In the Op-ed in the link, above, James Livingston of Rutgers points out that consumer spending is the key to economic growth. But where will this spending come from? It must first come from the top 25% of the U.S. households that account for over 50% of consumer spending. http://www.nytimes.com/2011/10/26/us/politics/top-earners-doubled-share-of-nations-income-cbo-says.html?ref=us.
But this does not mean that it should come from the top 1%. As we pointed out in an earlier blog entry (Underconsumption and Underemployment) the top 1% simply (physically) cannot spend enough of their earnings to have a meaningful impact. The spending must come from the remainder of the more affluent. Unfortunately they are either nervous about losing their job (and therefore are saving) or are experiencing declines in revenues in their small businesses or professional practices. The key will be to increase confidence in the government (and perhaps increase its spending) so that the overall population resume it normal practices.
And as Professor Livingston writes, we collectively need to stop "bashing" the fact that our economy is a consumer-driven economy. This is the positive result of the post-industrial period.
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