Recently, there have been articles lambasting the spending on the Oscars ceremony as being excessive and insensitive. While it is a pity that so much is pouring into the posh of the few who don’t need it, I think that the argument that being frugal will benefit the economy is misguided. The economy thrives on consumer spending, and if everyone in the U.S. now suddenly stopped buying goods, that would for certain spell the doom of the market.
In my view, it makes little sense to throw money into the management and administrative ends of businesses. If you want to revitalize a crippled American car economy, why bleed money when the government could buy off the endless inventoried vehicles and put them to use in one way or another?
While I’m not spending a ton of money, I’m also not spending much less than ever before. Economic plans focus on unemployment and big “key” companies, but there must also be an effort to keep the small owners’ businesses alive, and that is most easily achieved by simply patronizing those businesses. Consumption tends to be a self-sustaining process since quality goods promote further business; the endpoint of tax cuts has to be in this realm, and if people just hoard their money, nothing is going to change.
A related article: http://www.nytimes.com/2009/02/22/business/worldbusiness/22japan.html?_r=1&hp
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