csc@watmath.UUCP (Computer Sci Club) (04/11/84)
The use of essentially simplistic economic reasoning on this net is
becoming nauseating. Witness the current debate on the effect of the
transfer of money via welfare payments.
Side 1: The transfer is good for the economy as it increases
consumer spending, thereby stimulating business and
creating jobs ...
Side 2: The transfer is bad for the economy as it shifts
resources from capital (ie. productive) sectors
to service (ie nonprodutive) sectors ...
The truth of the matter is of course that both sides are right. The
transfer has both of the above effects and many more besides. It is
true that consumer spending is necessary to the workings of the economy,
and that without it capital is useless, as it is not used. It is also
true that without a source of capital businesses are not started, hence
jobs are lost, hence consumer spending goes down, hence the economy fails
to operate. One must strike a balance (hardly the most profound statement
ever made but still and extremely important and oft forgotten fact).
Economics is not a simple subject (profundity was never my strong point).
It involves hundreds of factors, coupled in thousands of intricate ways.
It is international in scope and mind boggling in complexity. Many economic
models have been proposed, so far none of them have been extremely successful
(though they are far from valueless). So when presenting arguments on
ecomomic matters try to look at the whole picture and recognize the
limitations of whatever model you are using.
William Hughes
ps. My personal opinion is that (in Canada at least) the government has
transfered too great a quantity of resources from the capital to
service sectors. This is not a naive opinion, but it is incompletely
researched and in any case any reasonably complete discussion would
be impossible in this forum.