consumption?
Disclaimer: maybe I'm completely misunderstanding what they're talking about (entirely possible) and I have a rather knee-jerk reaction to words like "increased consumer spending"
From this article in the Economist (the article itself actually argues against this paragraph:
Even economists who believe that most of the blame for the crisis lies in Washington, DC, argue that Asian economies need to shift from exports and investment to consumption as their new engine of growth. In “The Next Asia”, a recently published book, Stephen Roach, chairman of Morgan Stanley in Asia, calculates that consumption in emerging Asian economies fell from 65% of GDP in 1980 to 47% in 2008. American consumer spending, by contrast, accounts for more than 70% of GDP. “Until export-led growth gives way to increased support from private consumption,” he argues, “the dream of an Asian century is likely to remain just that.”
I'm sorry, what? They're saying Asian countries need to consume more. But consume what? Domestic products or foreign products? If foreign products, whose? The Asian countries themselves or the people they're buying from? I know my understanding of econs is very limited but as far as I can tell, if you consume more foreign products, that'll inevitably lead to a decrease in how much money the country has.
Also, consumption constituting a smaller percentage of the gdp doesn't necessarily mean that consumption on a whole has decreased, it may just mean that people are making more, but spending like they used to. Just because you have money doesn't mean that you have to spend it. I know it's a severe simplification of the situation, but that's basically the mentality that got America into over twelve trillion dollars worth of debt (there's a debt clock in Times Square that shows Uncle Sam begging, quite amusing).
Besides, even if consumption helps balance the books, that isn't necessarily a good thing. Increased consumer spending inevitable leads to waste, not just from the products themselves that have incredibly short life spans and just get thrown away, but from stuff like packaging, delivery and production, that create incredible amounts of waste. That's part of my problem with the whole financial system: the numbers may makes sense, but the logic behind it just doesn't make sense.
So who exactly is supposed to benefit from this?
(Of course, I know me saying this is really hypocrisy because I still follow a capitalist system anyway.)
From this article in the Economist (the article itself actually argues against this paragraph:
Even economists who believe that most of the blame for the crisis lies in Washington, DC, argue that Asian economies need to shift from exports and investment to consumption as their new engine of growth. In “The Next Asia”, a recently published book, Stephen Roach, chairman of Morgan Stanley in Asia, calculates that consumption in emerging Asian economies fell from 65% of GDP in 1980 to 47% in 2008. American consumer spending, by contrast, accounts for more than 70% of GDP. “Until export-led growth gives way to increased support from private consumption,” he argues, “the dream of an Asian century is likely to remain just that.”
I'm sorry, what? They're saying Asian countries need to consume more. But consume what? Domestic products or foreign products? If foreign products, whose? The Asian countries themselves or the people they're buying from? I know my understanding of econs is very limited but as far as I can tell, if you consume more foreign products, that'll inevitably lead to a decrease in how much money the country has.
Also, consumption constituting a smaller percentage of the gdp doesn't necessarily mean that consumption on a whole has decreased, it may just mean that people are making more, but spending like they used to. Just because you have money doesn't mean that you have to spend it. I know it's a severe simplification of the situation, but that's basically the mentality that got America into over twelve trillion dollars worth of debt (there's a debt clock in Times Square that shows Uncle Sam begging, quite amusing).
Besides, even if consumption helps balance the books, that isn't necessarily a good thing. Increased consumer spending inevitable leads to waste, not just from the products themselves that have incredibly short life spans and just get thrown away, but from stuff like packaging, delivery and production, that create incredible amounts of waste. That's part of my problem with the whole financial system: the numbers may makes sense, but the logic behind it just doesn't make sense.
So who exactly is supposed to benefit from this?
(Of course, I know me saying this is really hypocrisy because I still follow a capitalist system anyway.)