In Praise of Temperance
By Arnold Kling
Deirdre McCloskey writes that economists no longer view underconsumption as a threat to full employment.
Nothing would befall the market economy in the long run, says the modern economist, if we tempered our desires to a thrifty style of life–one old Volvo and a little house with a vegetable garden and a moderate amount of tofu and jug wine from the co-op. … if you focus on an irrelevant mental experiment, namely, that tomorrow, suddenly, without warning, we would all begin to follow Jesus in what we buy. Such a sudden conversion would no doubt be a shock to sales of SUVs at Ford and Toyota. But, the economist observes, people in a Christian Economy would at length find other employment, or choose more leisure…
All this is good news for ethical people. We don’t need to accept avaricious behavior on account of some wider social prudence it is supposed to serve, allegedly keeping us employed. “Keeping us employed.” Have you ever in your private, homely activities, doing the laundry or planting the garden, seen the main problem as finding jobs at which to be employed? Isn’t the main problem the opposite one, a scarcity of hours in which to bake the bread, or fix the car, or play with the kids, or nurture friendships, or sing praises unto the Lord? If you agree, then you grasp the great economic principle that, as Adam Smith put it, “What is prudence in the conduct of every private family can scarce be folly in that of a great kingdom.” And you will grasp why it is not economic prudence to “keep us all at work” by spending on luxuries.
For Discussion. Is the theory that we need to consume to “keep the economy going” related to what Bryan Caplan would call make-work bias?