Buying vs Saving Economic Theory
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For example, the "buying is good for us" mentality is what is driving America's trade deficit because we keep buying, but we aren't making. So it just sends the money elsewhere - out of our economy.
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Buying products of any scale, importing or not produces jobs. In all parts of the world, from where the products are made, to how they are shipped (globally) and then locally.
Then you have the stores (as bad as brick and mortar are) that hire people to sell the products.
Saving is great personally as it builds wealth in side the household. But it's not contributing to the economy of putting people to work.
For example, if in your statement people buy things and expect those things to last decades.
Buy not spending (and I don't mean frivolously) but buying when its time to replace you are contributing to your local community (even if in a tiny way - UPS driver for example)
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@DustinB3403 said in Buying vs Saving Economic Theory:
Saving is great personally as it builds wealth in side the household. But it's not contributing to the economy of putting people to work.
Depends, savings and investment accounts actually do put people to work.
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@DustinB3403 said in Buying vs Saving Economic Theory:
Buy not spending (and I don't mean frivolously) but buying when its time to replace you are contributing to your local community (even if in a tiny way - UPS driver for example)
Assuming that you are buying locally and you have to compare the amount that goes local to the amount that goes regional (or national) to the amount that leaves the system. The problem with the American approach currently is that the amount that you help the economy is small compared the amount that the money leaves the economy.
Think about buying a cheap tablet. It is likely designed and made somewhere in Asia, American firms have almost no dealing in this area, but it is a huge purchasing area. You might spend $100 to get the item, probably online.
UPS gets a small cut, yes. But tons of their cut goes to costs, fuel and machines being a big one. A lot of that is lost, even if the fuel originates in the US, as tons of it is just the cost of getting the oil out of the ground. UPS might add a few cents to the economy.
The reseller might take in a few dollars. All we've done, though, is shift money from your pocket to theirs. It's still in the same economy.
The bulk of the money, say 80%, leaves the economy and goes overseas.
In your model, which has some value, you are directly equating "keeping workers busy" with "growing the economy" and those are not actually synonymous. In the future we expect that most people will be idle and that there will be almost no work to be done, yet we expect the economy to continue to grow. An economy is the buying power of what you have, not the amount of busy work you can keep people doing.
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@scottalanmiller said in Buying vs Saving Economic Theory:
@DustinB3403 said in Buying vs Saving Economic Theory:
Saving is great personally as it builds wealth in side the household. But it's not contributing to the economy of putting people to work.
Depends, savings and investment accounts actually do put people to work.
In the limited market that are working with money and investments directly, certainly. I didn't disagree.
But that job market is tiny compared to the number of people who are job ready for things like shipping, or road work (or any other blue collar job)
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Some types of work actually grow economies: creating food, building buildings and such. They increase the total size. But busy work alone does not, it simply shifts money around.
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@DustinB3403 said in Buying vs Saving Economic Theory:
@scottalanmiller said in Buying vs Saving Economic Theory:
@DustinB3403 said in Buying vs Saving Economic Theory:
Saving is great personally as it builds wealth in side the household. But it's not contributing to the economy of putting people to work.
Depends, savings and investment accounts actually do put people to work.
In the limited market that are working with money and investments directly, certainly. I didn't disagree.
But that job market is tiny compared to the number of people who are job ready for things like shipping, or road work (or any other blue collar job)
Right, but who cares that they are job ready? Just making them "do something" does not increase our economy. It just pays them at your expense.
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@scottalanmiller said in Buying vs Saving Economic Theory:
@DustinB3403 said in Buying vs Saving Economic Theory:
@scottalanmiller said in Buying vs Saving Economic Theory:
@DustinB3403 said in Buying vs Saving Economic Theory:
Saving is great personally as it builds wealth in side the household. But it's not contributing to the economy of putting people to work.
Depends, savings and investment accounts actually do put people to work.
In the limited market that are working with money and investments directly, certainly. I didn't disagree.
But that job market is tiny compared to the number of people who are job ready for things like shipping, or road work (or any other blue collar job)
Right, but who cares that they are job ready? Just making them "do something" does not increase our economy. It just pays them at your expense.
I used "job ready" as a synonym for a non-skilled labor. Working with money and investments or designing bridges are the white-collar jobs.
Actually putting the bridge together (while supervised by a white-collar manager) is what produces economic growth.
Yes, shipping (shipping drivers) is a poor example, but the role needs to be filled, and that creates an economy rung.
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So @scottalanmiller what do you think would be a way of keeping people alive (literally) in a jobless world. Where there are machines doing everything, from growing food, to building structures?
Not everyone is going to be maintainers of the robot army.
So just a base income for everyone? How is that going to be settled on?
