recession or no, they’ll buy it. What you are suggesting is buying MORE than that, in the interests of helping the economy. If not, what are you suggesting?
—Both tracer and pldennison have shown other examples of how your view of economics is overly simplistic.—
Ah: is that why pld and tracers’ story ignores entirely a rather key (and relevant) element of the monopoly curve that determines where they set prices?
Apos, the fallacies you’re tossing around are astounding! Consider the following, for example:
Common sense dictates otherwise. Whether it’s a “good buy” or not depends on many factors – INCLUDING whether there’s a recession or not! Besides, there are many luxury and semi-luxury items (entertainment systems, for examples), that are “good buys,” wbut which people may choose to pass on. Most people are not as one-dimensional as you paint them to be.
Similarly, your statement,
is likewise oversimplistic. When it comes to “good buys,” there are degrees of goodness! Intelligent people do not purchase something simply because it’s a “good buy,” and astute people recognize that distinction.
Case in point: I saw a DVD/VHS player today. It was a very good buy, but I decided not to buy it. Why? Because, quite frankly, I can do without it for now. A few days from now, I might change my mind and decide to purchase it anyway.
As I said, normal people are nowhere near as one-dimensional as you’re painting them to be. I could go on an on, but as I said, you posts keep demonstrating the same simplistic worldview and reapplying the same logical fallacies. Frankly, I can only shake my head in amazement.
As I understand most of the writers in this thread, if not all, are from US?
Sony (Playstation) is Japanese? No?
Buy “Made in USA”! Or is there no difference?
I always buy “Made in Finland” if I can.
OK. Playstation may have monopoly, so in this case there is no alternatives.
There is some products that are USA, like Microsoft, but it can be better to have another system (Linux???), so that there will be competition.
I am computer-stupid, so I do not know if I am out swimming in the Atlantic with this example, but anyhow I believe that helping the underdog, the number 2, is good in the long run.
Linux is not an American product so in this my example is bad.
It is a Finnish product, but the inventor, Linus Thorwalds, is now working in Silicon W.
So much of Finnish propaganda. (Linus Thorwalds is a Finn, if You did not happen to know).
But help only the underdog if it is fighting hard, is relatively honest etc. I mean it is no use to have a company as number one, whose production has been put into some Ongo-Bongo-country because the labour costs can be counted in rice.
They will register themself in Nepal, if the taxes there are about null.
The most important thing is the education of Yourself. You have to be ready to take the new challanges when the next boost comes.
And even if the economy would go bad and You would lose everything, nobady can take Your knowledge. And on that it is easy to begin to build again.
Yeah, when we still are on this: Sell Your TV, and You have a chance to learn something useful.
I do not know how many hours an average person of Your country is using watching TV, but if people would read books even half of that time, Your country would be the most educated in the world.
—Whether it’s a “good buy” or not depends on many factors – INCLUDING whether there’s a recession or not!—
I believe I already said that. I didn’t say that the recession wouldn’t affect anyone’s choices. On the contrary, I said that whether or not there is a recession, people still are going to (and should) buy exactly what they personally see as worth it to buy. Patriotism doesn’t make purchases any more worth it. If there is a bussiness going under, then by all means support it so it stays in bussiness. But that’s simply not the same thing as helping the economy as a whole. If anyone knew what would help the economy as a whole, you can bet it would be both front-page news and award-winning material.
—Most people are not as one-dimensional as you paint them to be.—
You toss this accusation around a lot. But there’s nothing “one-dimensional” about people choosing to buy or not buy based upon their own estimation of their desires, preferences, and financial situation.
—Besides, there are many luxury and semi-luxury items (entertainment systems, for examples), that are “good buys,” but which people may choose to pass on.—
Okay… so? How is that not in line with what I said? Presumably they have good reasons for passing on them, just like those that buy have good reasons for buying them. But buying something because you believe it will help the economy, instead of because your own estimation of whether you want to buy the product or not, is not a good reason.
—When it comes to “good buys,” there are degrees of goodness!—
Again, when did I say anything different or inconsistent with this? Those degrees are what reasonable people decide upon day to day. You are again avoiding the point: are you advocating that people buy IN EXCESS of what they already would choose buy, because it would “help the economy?”
—demonstrating the same simplistic worldview and reapplying the same logical fallacies.—
Someone is not guilty of a logical fallacy simply because you accuse them of pushing a “simplistic worldview.” I could accuse you of the same, with a lot more merit, for suggesting that people buy more things for a purely one-dimensional reason that doesn’t even make any sense.
—I saw a DVD/VHS player today. It was a very good buy, but I decided not to buy it. Why? Because, quite frankly, I can do without it for now. A few days from now, I might change my mind and decide to purchase it anyway.—
Sure. But “helping the economy” is simply not a good reason to decide to purchase it anyway. Purchase it anyway only if you decide that it’s worth it to you to own. If you’d rather have it than the cash it costs to buy it.
