Comment: Sorry, but consumption drives production

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Sorry, but consumption drives production

I'm not saying that consumption stimulus is a good thing. Because its not.

But, consumption is much more effective at creating production than production is at creating consumption.

Pick an industry... say computers.
People dont care much for desktop computers anymore. Because of various newer options like notebooks, netbooks, tablets, mobile phones, etc. The overall demand for desktops has diminished. As a result, the market for desktops has tanked. There is unbelievable surplus of new and refurbished desktops that no one is buying. Simple production of more desktop computers will not increase the number of desktop computers that get purchased. There is simply not a demand for them. No amount of overproduction will stimulate consumption of this particular "good".

Now, imagine if you will a sudden demand in desktop PCs (whether it is artificially created, or naturally occurring) if, all at once everyone decided they simply had to have another desktop computer, almost overnight, companies would ramp up production enough to meet that demand. And as soon as the consumption slowed, they would immediately stop producing.

Consumption drives production, not the other way around.

The error in the Keynesian economic theory is that consumption creates prosperity. As well as the idea that markets can somehow be guided more effectively by centralized intervention than by simply allowing people to choose to produce, consume, but, sell, and otherwise enter into contracts with one another in whatever way they feel is most beneficial to them.

In all reality, the government doesn't need to "focus" on either of your paths to prosperity. The government needs to focus on protecting the rule of law so that free people can interact with confidence.