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Wednesday, November 17, 2010

A Nation of Consumers?

Got to keep those factories humming.

In its April 25, 1934, edition, the British humor magazine Punch published “I Want to Be a Consumer” by Patrick Barrington in which a young boy says that when he grows up, he wants to consume. The poem provides commentary not only on the Keynesian mentality of that day, but also for our present circumstances.

(Yes, the poem came out two years before publication of Keynes’s General Theory, but one can see that Keynes’s way of thinking already was already in vogue.)

The lad tells the bishop:

“I want to be a Consumer,”
The bright-haired lad replied
As he gazed up into the Bishop’s face
In innocence open-eyed.
“I’ve never had aims of a selfish sort,
For that, as I know, is wrong.
I want to be a consumer, Sir,
And help the world along.

“I want to be a Consumer
And work both night and day,
For that is the thing that’s needed most,
I’ve heard economists say,
I won’t just be a Producer,
Like Bobby and James and John;

I want to be a Consumer, Sir,
And help this nation on.”

The poem is meant to be farce, but it also is a theme of Paul Krugman’s columns. If one can sum up all the present Keynesian claptrap into one sentence, it would be this: Americans need to consume more.

Should one doubt the close association of the poem with what the Keynesians are declaring, read on:

“I want to be a Consumer
And live in a useful way;
For that is the thing that’s needed most,
I’ve heard economists say.
There are too many people working
And too many things are made.
I want to be a Consumer, Sir,
And help to further trade.

“I want to be a Consumer,
And do my duty well;
For that is the thing that’s needed most,
I’ve heard Economists tell.
I’ve made up my mind,” the lad was heard
As he lit a cigar, to say;
“I want to be a Consumer, sir,
And I want to begin today.”

Last year, Hillary Clinton visited China and urged the Chinese central bank to continue to purchase U.S. government debt because “We are all in this together.” Clinton stated (in other words, of course): China is the producer, and the United States is the consumer, and this keeps the perpetual motion machine of a world economy going.

(Once upon a time, international trade involved the exchange of real goods, but today’s sophisticated economy has done away with that necessity. Paper for products will do.)

Clinton, in essence, was claiming that the responsibility of U.S. citizens is to consume Chinese products, and the Chinese should gratefully accept U.S. dollars. What do Americans receive? Why they receive computers and cell phones, clothing, and a million other items.

What do Chinese get for all of this? Why, they get jobs. (For lack of space, I won’t go into the current brouhaha about the value of China’s currency, which I will address in a future column.)

Never mind that Clinton advocated something akin to real exploitation, in which one group of people works for minimal compensation and another class of people receives goods without having to work for them.

If anyone really wants to understand the mentality behind the “stimulus” plans of former President Bush and President Obama, it is this: The United States must become first and foremost a nation of consumers, and the way to do it is for the government to provide dollars, Americans to quickly spend them, and people overseas to accept the dollars and keep working.

A fundamental tenet of economics is that the end of production is consumption. Unfortunately, Keynesian economists seizing the public microphone claim the purpose of consumption is to clear the shelves so producers will have something to do in the future.

So the lad apparently was right. The purpose of consumption is consumption, and the purpose of production is, well, production. Just ask the Keynesians.

  • Dr. William Anderson is Professor of Economics at Frostburg State University. He holds a Ph.D in Economics from Auburn University. He is a member of the FEE Faculty Network.