—OK. Playstation may have monopoly, so in this case there is no alternatives.—
Plenty of alternatives (relatively close substitutes)… Sony has a monopoly on Playstations, but not on video game systems. This doesn’t change the relevant points here any (wouldn’t really matter if they did), but it’s worth recognzing when dealing with the gaming market.
As I understand most of the writers in this thread, if not all, are from US?
Sony (Playstation) is Japanese? No?
Buy “Made in USA”! Or is there no difference?
I always buy “Made in Finland” if I can.
OK. Playstation may have monopoly, so in this case there is no alternatives.
There is some products that are USA, like Microsoft, but it can be better to have another system (Linux???), so that there will be competition.
I am computer-stupid, so I do not know if I am out swimming in the Atlantic with this example, but anyhow I believe that helping the underdog, the number 2, is good in the long run.
Linux is not an American product so in this my example is bad.
It is a Finnish product, but the inventor, Linus Thorwalds, is now working in Silicon W.
So much of Finnish propaganda. (Linus Thorwalds is a Finn, if You did not happen to know).
But help only the underdog if it is fighting hard, is relatively honest etc. I mean it is no use to have a company as number one, whose production has been put into some Ongo-Bongo-country because the labour costs can be counted in rice.
They will register themself in Nepal, if the taxes there are about null.
The most important thing is the education of Yourself. You have to be ready to take the new challanges when the next boost comes.
And even if the economy would go bad and You would lose everything, nobady can take Your knowledge. And on that it is easy to begin to build again.
Yeah, when we still are on this: Sell Your TV, and You have a chance to learn something useful.
I do not know how many hours an average person of Your country is using watching TV, but if people would read books even half of that time, Your country would be the most educated in the world.
Bull. You explicitly said, “Again, presumably if someone thinks something is a good buy, recession or no, they’ll buy it.” Those were your exact words.
Apos, I think you are clearly talking out of both sides of your mouth. On the one hand, you say “Again, presumably if someone thinks something is a good buy, recession or no, they’ll buy it.” Yet now, you say that when it comes to good buys, “Presumably they have good reasons for passing on them, just like those that buy have good reasons for buying them.”
You keep doing this sort of thing. If you can’t make up your mind on what you’re actually claiming, then there’s no reason to take your cliams seriously.
You also keep claiming that increased spending means buying stuff we don’t really want – yet now you admit that there are degrees of goodness when it comes to good buys. Again, common sense dictates that we can choose to spend more on things that we want, but which we might not otherwise have been inclined to buy. (Mind you, I’m not actually encouraging people to spend that way. We are merely talking about the hypothetical here – what could hypothetically help the economy.)
Moreover, please note that we are addressing your claim that increased spending will not help the economy at all. The burden of proof for your claim rests on your shoulders. I am merely pointing out the repeated fallacies in the arguments that you keep proposing.
—Bull. You explicitly said, “Again, presumably if someone thinks something is a good buy, recession or no, they’ll buy it.” Those were your exact words.—
I think you’re letting your desperation to be nasty ot me get the better of you. Those “exact words” don’t say what you’d like to pretend they do. They are a little confusing, I’ll concede, but they still say exactly what they mean: regardless of whether there is a recession or not, people are still going to make purchasing decisions based on their estimation of what is a good buy. That principle is a pretty darn safe one in any discussion of economics.
And that’s good, because that’s the only consistently sound basis for such a decision.
—You keep doing this sort of thing. If you can’t make up your mind on what you’re actually claiming, then there’s no reason to take your cliams seriously.—
There’s no difference in one claim to the other: you’re now simply defending your determined misread.
—You also keep claiming that increased spending means buying stuff we don’t really want – yet now you admit that there are degrees of goodness when it comes to good buys. Again, common sense dictates that we can choose to spend more on things that we want, but which we might not otherwise have been inclined to buy.—
If you weren’t otherwise inclined to buy, why is that? Everyone WANTS things for goodness sakes: but that doesn’t mean they go out and blow some of their savings on lollipops. There are other considerations than simply wanting something now. We might want something else more, later, for instance. At some point people have to decide how best to balence out their desires and their best judgements of how to acheive them all, given their expectations. But “helping the economy” doesn’t fit in anywhere in that sort of judgement. It doesn’t change anyone’s estimation of taste and efficient finances.
You’re the one talking out of both sides of your mouth here. If you aren’t advocating the idea that people would be spending more than they ordinarily would decide to spend, for reasons of “helping the economy,” then what the heck are we even talking about?
