People don’t usually spend their money buying things they don’t want or need, do they? Or, how do we define Need?

GREGORY MANKIW from NYT:

"... If you hire your neighbor for $100 to dig a hole in your backyard and then fill it up, and he hires you to do the same in his yard, the government statisticians report that things are improving. The economy has created two jobs, and the G.D.P. rises by $200. But it is unlikely that, having wasted all that time digging and filling, either of you is better off.

People don’t usually spend their money buying things they don’t want or need, so for private transactions, this kind of inefficient spending is not much of a problem...."



IbnBattuta here: When we are not able to see the assumption that are guiding us, we are in deep trouble!
Unless we get quickly rid of this fallacy we will hardly see any steady sustainable growth in the near future.

A frightening percentage of people in OECD countries have been brainwashed into culturalize an increasingly higher proportion of their spending. And when possible spend more, even more then they have.

The real existence of this excess of demand is not easy to prove, let alone to quantify, but would certainly constitute a bubble, a deviation from a sustainable level.

This could probably be considered the equivalent at micro level of what Mankiw fault to the Government, an enormous misallocation.

A sudden change in cultural values that would change the composition of the basket of consumers goods for a sufficiently long period of time is likely to have permanently disruptive effects on demand

Anybody seriously doubtful about the real existence of a cultural bias in consumption just think of minimum wage workers that pays 40 bucks for a pop-star show.

Or, for that matter, the time that they may spend paying attentions to their lives.

And I'm ready to take the charge of elitist. The true elitist are those who consider that our high culture is unfit for general public and instead provide their souls with poisonous food, preventing them even the chance to accept their share in mankind bequest.

We have been humiliating our fellow citizens for too long in exchange for very little good in our countries' real long term prosperity.

For generations, we have been preaching the great highness of self-realization while we were actually selling a model with very few winners that use to take no prisoners, and a huge anomic mass to be controlled with broadcasted, home consumed, circenses.

There is nothing wrong about the fact of living in a hierarchical society, at all!!

But the rule have to be clearly stated and we must get rid of hypocrisy.

In the next days I'll publish a post about what I called Agricare, as you can see the merging of Agri-culture and Health-care.