The sentiment of a large majority of the active business community

Reading classical economics for me is to be in the company of economists who understood how economies worked. I have of late been reading Simon Newcomb’s “The Problem of Economic Education” which was published in The Quarterly Journal of Economics in July 1893. And what he does is go through the kinds of economic illiteracy that was all too common in the general population of his time, with a decidedly pessimistic view of whether these ideas can ever be eradicated amongst the population in general. And this was even though there was then universal understanding amongst economists about how fallacious these fallacious ideas were. An example:

From the economic point of view, the value of an industry is measured by the utility and cheapness of its products. From the popular point of view, utility is nearly lost sight of. . . . The benefit is supposed to be measured by the number of laborers and the sum total of wages which can be gained by pursuing the industry. . . . Here legislation only reflects the sentiment of a large majority of the active business community. A man’s economic usefulness to society is supposed to be measured by his expenditure of money and consumption of goods. He who spends freely is pointed out as a benefactor; while the miser, who invests his income, is looked upon as a selfish being, mindful only of his own aggrandizement. (p. 7)

Well, that was in 1893 for goodness sake. Who today would think spending is good and saving bad? From The Australian today:

CLIVE Palmer wants the age at which Australians can access their superannuation lowered, saying it will boost domestic demand for goods and services and increase economic growth. . . .

“I think we should be allowing people to access their super at 50 if they want to.

“It’s up to them, it’s their savings … we want to get that money released from the super funds.”

On this, Newcomb wasn’t even close to being pessimistic enough. Now, and since 1936, even economists think saving is a bad thing and spending is good.

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15 Responses to The sentiment of a large majority of the active business community

  1. stackja

    “I think we should be allowing people to access their super at 50 if they want to.
    “It’s up to them, it’s their savings … we want to get that money released from the super funds.”

    Why not 40? Get that money released from the super funds.
    Who needs savings?
    Could Clive release some of his super now?

  2. Notafan

    I suppose Clive pensioners will get an increase of $150 a week Palmer is happy with the blow your super get the pension scenario.

  3. roo

    I’m puzzled? You make reference to antiquity, yet Capitalism has only been the dominant political-economy for 300yrs.

  4. Yohan

    Roo what ‘Capitalism’ are you talking about? Laissez-faire capitalism or state crony capitalism, which is essentially technocratic interventionism and monopoly regulation that we have now in every western country?

    To say that Capitalism has been the dominant political economy for 300 years is a meaningless statement, because the word is so broad a term as to become useless.

    Useless that is, unless you are a lefty who rails at all business and wealth as somehow being the result of ‘capitalism’, thus the vagueness of the term can hide the distinction between how that wealth was acquired.

  5. Hmmm, what might Clive Palmer have to sell, I wonder?

    Shouldn’t it be obvious to anyone that wealth is a product of productive efficiency? If you are a subsistence farmer, no excess production, no wealth. Sure, spending excess contributes to an economy, but reinvesting it into more productive efficiency enables more wealth and ultimately more spending.

    Palmer is a clown. Worse, he is not out of the ordinary amongst his political peers.

  6. Yohan

    I think we are still trying to figure out if Clive Palmer is one of the most opportunistic liars around, or really that dumb, when it comes to his economic pronouncements.

  7. Blogstrop

    I remember many years ago when journos were introduced to the term “the M3, Money Supply”.
    They kept talking about it for ages, thinking it showed they knew a lot.

  8. Dianeh

    Let people access their super at 50 as Clive says. But amend the aged pension eligibility age as well. For each year below 65 that you access your super, the eligibility age should increase by 1 year. So if you access your super at 60 , then you would not be able to claim a pension until 70. Reward those that save, punish those that don’t.

    Otherwise, what Clive suggests it complete horse shit, as usual.

  9. Rabz

    I remember many years ago when journos were introduced to the term “the M3, Money Supply”.
    They kept talking about it for ages, thinking it showed they knew a lot.

    IIRC, they were introduced to the term by that economic genius Keating.

  10. Tel

    The whole super industry is dodgy, and only a matter of time before government dips into the pot. Reducing the age to 50 is a bloody good idea, Palmer is right as usual and you guys are still puzzling over it.

    Why not 40? Get that money released from the super funds.

    Why not indeed.

  11. Tel

    But amend the aged pension eligibility age as well. For each year below 65 that you access your super, the eligibility age should increase by 1 year.

    Oh of course, because the people paying into super don’t also pay regular income tax. Errr wait.

  12. His Omniscience

    Now, and since 1936, even economists think saving is a bad thing and spending is good.

    Ho hum, Kates misrepresenting economists’ views again.

  13. laugh out loud

    Saving good spending bad. It depends as too much of either has its own problems.

  14. Yohan

    The core message of classical economics is that production must come before consumption. Savings, investment and capital accumulation lengthen the production structure, raise productivity and increase the output per unit of capital.

    Savings leads to more goods being available per relative monetary unit, thus society ends up with a raised standard of living. The more goods available, the more exchange takes place for those goods and services, the greater the division of labor, and so on.

    Politicians and statists were always held in check by the classical economists, who told them that printing money and debt financing will lead to lower levels of capital accumulation and thus lower standards of living.

    Then Keynes came along and said you can have it all, high growth, unlimited political spending, unlimited debt creation, he gave a pseudo-scientific rationale for them to do what they always wanted to do, which was to ignore sound economics.

  15. Lawrie Ayres

    I was treasurer for a community low care facility. Those who saved and bought their homes were expected to sell up and contribute to their accommodation. Those who blew every cent and rented got in scot free. The savers were punished twice, once for being careful with their funds and once so they could pay for the spendthrifts. The ant was done over by the grasshopper yet again. A real incentive to strive.

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