—Moreover, please note that we are addressing your claim that increased spending will not help the economy at all.—
Not only is that not how this thread turned out, but yours is the positive assertion anyway, not to mention the extrodinary claim. But please, try me. Go find a academic economist. Tell him that in order to help the economy, you are going to take money out of your savings account to buy a shirt that you otherwise might not have, had no one ever suggested to you that doing so would “help the economy.” See what he thinks of your idea.
And hey, I ALREADY pointed out one very definate way you can help the economy (as long as you, being an altruist, don’t count yourself as part of the equation). Turn your money into cash, and burn it. No kidding: it really will work.
It’s seems that Apos dozed through during his economics classes. For example, the statement, “Common sense dictates that there’s only so much wealth in the world” is obviously and spectacularly wrong when applied to the economy over time. (So there’s the same amount of wealth now as there was ten thousand years ago?) Wealth can be both created and destroyed, and both things happen constantly.
The notion that burning money will stimulate the economy is equally loopy; the only thing it will do is reduce the money supply, which cannot stimulate the economy.
If the economy always produces at full capacity (or full employment), then swapping savings for savings for consumption will not increase current real GDP. On the other hand, if the economy is producing at less than full capacity, then swapping savings for consumption will increase real current GDP, and by an amount more than the initial increase in consumption. This is the good, old Keynesian multiplier, and is taught by legions of academic economists in freshman Economics courses. It’s also the rationale used to justify tax cuts or government spending increases during recessions. (Of course, the effect of one indivdual increasing his consumption would be tiny, but that’s not really the issue here.)
Does economy always (or almost always) operate at full capacity? And are we operating at full capacity now? There economists disagree . But no economist would say that it’s impossible for an increase in spending to ever stimulate real GDP, under any circumstances.
Or think about it this way. If I am capable of building two chairs, and you are capable of building two tables, but we each have one chair and one table, then if we decide to engage in trade and build each other a table and a chair we will both be more wealthy in the end than if we decided to just stay home and use what we have.
The question is whether or not the amount of spending going on right now is *rational or not. Going back to our caveman example, if one chooses not to build a table for the other because he is saving his resources to build something more important, then inducing him to ‘spend’ his resources now is not a good idea. On the other hand, if he is not building that table because of an irrational fear of a sabertooth tiger eating him while delivering it, and instead just sits on his haunches, then convincing him to ‘spend’ his labor would improve his lot.
—“Common sense dictates that there’s only so much wealth in the world” is obviously and spectacularly wrong when applied to the economy over time.—
Oh for goodness sakes… we’re not talking about anything over time. We’re talking about people right now, making decisions right now, about what to do with the wealth they have now. Obviously, if they think will have more wealth in the future, that will impact their decisions. But that doesn’t change the fact that they have to make decisions now about the wealth they control.
The essential fallacy here is pretending that spending is the only real economic activity, and everything else is deadweight. But people’s level of savings affects the economy just as surely as their level of spending, and there’s no simple equation by which we can say that all people should spend more vs. save more. They should do what makes sense given their situation, preferences, and outlook. For a given individual, that might mean saving more, it might mean spending more.
—But no economist would say that it’s impossible for an increase in spending to ever stimulate real GDP, under any circumstances.—
Obviously. But that’s not in any way reflected in the idea that patriotic buying sprees help the economy in any sort of predictable way, and they certainly won’t if that is an average strategy. Government macro strategy at least tries to fine tune things: but the simplest rationale for how it actually does this is far far more complicated than the story they teach kids in Econ 101, and by no means a certain pathway at all. It also fails to adequately account for the fact that the resources used to spend have to be taken from SOMEWHERE.
—The notion that burning money will stimulate the economy is equally loopy; the only thing it will do is reduce the money supply, which cannot stimulate the economy.—
I didn’t say stimulate the economy: I said, help it (as long as you fail to count yourself, which is the punchline: all these schemes for “helping the economy” look attractive because they fail to count the negative counterbalancing parts of the economy: this case simply offers an altruist to play that part). When you burn money, you aren’t simply reducing the money supply: you are also giving up YOUR claim on resources. You are poorer, forever, by the amount you burned. But this doesn’t affect the amount of goods and services in the economy at all: SOMEONE has to benefit from it, and that “someone” is everyone currently holding cash and wanting goods.
—Or think about it this way. If I am capable of building two chairs, and you are capable of building two tables, but we each have one chair and one table, then if we decide to engage in trade and build each other a table and a chair we will both be more wealthy in the end than if we decided to just stay home and use what we have.—
Yes, but that is exactly the sort of trade that is attractive because of its benefits, not because it is patriotic. Obviously there are benefits to trade! The point here is whether, AFTER we’ve reaped these benefits, which can be justified entirely on their own merits, it makes sense to trade even more to “help the economy.” Say, buying another table and selling our last chair.
Yes, it appears that several of us agree on that point.
Agreed. In fact, I learned this as a high school student. It’s a fairly basic tenet of economic theory.
