Friday, July 13, 2007

Spend or Save? – The Great Question of Our Time

by Dick McDonald

You have two economic alternatives in life no matter who you are – “spend” your income and/or wealth or “save” your income and/or your wealth. There are no other options. However, buried in that question is the solution to man’s most pressing problems – poverty, hunger, starvation as well as slavery and man’s inhumanity to man. When the rules were made by tyrants there was no reason to concern yourselves with these problems – individuals were involuntarily trapped in the feudal system. With the advent of individual freedom and the creation of the Western World in the mid to late 2nd Millennium “saving” became possible and it has freed a considerable chunk of humanity from oppression. They were free to save and spend as they wished and created some really successful economies by not spending everything but saving and thereby “investing” a portion of what they earned in their future.

No economy on Earth can compare to the success of the United States of America – their free market capitalism allows each individual to successfully negotiate his own success by economies of saving or spending. Allowing that the USA is the best, it still falls short of providing the world with enough capital to eliminate poverty, hunger, starvation; it still lacks the resolve, strength and confidence to stop genocide and the modern slavery of totalitarianism. The USA allows its media to blame others for their misfortune – its leaders to cower behind the cover of appeasement and containment to avoid the stark reality that America is still too weak economically to effectively affect the course of history. It doesn’t need to be so. It is all tied up in the question of saving and spending.

Tyrants spent and consumed all their serfs produced in the feudal world. Modern “free-world” tyrants “tax and spend” as much as their people will tolerate. Unfortunately taxes represent the conversion of that which could be saved and invested into sums that will be currently spent and consumed. Therein lies the rub. There are groups, political parties, entire peoples and countries deluded by the concept that consuming is not deleterious to wealth creation. They ignore the fact that their people could all be wealthy if they just could save some of their income – or more precisely if they could invest some of their income in the future.

The people of the United States of America have bought into a delusion and fiction – they spent 1 ½ % more than they made in 2006. They became consumption-dependents – starved by severe taxation – they spend all they make and more and have become a drag on wealth creation in America.

So you rightly ask “What’s the big deal?” “So we spend too much, we are doing fine economically.” And my answer is you probably are right in your own myopia. Unfortunately 4.5 billion people will go to bed in the dark tonight and 18,000 children will starve to death tomorrow - 1.1 million Darfurians await their extermination at the hands of Islam’s radical administration in the Sudan. But why should you care? You didn’t care when that same administration killed 2 million Christians in the 90’s, so why start now? That is their problem. You “people” that think that way, don’t stand for the “common good” so quit your propaganda and the lies you tell your mirror – you condone murder and genocide and live in a selfless, myopic stupor when it would be so easy to right that ship.

What? Right that ship? Yeah, that’s right. It is all tied up in the “spend or save” equation. I have run some figures. You can get them right here. If just Americans “saved” 15% of their income and invested it for forty years, Americans would multiply their market assets 120 times over and begin to have the kind of capital it will take to pacify the world – to build the institutions and infrastructure that peace demands.

Right now the majority of humanity live in squalor, immobilized by lack of roads and infrastructure, depressed by lack of opportunity and oppressed by totalitarian regimes bent on keeping them enslaved. Something akin to the tax and spenders here – the ones dedicated to keeping the poor poor by encouraging dependency on our semi-totalitarian political class who are anti-individual, pro government types bent on isolating power to control the country in the hands of a few wealthy elites using the anti-corporate card to deceive the people and the “spending-consumption fraud” as their most lethal tool. I have devised the Rise Up Theory of Economics to help us solve the save and spend dilemma. You can read about it here.

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