Using spending as a measure of economic growth is patently
insane. Let’s take a look at a recent AP article on “slow economic
growth” to see what I mean. The AP reports, ”The
U.S. economy grew at an annual rate of just 1.5 percent from April
through June, as Americans cut back sharply on spending. The slowdown in
growth adds to worries that the economy could be stalling three years
after the recession ended.”
The clear inference here is that growth = spending. The article uses the two words interchangeably. To the authors of this article, there is no difference between the words growth and spending – spending is growth, and growth is spending. The economists claim that measuring spending is measuring growth. Does this make any sense to anyone other than a Keynesian economist?
In your own life, do you consider yourself wealthier if you go out and spend all the money you have saved? Of course not! You are no more or less wealthy than you were before you spent your money. The act of spending money is simply transferring the value you have already earned into some physical product or the consumption of some service. If you spend $100 on some new shoes, your total net worth is exactly the same as before you spent the money; rather than holding $100 in cash, you are now holding $100 in shoes. Of course, the value of products and services generally depreciate faster than cash does, but at the moment that spending occurs, there is no loss of value.
Read more: http://www.libertariannews.org/2012/07/27/the-insanity-of-spending-as-a-measure-of-growth/
The clear inference here is that growth = spending. The article uses the two words interchangeably. To the authors of this article, there is no difference between the words growth and spending – spending is growth, and growth is spending. The economists claim that measuring spending is measuring growth. Does this make any sense to anyone other than a Keynesian economist?
In your own life, do you consider yourself wealthier if you go out and spend all the money you have saved? Of course not! You are no more or less wealthy than you were before you spent your money. The act of spending money is simply transferring the value you have already earned into some physical product or the consumption of some service. If you spend $100 on some new shoes, your total net worth is exactly the same as before you spent the money; rather than holding $100 in cash, you are now holding $100 in shoes. Of course, the value of products and services generally depreciate faster than cash does, but at the moment that spending occurs, there is no loss of value.
Read more: http://www.libertariannews.org/2012/07/27/the-insanity-of-spending-as-a-measure-of-growth/
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