Absolutely correct. That’s why I was hoping for a more thorough answer to the OP than “Spend more!” We must consider, for example, which sectors in which increased spending would be beneficial. (Common wisdom seems to dictate that high tech industry is one such sector right now.)
Yes, it appears that several of us agree on that point.
Agreed. In fact, I learned this as a high school student. It’s a fairly basic tenet of economic theory.
Absolutely correct. That’s why I was hoping for a more thorough answer to the OP than “Spend more!” We must consider, for example, which sectors in which increased spending would be beneficial. (Common wisdom seems to dictate that high tech industry is one such sector right now.)
I see. So I suppose you were just kidding when you said,
The clear implication is that spending more money now translates to spending less money in the future. As Wumpus and Sam Stone explained, that simply doesn’t follow.
“But, but wait!” you might say. “I didn’t really mean ‘elsewhen’!” Well, tough. If you still can’t make up your mind, then that’s your problem, not ours.
I’m a leftist, so I’m not necessarily on this side, but any tenant of the free-market would shot down this advice in a heartbeat.
Assuming you’re an american, by buying american no matter what, you’re actually doing a disservice to the american economy, because you’re artificially encouraging an unefficient production. If the USA isn’t good at making cars and you nevertheless buy american cars, you’re subsidizing this industry and prevent the ressources (material and human) to be used in a more efficient way, i.e. to produce something the USA is good at producing. If you stop buying the overpriced american cars, the ressources will be better used and on the long run, the USA will produce more of something else and will become wealthier (and you too since you’ll have a foreign car and say, a computer for the price of an american car).
Of course, on the short term, it will result in unemployment, and people working in the car industry will hate you…
—I see. So I suppose you were just kidding when you said, —
No. When you sit down with the wealth you have now, elsewhen is one of the considerations
—The clear implication is that spending more money now translates to spending less money in the future.—
The clear implication is that once you spend money, it’s spent. You may have more money to spend in the future: in which case that’s one of the expectations you might have that legitimately factors into you planning your lifetime consumption options. But you can’t spend the SAME money twice, for goodness sakes.
—But, but wait!" you might say. “I didn’t really mean ‘elsewhen’!”—
Oh, but I really did mean it.
Look, it’s not that hard. Let’s say you have 10$. You can spend it now, and once you do so, that 10$ is spent. You may have opportunities to spend more money later in the future. But THAT 10$ is spent. Had you not spent it, you could have used it to spend even MORE in the future than you could have otherwise. In short, you made a choice that you can’t take back: a choice with an opportunity cost. Is that cost offset by the highest level of benefits? That’s something eahc individual has to figure out, and there are sensible ways to make that choice, and some not so sensible ways.
But it’s simply not clear at all that spending it now is inevitably the “right” choice, especially faced with several important alternatives, one of which is saving it to spend in the future, that may or may not be better given someone’s situation. It’s a choice you can only make given some account of your personal preferences for various things now or later, coupled with the most reasonable expectations of your future situation that you can dream up.
You started in this thread by musing that “I don’t think many people would be willing to spend their money, simply to boost the economy.” I think it’s worth asking yourself WHY they wouldn’t be willing to spend their money.
—We must consider, for example, which sectors in which increased spending would be beneficial.—
Beneficial to WHO? The only reasonable answer deals with benefits to the people who buy high tech products. It is not all things equal a good thing to MAKE high tech products: it is a good thing to HAVE high tech products. And there is always such a thing as having too much, because you are always trading off for other things, other choices.
Further, if high tech is something that people want and expect good returns from, presumably they will already invest in it as much as it warrants. The whole reason the high tech market tanked is that people suddenly realized that they were being TOO optimistic about how good high tech returns were, and what high tech products could do for them.
clairobscur!
No matter if You are leftist or not, You’re right.
Never buy bad products, that is also mine main thought.
And I think we should very actively “vote with our wallets”.
I tried to make that point with the fact that I do not like to buy Microsoft-products, because I am afraid of the monopoly of the company.
But I buy my “homeland” products, if they are as good as the other, at he same pricelevel etc..
But when it comes down to coffee, tea and other products, when I also can buy the products of the “third world”, I do so.
I have never found a good site about what products I should avoid for the reasons like:
- child labour used
- hard working standards for the workers (products mainly made in countries where there is no unions etc.)
- etc. (I think You are better on this than I am).
It can maybe be news for You that some capitalist (as I am seen in this country) think like this, but in the long run we need the “buying-power” all over the world.
I also understand Your thought of international trade, but I have the knowledge of how the firms are acting in the Nordic countries, and I more or less know which firms products I should avoid (in these countries).
To discuss this is not according to the OP, (or maybe it is?), so I leave it to another OP.
—Never buy bad products, that is also mine main thought.—
Good advice: regardless of whether the economy is in recession or not.