[ExI] More on Health Costs

[Stathis Papaioannou]

2009/5/29 Dan <dan_ust at yahoo.com>:

> A reductio ad absurdum of the Keynesian view is if spending to wealth worked, why wait for a recession?  Why not always keep immediately consuming our total incomes -- never saving at all?  (Saving is really postponed consumption, but it's from such postponed consumption that all economic progress aside from pure luck arises.)

If everyone saved and no-one consumed, save for the necessities of
life, why would anyone invest in anything other than the necessities
of life? Interestingly, the savings ratio correlates negatively with
economic growth in OECD countries:

http://www.forium.co.uk/Savings-Accounts/Saving-Account-News/Savings-ratios-over-the-decades.html

But this doesn't mean that maximal consumption is necessarily good.
The world would have been better off if China consumed more and the US
saved more.


-- 
Stathis Papaioannou