Thursday, February 5, 2009

The New Era of Irresponsibility

Jacob Sullum in Reason magazine points out the paradox of wanting the American public to continue to spend recklessly:

Remember when the problem with Americans was that we saved too little, preferring instant gratification even when we couldn't afford it? As Obama put it in October, "we were allowed and even encouraged to spend without limits, to borrow instead of save."

Economists worried that our low saving rate made our economy and our government dangerously dependent on the whims of foreign investors. Yet on Monday, when Commerce Department data showed that the U.S. saving rate had risen sharply, from less than 1 percent of after-tax income a year ago to 3.6 percent in December, the press treated the increase as bad news.

"Putting away money and paying down debt may be good for one family's kitchen-table economics," The New York Times reported, "but the broader economy suffers in the short term when millions of families do it." The Associated Press agreed: "What's good for individuals—spending less, saving more—is bad for the economy when everyone does it."

This is comical. The best they can come up with is shop more, don't worry about debt. The whole problem in the first place. Do you get the feeling that the administration really don't know what they're doing?


  1. There is one really important component that a capitalist system needs, capital. Yes savings actually fuel economic development. Industry needs access to capital in order to survive. That is why so many third world countries will never develop, anyone with money in a third world country, makes darn sure it is in a safe Swiss bank.
    Currently the US has to borrow Asian savings to survive. However China and Japan may one day decide not to lend money to the US. Perhaps at that point someone in Washington will realize savings are important.

  2. Yes, there is simply no long term thinking.