Most puzzling question on Economics here !
-
Everybody knows Consumers Spending is needed for a healthy national economy, else it will sink deeper into a recession.
The question is: Why humans need to serve the economy instead of the economy that should serve human beings?
Aren't we been thought by parents to "spend wisely", "spend only when necessary"...?
Humans have become the slave and the economy is the master?
-
I'm not a economy student, but here's what I think.
I feel that it's like a system, where by it's has forward and backward reaction. There is also an equilibrium point where the amount of unit humans served = to the amount of unit the economy benefits the human.
Let's say recession. That means in the equation, the backwards reactions is greater than the forward reaction.
When the economy is better offf, human gets benefits too. Intengible benefits like job stability etc.
To reach a point where the economy is benefiting/serving the humans, humans must work hard first. After working hard, there may be a stabilizing point to 'hold on', before getting to another higher level(economy benefits human).
Just like a triprotic acid, it donate its proton at different condition at three differnet Ka. Example will be titration, you should know H2SO4 has two equivalence point.
-
Equilibrium?
No hear of reflexivity by George Soros?
Dynamic disequilibrium.
-
Economy is not just spending. It is about meeting our needs and wants based on scarce resources.
Every year, the world population increases and therefore, the demand on resources intensifies. Example: Parents need jobs to pay for their kids education, and we need money to buy things we want.
If the economy goes into recession, it means that we are producing output that is less than the previous year. And if we are producing lesser output, we will not be able to satisfy the world demand as the world population increases. And this will lead to loss of jobs and income and thus when there is loss of income, the demand for goods will drop further more and thus the vicious cycle will continue and worsen the effect from recession to depression.
This is why I tink government usually try to improve the economy by encouraging consumer spending. The other kind of polices govt usually use is fiscal policy which is to improve output of the nation by spending on infrastructure. E.g Build more roads, School, IR...etc
Therefore, in my humble opinion, I dont think that human serve economy or economy serve human.
Economy exist becoz it is a way of satisfying human's need and want.
please correct me if my concept is wrong, coz i havent touch econs for a long time already so i might mix up some of the concept.
-
Originally posted by Sg1299:
Everybody knows Consumers Spending is needed for a healthy national economy, else it will sink deeper into a recession.
The question is: Why humans need to serve the economy instead of the economy that should serve human beings?
Aren't we been thought by parents to "spend wisely", "spend only when necessary"...?
Humans have become the slave and the economy is the master?
Interestingly even if you're going through an economic downturn, while common sense would be to cut the expenditure on whole, even if the expenditure is fueling a deficit, practical examples have shown that increasing spending and not cutting it could actually help in the long run, especially in high-return investments.
Apparently growth begets growth....thanks to the multiplier effect.
-
The other thing to take note is consumer spending on what....imports? Domestic products?
Consuming imports would have the effect of potentially worsening the economy.....and vice versa for domestic products.
-
The economy is made up of people who makes economic decisions. It includes comsumers, producers and the government. Due to the circular flow, spending by an individual translate to income to another. Eg, consumer spending money($10) which is then received by the producer which is then spent on other sectors of the economy. The same $10 can stimulate the production of other goods and services which then provides jobs for other people.
-
As mentioned above, an economy is for the allocation of scarce resources. The main basis is that everyone is selfish and works for himself or herself.
As Adam Smith puts it, it's not from the benevolence of the butcher, the baker or the brewer that we expect our dinner, but from their regard to their own interest.
Humans have unlimited wants, but resources are scarce; i.e. the resources are not unlimited.
Then again, how the economy functions as described above is way too unfeeling. In actual life, there are a lot of emotions involved as well. Adam Smith recognized it as well in his Theory of Moral Sentiments.
After all my rubbish above, an economy requires humans as much as humans require the economy. The economy requirse human (as a scarce resource) to produce, and humans require the economy to allocate (the scarce resources).
-
paradox of thrift
-
Originally posted by Master -_-:
paradox of thrift
Keynesian? -
All I know is that in the long run, we're all dead.
-
Even more puzzling.
Fisherman catches 100 fishes every month till forever and ever happily ever after.
Farmer yields 100 ears of corn every month till forever and ever happily ever after.
Both use bartering initially, then now use currency, after the trade both deposit currency in bank to earn interest allowing them to buy more fish and corn in the future.
After they get their interest from the bank, they still can only purchase 100 fishes and 100 ears of corn. What happened to the interest?
Money is illusionary.