Back to Homepage Income Measures Income: Saving and Investment Methods of Buying That Save Money The Choice of Goods Methods of Buying That Reduce Mistakes In Selection Methods of Securing Information Concerning Goods Plans and Motives of Consumers Consuming the Product Who Is the Consumer? The Consumer in the Market Priorities and Preferences in Consuming Decisions The Consumer as User of Wealth The Consumer as a Buyer Consumers as Self-Conscious Agents Criteria of a Good Market Information Versus Persuasion of the Buyer The Rate of Interest Interest Rates and Economic Activity Saving, Investment, and Income Saving Motives Saving Plans and their Realization Total Spending Is the Key to Prosperity The More We Spend, The More We Have Spending by Private Enterprise

Total Spending Is the Key to Prosperity Business is operated for profit. Continuing to keep workers on the payroll and to build up huge inventories in the face of declining demand is not profitable. Businessmen cannot and should not be expected to operate that way. We shall have solved our economic difficulties only when there is sufficient demand to absorb all of the goods and services which private enterprise can produce when all of those able and willing to work are employed. We should look to the businessman for initiative and drive and efficiency in production, but we cannot look to him for actions which are incompatible with his competitive relationships. We have all heard a great deal in recent years about the term "spending." Unfortunately, there are two common uses of the word "spending," which causes a great deal of confusion. First, there are many who associate the word exclusively with government spending. Those who are in favor of government spending are usually referred to by the opposition, in a rather critical sense, as "spenders." Because of loose thinking and loose terminology, this title is often applied to all people who recognize the importance of total spending as the key to economic prosperity. The second derogatory use of the term "spending" applies to large and perhaps indiscriminate outlays by individuals for the satisfaction of their desires, lavishly above and beyond reasonable levels. Maybe criticism of such spending is justified on ethical grounds when some people are starving and others are spending for luxuries; but generally, from an economic point of view, there is little basis for such criticism. Sociologically, it is no doubt to the benefit of the nation's total welfare that funds be available for the underprivileged to purchase milk and meats rather than the same funds being spent for liquor or a yacht or a beautiful estate; but from the economic aspect, the expenditure in either case creates a demand, which in turn stimulates production and jobs and income. Some expenditures tend to provide more immediate employment opportunities than others, but all spending for goods and services is important in our type of economy. Anyone who is critical of spending as such is thereby critical of the economic system under which we operate. Without spending, there would be no markets, therefore no demand, and therefore no production except for the immediate consumption by each producer of his own product or the products which he can barter with other producers. Under our economic way of life, people work in order to produce goods and services and to acquire claims over that production. They receive income or buying power for their efforts, and that buying power gives them the right to acquire the goods and services produced. Unless that income is exercised through spending by the recipient or someone else to whom he transfers or loans or entrusts his income, further production will be discouraged, and this will in turn bring reduced employment, lower incomes, less spending, and less production.   Home