Wednesday, March 18, 2015

Feast or Famine?

photo of Max Weber
If it’s raining and rush hour you’re going to have trouble getting, a cab, but on a sunny Sunday there will be cabs everywhere and it’s a buyer’s market. Pharaoh’s dream was about the famine that followed seven years of feast, symbolized by the fat and emaciated  cows. But isn’t that precisely how all of life is? There are literally and metaphorically always the rush hours when it’s raining and you can’t get a cab and then the sunny days, when the city has been vacated, and cabs are everywhere. But how does one handle scarcity and surfeit? Should you save up and hoard when things are good so that you can weather the storm or should carpe diem be the philosophy by which you live. Why save for tomorrow, when you don’t know if there will even be one? If you are always putting off pleasure then you will never fully enjoy anything. On the other hand if you totally follow the senses and enjoy the pleasures of the body, of the now, you are not planning for a rainy day. Max Weber wrote The Protestant Ethic and the Spirit of Capitalism which dealt with this very issue. Spenders are not followers or the Protestant ethic. This is a paradigm of our economic problems. Corporate bank accounts are overflowing, but the economy is only expanding slowly. Businesses are still jittery in the light of the economic debacle of 2008 so they're holding back on the kind of expansion, which would create more jobs. The Chicago school still talks about trickle down economics. If those corporate bank accounts get big enough eventually everyone will profit. Old fashioned Keynesians, who are less concerned about inflation and the deficit, are still invested in the notion of the kind of government spending that creates effective demand. They reject  Say’s Law with its belief that supply alone will produce demand.  One way creates wealth by spending and another by saving. Which one is right?

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