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@DustinB3403 said in Buying vs Saving Economic Theory:
@scottalanmiller said in Buying vs Saving Economic Theory:
@DustinB3403 said in Buying vs Saving Economic Theory:
@scottalanmiller said in Buying vs Saving Economic Theory:
@DustinB3403 said in Buying vs Saving Economic Theory:
Saving is great personally as it builds wealth in side the household. But it's not contributing to the economy of putting people to work.
Depends, savings and investment accounts actually do put people to work.
In the limited market that are working with money and investments directly, certainly. I didn't disagree.
But that job market is tiny compared to the number of people who are job ready for things like shipping, or road work (or any other blue collar job)
Right, but who cares that they are job ready? Just making them "do something" does not increase our economy. It just pays them at your expense.
I used "job ready" as a synonym for a non-skilled labor. Working with money and investments or designing bridges are the white-collar jobs.
Actually putting the bridge together (while supervised by a white-collar manager) is what produces economic growth.
Yes, shipping (shipping drivers) is a poor example, but the role needs to be filled, and that creates an economy rung.
Oh, what i mean with making money is that savings and investment dollars are used to build the economy through paying for things like real estate growth (savings accounts are the primary funding for building buildings, for example) and more general investments are used for things like factories or product designs and bonds are often used for roads or things like that. So blue collar jobs created through them, too. But jobs and economy are not the same. In theory, the best economy would have essentially no jobs.
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@DustinB3403 said in Buying vs Saving Economic Theory:
So @scottalanmiller what do you think would be a way of keeping people alive (literally) in a jobless world. Where there are machines doing everything, from growing food, to building structures?
Not everyone is going to be maintainers of the robot army.
So just a base income for everyone? How is that going to be settled on?
I've been preaching this for decades (literally) and I'm racing to write it before @dashrender repeats it because he's heard it so many times. But first...
- Economy is the buying power of the economy, not a reflection of individuals.
- Individuals fare best when disparity within an economy is low.
This is the "base income" idea proposed and voted on by Switzerland a few months ago - the idea that the companies making all the money have to pay a high degree of taxes and that everyone earns "something" so that everyone can live well from the results of their economy without needing to worry about a job. This was proposed by Scott Adams in his guidance as the economic adviser to the CIA decades ago and written about in his books.
This is believed to actually grow, not shrink the economy, as sending people to work actually hurts the economy and the value of the work that they do has to overcome the economic loss before it can provide economic gain and roughly 98% of the workforce actually functions at a loss or break even and just 2% represent all of the gains and growth. But, the 98% that aren't adding value are often "in the way" making it harder for the remaining 2% to be as effective as they could be. So, the theory goes and tons of people now agree with this around the world, is that by trying to keep everyone "busy" we are inadvertently making everyone poorer.
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And the theory goes farther... not only do we take the only people growing the economy today and make them more efficient (making the economy even bigger) but we reduce the cost of doing so by reducing the busy work so the risks go down and we also create a system where the 98% have free time to do things that they cannot do today such as, for example... invent things, do community service, art or whatever that help humanity- potentially by growing the economy. We might turn losses into gains.
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@DustinB3403 said in Buying vs Saving Economic Theory:
So just a base income for everyone? How is that going to be settled on?
Absolutely, experts have known that this was the future that was coming for decades now. Maybe centuries, I've even known about it for decades and economics is a casual interest.
It's a bit complex to settle on the exact about as the value of money changes dramatically in doing this, but like most things in the economy, it is a self leveling system. The more money you pay out, the less it is worth. The amount of money in the system represents the whole of the economy, so outside of the "extra" amount going to those actually making money (if that even turns out to be necessary, but it probably is) there is really nothing to decide on.
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@DustinB3403 said in Buying vs Saving Economic Theory:
@scottalanmiller said in old MSP wants to know what they did wrong:
@DustinB3403 said in old MSP wants to know what they did wrong:
If you're never replacing things with newer better solutions there is an underlying issue.
That's a very American sentiment. They don't replace their houses for hundreds of years... because they build them to last the first time.
I did say better solutions. If the house they built is the best solution then fine. But don't complain about WEP and say things like "they don't replace things as they expect them to last decades" and then be snarky when someone comments on the economy of a country based on what you've said of the same country.
Buying new goods on a regular basis, creates a healthy economy. Not doing so contributes to the financial collapse that Italy just had.
WHAT? that's basically Reagonomics right there - spend your way into success.. lol
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@Dashrender said in Buying vs Saving Economic Theory:
@DustinB3403 said in Buying vs Saving Economic Theory:
@scottalanmiller said in old MSP wants to know what they did wrong:
@DustinB3403 said in old MSP wants to know what they did wrong:
If you're never replacing things with newer better solutions there is an underlying issue.
