I need help disproving Keynesian TheorySubmitted by salberty on Wed, 04/03/2013 - 13:23
Everyone agrees with this:
- Consumption is good
- We cannot consume more than is produced, on net
- To consume more requires us to produce more
The divide is on HOW to accomplish this. Two basic contradictory proposals:
- focus on increasing consumption which will "trigger" the needed production increase...or
- focus on increasing production to allow for the consumption increase
I think approach #1 is foolish. But I'm having a really hard time coming up with a simple, clear, concise, elegant explanation to show why it's foolish.
If you've heard such an explanation, or can come up with one, please let me know.
I think approach #1 is the single most dangerous and prominent misunderstanding of economics. Basically all future prosperity depends on debunking it...so no pressure.
EDIT: Thanks for all the feedback. Based on comments, I want to clarify something...
I'm not trying refute the fallacy that GOVERNMENT should decide for us what to consume. Yes, this is definitely a part of Keynesian Theory, but the broken window fallacy already does a nice job of refuting that part of the theory.
I'm saying that EVEN free people deciding on their own to increase their consumption on goods that really would make their lives better, does NOT stimulate the production increase required to meed those new demands.
In fact, those production increases come from the opposite of consumption: they require human work, innovation, technology, and under-consumption.
So whether or not the increased consumption is market driven or government driven, I don't think it causes production to increase, and I'm looking for a good way to show that.