Not only was Mark an excellent teacher (we learned a ton about ski boots), he was quite the entertainer as well. With glee, he told us about this one customer who has visited the shop every winter for the past several years. According to Mark she turns over her entire ensemble every year to the tune of around $10,000. She buys brand new skis, boots, gloves, pants, jacket, etc., then slides over the snow-covered walkway to the bar where she spends the balance of her vacation.
Now, Mark's understandable (he benefits) lack of disdain notwithstanding, that would be the sort of gluttonous display that totally justifies the popular ire toward the infamous 1 percent. Here's a woman, by all counts spoiled rotten, lavishing herself silly while so many of her fellow Americans can't make ends meet. Her story defines inequality! Tell me she's paying her fair share!
Okay, I'll tell you, in a manner that should leave you scratching your head about why any Keynesian who believes greater consumption is what this economy needs would ever bemoan the rising fortunes of the 1 percent:
For starters, she (along with others like her) is paying Mark's salary. She's paying the wages of the hardworking folks who clean her hotel room, who prepare and serve the food, bus the tables and clean the dishes where she eats. She's paying for the snow plow operators who clear the roads leading to the resort. She's paying for the the folks who catered to her at however many hubs and pubs she visited on the way to Aspen. Oh, and don't forget about all those union workers who build Boeings in Everett, Washington. Make no mistake, she's paying every step of her red-carpeted way for all the folks whose livelihoods depend on making certain she has the best possible experience. Folks who (save for maybe a union member or two [certainly their representatives] in Everett, WA) couldn't give a rip about some politician's self-serving assertion that somehow the system favors such creatures. In essence, in the words of that 1-percent-basher himself, famed Keynesian Paul Krugman, her spending is their income.
So there you have it: the argument for leaving the 1 percent the hell alone, and the argument that, given the visible economic good fortune resulting from Mark's customer's consumption, that more of the same (more demand, more consumption) is what we need to get the economy humming.
And there my friends is where the Keynesian closes. There's where the economist who sees only to the end of his nose---or would have you and I see only to the ends of our noses---composes and completes his argument.
Oh but how he misses the forest when all he sees is the trees. Let's now trek a little deeper into the woods:
So what in the world transpired that would allow this woman the ability to shower dollars onto so many people during the course of one vacation? Did she simply begin spending every dime she had from the moment she had her first dime. If I only had a nickel, let alone a dime, for every Keynesian commentary I've read complaining that the economy's weak because the post-recession consumer is meek. If that were true, if they indeed believe their own words, why on earth would they even begin to propose policy that would threaten the lifestyles of the rich and shameless. I mean those cats live above the economic cycle. Recession be damned!---they've got cash to burn. Seriously, "trickle down" ought to be the Keynesian's mantra. Trickle down consumption that is.
Back to my question, what allows this woman the wherewithal to spend like she does? Well, it's not what you may think, that is if you think consumption drives the economy. I'll answer by simply tweaking my story:
Her story defines inequality! Tell me she's producing her fair share!
Okay, I'll tell you, in a manner that should disabuse you once and for all (if you're not too far gone already) of any notion that consumption drives the economy.
For starters, she, or her benefactor, or her benefactor's benefactor, produce, or have produced, goods and/or services of such value to others that she has amassed the kind of income and/or resources to enjoy the most lavish vacations. It may very well be that the desire to consume is what inspires the woman, or her benefactor, etc., to produce. Make no mistake, the horse (production) indeed always comes before the cart (consumption).
As for Mark: he loves to play golf. So much so as to inspire him to produce customer service at a level that inspires folks like his rich customer to return year after year and drop ten grand into his employer's coffers. I have no doubt that Mark sits atop the pay scale for his position at Aspen Sports. And I have no doubt that he has a nice set of golf clubs. And I could no doubt use Mark's golf clubs as a segue to a whole new inspiring tale of production-led economic growth.
And what about those hardworking folks who produce the clean hotel rooms, the delicious dishes, the snow-free roadways, the spritzers and the jet planes---the goods and the services, that is, that they must produce for the likes of Mark's customer if they are to later consume at the levels they desire? I think my question answered my question. Production at every level precedes consumption.
Do you see how utterly backward are the Keynesians' claims? The whole notion that your spending is my income and my spending is your income, and, therefore, how robust our economy would be if we'd only ramp up our spending. Clearly, my income is the result of my production, and your income is the result of your production. It's the saving (not the spending) and the investing of savings into production that ultimately creates real wealth and wonderful lifestyles. Do you see the
I repeat: It's the saving (not the spending) and the investing of savings into production that ultimately creates real wealth and wonderful lifestyles (not to mention economic growth and jobs).