A few more thoughts: All investment is not alike. That is, investment which implements innovations is of a different nature than investment that simply replicates what already exists. The latter must precisely keep pace with population growth for a society just to remain in the same place. But innovation that improves productivity uses investment dollars (or time or whatever) more efficiently: that is, the contribution to economic growth is greater than simply replacing worn-out capital with an identical counterpart. And to echo others, the negative impact of investment to spur growth must be taken into the calculation as well -- we have to be far more aware of implicit and long-run costs that are left off the enterprise balance sheet, are difficult to calculate, but are significant if growth is to be equated with wellbeing. ------------- The other point is that if there is no reason for the government to favor savings over consumption, and likewise no reason to favor consumption over savings -- in terms of the government's behavior in the economy -- then we can think of the redistributive effects of government activity as simply that: redistributive effects. Lesson One of the New Deal, for example, is that it failed to pull the United States out of the Great Depression. But Lesson Two is that it saved individuals - people -- old people, children, families -- from utter destitution. Suppose that the New Deal (as an example) was neutral in terms of its macroeconomic effects. Then it becomes a matter of social values whether it is right to tax the comfortable to prevent the children and the elderly from starving (quite literally). We might quibble over the efficiency with which we could meet that goal. But the argument that redistributive policies are perverse because they dampen economic growth has far less merit than the classical economists or the current crop of Chicago neoclassical economists believed. And perhaps you do not NEED Keynes' hopeful analysis that redistributive policies would do a better job of encouraging growth than those promoting savings (and hence favoring the wealthy, as has been pretty much agreed upon by economists for over a century, as having a greater propensity to save portions of their income than the poor. We might add that it also favors the senior population over young parents, too.) -- Mary Schweitzer