That's a very American sentiment. They don't replace their houses for hundreds of years... because they build them to last the first time.
I did say better solutions. If the house they built is the best solution then fine. But don't complain about WEP and say things like "they don't replace things as they expect them to last decades" and then be snarky when someone comments on the economy of a country based on what you've said of the same country.
Buying new goods on a regular basis, creates a healthy economy. Not doing so contributes to the financial collapse that Italy just had.
WHAT? that's basically Reagonomics right there - spend your way into success.. lol
Liquidate your assets, buy lottery tickets, it really works!
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@scottalanmiller said in Buying vs Saving Economic Theory:
In the future we expect that most people will be idle and that there will be almost no work to be done, yet we expect the economy to continue to grow. An economy is the buying power of what you have, not the amount of busy work you can keep people doing.
This is the part that I don't understand how it sustainable.
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@Dashrender said in Buying vs Saving Economic Theory:
@DustinB3403 said in Buying vs Saving Economic Theory:
@scottalanmiller said in old MSP wants to know what they did wrong:
@DustinB3403 said in old MSP wants to know what they did wrong:
If you're never replacing things with newer better solutions there is an underlying issue.
That's a very American sentiment. They don't replace their houses for hundreds of years... because they build them to last the first time.
I did say better solutions. If the house they built is the best solution then fine. But don't complain about WEP and say things like "they don't replace things as they expect them to last decades" and then be snarky when someone comments on the economy of a country based on what you've said of the same country.
Buying new goods on a regular basis, creates a healthy economy. Not doing so contributes to the financial collapse that Italy just had.
WHAT? that's basically Reagonomics right there - spend your way into success.. lol
I think you mean Keynesian Economics/demand-stimulus economics ... Reagonomics was something different.
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@Dashrender said in Buying vs Saving Economic Theory:
@DustinB3403 said in Buying vs Saving Economic Theory:
@scottalanmiller said in old MSP wants to know what they did wrong:
@DustinB3403 said in old MSP wants to know what they did wrong:
If you're never replacing things with newer better solutions there is an underlying issue.
That's a very American sentiment. They don't replace their houses for hundreds of years... because they build them to last the first time.
I did say better solutions. If the house they built is the best solution then fine. But don't complain about WEP and say things like "they don't replace things as they expect them to last decades" and then be snarky when someone comments on the economy of a country based on what you've said of the same country.
Buying new goods on a regular basis, creates a healthy economy. Not doing so contributes to the financial collapse that Italy just had.
WHAT? that's basically Reagonomics right there - spend your way into success.. lol
It's trickle down, to some degree. But it is more general than that, it's just "if everyone is working, the economy will improve" which is the line that high schools have been told to use to encourage people to head off to the factories without questioning why.
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@Dashrender said in Buying vs Saving Economic Theory:
@scottalanmiller said in Buying vs Saving Economic Theory:
In the future we expect that most people will be idle and that there will be almost no work to be done, yet we expect the economy to continue to grow. An economy is the buying power of what you have, not the amount of busy work you can keep people doing.
This is the part that I don't understand how it sustainable.
Where is the concern? We create more, have more money... it's what we currently do that is potentially not sustainable. Anything that grows the economy without negatives is more sustainable than something that does not.
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@scottalanmiller said in Buying vs Saving Economic Theory:
@Dashrender said in Buying vs Saving Economic Theory:
@scottalanmiller said in Buying vs Saving Economic Theory:
In the future we expect that most people will be idle and that there will be almost no work to be done, yet we expect the economy to continue to grow. An economy is the buying power of what you have, not the amount of busy work you can keep people doing.
This is the part that I don't understand how it sustainable.
Where is the concern? We create more, have more money... it's what we currently do that is potentially not sustainable. Anything that grows the economy without negatives is more sustainable than something that does not.
It's nearly impossible to think of a situation where 98% of the world doesn't work. Now that 98% wants to do whatever they want, that having a job prevented them from doing if for no other reason than they didn't have time.
Let's take travel - would it increase or seriously decrease? If you either a) lower the cost of flights (because now you need 10x as many planes to handle the load, so costs go down) or b) give enough money so everyone who wants to travel now can - which would increase demand anyway - how do you handle the increased load of people at tourist spots?
Do things like luxury items no longer matter/exist?
If everyone does really have access to all of the same stuff as everyone else, then crime probably wouldn't be worth as much short of the rare things like one of a kind paintings, etc - which then brings about a whole new type of economy, so money and normal things no longer matter, but that Renoir still does, just like new one of a kind items. There will always be something that is unique that someone else wants - that generates it's own system if it doesn't work inside the current one.
