Interesting myth buster.
By Cullen Roche January 8Th, 2014
"Ten common assertions elegantly skewered. "The biggest mistake in modern macroeconomics is probably the fallacy of composition. This is taking a concept that applies to an individual and applying it to everyone. We aren’t all better off if we all save more. In order for us to save more, in the aggregate, we must spend (or invest) more. As a whole, we tend not to think in a macro sense.""
http://pragcap.com/the-biggest-myths-in-economics
Book quoted below is worth a read even though you may occasionally want to toss it out the window. Thought provoking stuff.
"In the United States, despite the disappearance of the worst sorts of public racism and the emergence of a small black middle class, including some highly successful politicians, the blacks have been confirmed in their sub-working-class role. This emerges from all the statistics on unemployment, health care, mortality rates. education, prison occupation and family status. For example, infant mortality among blacks is more than double that of whites and the gap is widening. To this racial problem has been added a second sub-working-class made up of Hispanics who will be at thirty million, the largest ethnic group in the United States by the year 2000. A large number of these immigrants fuel a low-cost, low-employment-standards black market economy which escapes all social regulation. This in turn has placed great pressure on the economies of the southern states to remain or return to pre-Roosevelt conditions, which in turn has created an industrial drain from the northern states. As a further pressure on this lowest denominator style of competition, America is gradually integrating its economy with that of Mexico, a country that operates at the cheap and rough levels of the Third World.
In Britain a similar approach has led to the creation of large pockets of new wealth and to equally large pockets of new poverty. This return to the old rich-poor society with a gap in the middle has been encouraged by a decline in universal state services - whether practical, such as transportation, or social, such as health care,
In other words, there has been a gradual undermining of the idea of a general social consensus. All of this has been fueled by a slavish devotion to the rational certitude that there are absolute answers to all questions and problems. These absolute solutions have succeeded each other over the last twenty years in a jarring and disruptive way. At the same time the ability of governments to effect economic development has been severely handicapped by a growing reliance on service industries for growth ~ a sector dominated not by sophisticated items such as computer software but by consumer goods and personal consumer services. These sectors, it goes without saying, also flourish on labour which is part-time, low wage and insecure, thus creating a false sense of having solved part of the job-creation problem. This growth in services also leaves the Western economies dependent on the most unstable areas of economic activity, which is the first to collapse in an economic crisis. Put another way, service industries are to the economy what the uncontrolled printing of money is to monetary stability. They are both inflation." pps 237 'Voltaire's Bastards: The Dictatorship of Reason in the West' John Ralston Saul
By Cullen Roche January 8Th, 2014
"Ten common assertions elegantly skewered. "The biggest mistake in modern macroeconomics is probably the fallacy of composition. This is taking a concept that applies to an individual and applying it to everyone. We aren’t all better off if we all save more. In order for us to save more, in the aggregate, we must spend (or invest) more. As a whole, we tend not to think in a macro sense.""
http://pragcap.com/the-biggest-myths-in-economics
Book quoted below is worth a read even though you may occasionally want to toss it out the window. Thought provoking stuff.
"In the United States, despite the disappearance of the worst sorts of public racism and the emergence of a small black middle class, including some highly successful politicians, the blacks have been confirmed in their sub-working-class role. This emerges from all the statistics on unemployment, health care, mortality rates. education, prison occupation and family status. For example, infant mortality among blacks is more than double that of whites and the gap is widening. To this racial problem has been added a second sub-working-class made up of Hispanics who will be at thirty million, the largest ethnic group in the United States by the year 2000. A large number of these immigrants fuel a low-cost, low-employment-standards black market economy which escapes all social regulation. This in turn has placed great pressure on the economies of the southern states to remain or return to pre-Roosevelt conditions, which in turn has created an industrial drain from the northern states. As a further pressure on this lowest denominator style of competition, America is gradually integrating its economy with that of Mexico, a country that operates at the cheap and rough levels of the Third World.
In Britain a similar approach has led to the creation of large pockets of new wealth and to equally large pockets of new poverty. This return to the old rich-poor society with a gap in the middle has been encouraged by a decline in universal state services - whether practical, such as transportation, or social, such as health care,
In other words, there has been a gradual undermining of the idea of a general social consensus. All of this has been fueled by a slavish devotion to the rational certitude that there are absolute answers to all questions and problems. These absolute solutions have succeeded each other over the last twenty years in a jarring and disruptive way. At the same time the ability of governments to effect economic development has been severely handicapped by a growing reliance on service industries for growth ~ a sector dominated not by sophisticated items such as computer software but by consumer goods and personal consumer services. These sectors, it goes without saying, also flourish on labour which is part-time, low wage and insecure, thus creating a false sense of having solved part of the job-creation problem. This growth in services also leaves the Western economies dependent on the most unstable areas of economic activity, which is the first to collapse in an economic crisis. Put another way, service industries are to the economy what the uncontrolled printing of money is to monetary stability. They are both inflation." pps 237 'Voltaire's Bastards: The Dictatorship of Reason in the West' John Ralston Saul
