Were an alien to pick up our news channels, it would conclude that human civilisation depended on the production and purchase of cheap plastic tat. First came the concern that we might talk ourselves into not spending enough; then the fear that the banks wouldn’t lend us the money to spend, even if we wanted to. In November, our governments borrowed money and gave it to us in the hope that we’d get the hint. Are we really so dependent on consumption?
In the short run, yes. Economists worry about a sharp fall in consumer spending because when demand for goods falls, so does demand for labour. Our desire to spend less is quickly revealed as a desire to spend less hiring each other (and our friends in China) to make things. Result: economic collapse, unemployment, misery.
In the long run, the picture is completely different. The typical British man earns roughly twice what his father earned at the same age. When today’s teenagers are in their forties, there is no reason why they shouldn’t decide to enjoy their increased prosperity by working less instead of earning more. Rather than being twice as rich as their parents, they could be no richer but start their weekends on Wednesday afternoon.
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