Does living frugally hurt the economy?
Or
Helping us to get over The Current Financial Crisis
[INDENT]When I advocate for frugal living, people sometimes ask, "What if everybody lived like that? Wouldn't it hurt the economy?" My natural inclination toward frugal living may color my opinion, but I don't think so. I think mass frugality would be good for the economy.
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[INDENT]So, the question is: If everyone suddenly decided to be more frugal, would that look like a consumer-led recession, with falling sales leading to layoffs, and layoffs leading to cash-strapped consumers choosing to be even more frugal?
It's a question that's hard to answer. If everyone were a bit more frugal, yes there probably would be a bit less total economic activity. But it would help us to get over The Current Financial Crisis which places the responsibility on everyone to live more frugally.
What if everyone suddenly became frugal? I think, though, that the exact result depends a great deal on the economic situation at the moment the change takes place. It's kind of like unsure before giving someone an aspirin: Won't it cause his temperature to fall? Well, if he's got a fever, yes it probably will. Otherwise, probably not. In much the same way, if the economy is overheated, then a shift to frugality will probably slow it down.If the economy is underperforming, I think a shift toward frugality will make a big difference.
So, I feel comfortable advocating frugality. We may lose a bit of economic activity--but what we lose is worth losing. What we gain is more secure households and a more sustainable economy. It seems like a win to me
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