Sunday, February 6, 2011

Economics of Spending and Saving

An economics text seems to describe the impact of spending and saving on economic well-being. The principles espoused in the text seem to suggest that spending and saving patterns can determine economic conditions such as employment, wages and inflation. Some of the principles suggested seem based on unfounded assumptions that are adopted in possibly misguided effort to more fully control economic outcomes and/or to be convinced that economic observations are understood. It seems that many of the concepts and systems are unnatural and, as a result, conflict with and harm natural processes. I certainly don't claim to be wiser than the writer or the economist referred to in the writing. However, I seem to wonder if the emperor is, somehow, less than fully dressed. I seem to have been less than successful in finding successful rebuttals of the ideas I suggest and look forward to same.

National Income
For example, the text seems to describe Keynesian theory as "breaking down a nation's income into flows of spending from all of its various spenders". Although "flows of spending from all of its various spenders" seems to refer acceptably to the sum of the nation's trade transactions, the term "national income" seems inappropriately applied to that sum.

In my less-than-authoritative opinion, income seems to deal with one aspect of a trade transaction: that which is received in exchange for something else. In the natural world, that would apply to both sides of a transaction, since both parties are receiving something for something else. Does "national income" refer to double the value of the transaction? If the sole two citizens of a nation exchange with each other an orange, is the national income one orange or two?

In my humble opinion, I understand the natural trade system to categorize both parties as suppliers. The concept of income seems more applicable to that which I understand to the man-made system that redesignates traders as suppliers and buyers. In this perspective, one party (I imagine, the one with the product) is selling and the other (perhaps the one with the promissory note or other legal tender) is purchasing. One totally might lose sight of the fact that this seems not to exist in the natural world. Whether the traders exchange each other's orange or a tractor trailer for $100,000 in promissory notes, they're both suppliers. Mankind, perhaps, lost sight of this somewhat after adjusting to the promissory notes/legal tender concept.

It seems that all the calculations based on this difference between income-producing trade and natural trade might be like following the remainder of a map's directions perfectly after having made a wrong turn.

No comments:

Post a Comment