Consumers Don’t Drive the Economy, Producers Do

By:  Bob Adelmann
10/27/2011
       
Consumers Don’t Drive the Economy, Producers Do

In Commerce Secretary John Bryson’s announcement that the nation’s Gross Domestic Product (GDP) grew at an annual rate of 2.5% last quarter, he came close to disclosing the real driver of the economy: producers:

In spite of headwinds hitting the U.S. economy, today’s GDP report — the ninth straight positive quarter — reflects strong consumer spending and export growth and continued investment by American businesses (emphasis added).

But then he had to go and spoil it all by touting the Keynesian response to lack of jobs and turning to shill for more government spending:

Despite today’s encouraging numbers, we must do more to create jobs. That’s why it’s critical that Congress act to pass the measures in the president’s Jobs Act.

It’s the Keynesian approach that puts the matter upside down, but continues to be the only ideology considered as a solution: demand creates supply. If that is so, then putting spending power into the hands of consumers will drive the economy. History shows that that leads to all kinds of mischief, including taking of money from those who earned it and giving it to those who didn’t, all in the name of “fairness” and “economic justice.” The fact that the Keynesian approach doesn’t work, never has worked, and never can work, doesn’t bother the statists who favor more government, regardless.

In Commerce Secretary John Bryson’s announcement that the nation’s Gross Domestic Product (GDP) grew at an annual rate of 2.5% last quarter, he came close to disclosing the real driver of the economy: producers:

In spite of headwinds hitting the U.S. economy, today’s GDP report — the ninth straight positive quarter — reflects strong consumer spending and export growth and continued investment by American businesses (emphasis added).

But then he had to go and spoil it all by touting the Keynesian response to lack of jobs and turning to shill for more government spending:

Despite today’s encouraging numbers, we must do more to create jobs. That’s why it’s critical that Congress act to pass the measures in the president’s Jobs Act.

It’s the Keynesian approach that puts the matter upside down, but continues to be the only ideology considered as a solution: demand creates supply. If that is so, then putting spending power into the hands of consumers will drive the economy. History shows that that leads to all kinds of mischief, including taking of money from those who earned it and giving it to those who didn’t, all in the name of “fairness” and “economic justice.” The fact that the Keynesian approach doesn’t work, never has worked, and never can work, doesn’t bother the statists who favor more government, regardless.

Click here to read the entire article.

Austrian economist Mark Skousen (pictured)

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