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GDP

Atrios forgets in his mini-rant about social welfare and the GDP, that more than two-thirds of the US GDP is based on consumption. Any money that the poor get is spent to survive, not stuffed into mattresses.

Food stamps and unemployment checks help the economy by providing demand in the absence of people with jobs. The 1% don’t actually generate much demand when compared to the 99% buying groceries.

2 comments

1 Badtux { 12.15.13 at 12:30 pm }

Indeed, the 1% by definition consume only 1% of the food sold in America. The dollar amount may be larger, but that doesn’t change the fact that they can only physically eat 1% of the food and that it takes only 1% of the agricultural labor of American to create that 1% of the food. The 99% buying groceries provides far more contribution to the economy.

Same thing with cars. Someone making $50,000 may have one car. Someone making 5 million dollars is making 100 times more money, but he isn’t going to have 100 times more car. He may have three or four cars and they’ll likely be nice cars, but each of those cars takes the same number of auto workers to build. So from a standpoint of employing people, we need the 99% making $50,000 to keep the auto workers employed and producing output, not the 1% making $5M.

The fact that the 1% simply don’t consume anywhere near their share of the national income (somewhere around 1/3rd of national income last I checked) doesn’t “click” with people like Atrios though because they view savings as “good” and consumption as “bad” — despite the fact that without consumption, you have no economy, you just have a lot of people sitting on very lumpy mattresses. And he claims to be an economist?!

2 Bryan { 12.15.13 at 12:58 pm }

It is amazing how few of the ‘pros’ seem to remember how much of the GDP is dependent on consumption. When an economy doesn’t actually produce anything tangible, that’s about all there is left. T-Bills may be an investment for an individual, but they don’t help the economy all that much.