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Date: | Fri Mar 31 17:18:37 2006 |
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The point regarding increasing consumption would be that you don't
have to FORCE savings to make investment happen. Nor do you have
to take a moralistic stance that saving is somehow more "pure" and
better for us all than consumption.
The point is that when people consume, they are spending on
goods and services. Right? Well, that is incentive to SUPPLY
goods and services. Right? If the society has unusued productive
capabilities (and the big question here is why would it?) and/or
if there is great unmet productive POTENTIAL (say, people with
productive potential who are not getting educated when they could
be? Or prejudice that keeps qualified people out of jobs?) --
then making it possible for people to consume more is going to
lead to an increase in real demand for real goods and services,
and therefore it will be PROFITABLE to supply those goods and
services and therefore it will be ECONOMICALLY SOUND to INVEST
in theprovision of those goods and services.
I am well aware that there are theoretical problems with
the part about why you would need some kind of exogenous shock
to spending to achieve this. As well as why there should be
unused productive capaicty, or unmet productive potential.
But -- if you are going to oppose a policy prescription,
at least oppose it as it is intended to work.
The intention is to make the MARKET dictate WHERE and HOW
new investment is going to occur -- rather than designate some
activities "investment" and "saving" (like playing around with
the stock market or building vacation homes at the beach ....)
and hope that the people who engage in those activities will be
smart enough to take advantage of the tax break.
(And the market just might dictate that investment ought
to be in human capital ...)
-- Mary Schweitzer
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