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Quote of the Day (from Jean Baptiste Say)

By JLP | November 22, 2010

The title was not meant to rhyme.

Check out this interesting quote I came across today by Jean Babtiste Say in 1832:

“…the encouragement of mere consumption is no benefit to commerce; for the difficulty lies in supplying the means, not in stimulating the desire of consumption; and we have seen that production alone furnishes those means. Thus, it is the aim of good government to stimulate production, of bad government to encourage consumption.”

In other words, emphasizing consumption over production is like putting the cart before the ox.

This quote is interesting to me because of what we are seeing today. From President Bush begging people to go spend money after 911 to the Obama admistration increasing jobless benefits to the unemployed, when the focus is on consumption rather than production (job creation), we hurt the economy.

Topics: Economics | 11 Comments »


11 Responses to “Quote of the Day (from Jean Baptiste Say)”

  1. Ron Says:
    November 22nd, 2010 at 2:31 pm

    From the Wikipedia entry:

    “Jean-Baptiste Say … had classically liberal views and argued in favor of competition, free trade, and lifting restraints on business.”

    Wow, liberalism has changed!

    LIBERALS — TURN BACK TO YOUR ROOTS! Haha!

  2. BG Says:
    November 22nd, 2010 at 3:34 pm

    What about “lifting restraints on consumers”? You can’t even buy a pair of glasses without a prescription.

    And people wonder why health-care is so expensive.

  3. Dan Says:
    November 22nd, 2010 at 5:38 pm

    Clearly our economic problems will be solved by a lower capital gains tax rate. Restricting the productivity of the world’s top wealth-shifters is just more of the socialistic myopia inflicted on the world’s top economy by San Francisco Liberal Nancy Pelosi and Secret Muslim Kenyan Anti-colonialist Barack Obama. Hedge fund managers must be unshackled from the dank prison of paying the same tax rates as everybody else!

  4. Rob Says:
    November 22nd, 2010 at 6:43 pm

    That guy was not an economist. Mature economies must have a strong domestic consumption to sustain any kind of growth. Ours was a bit over the top, but other countries (Japan, now China) have the opposite problem. This article is really an interesting take on that:
    http://www.foreignpolicy.com/articles/2010/09/30/the_japan_syndrome?page=0,0

  5. Jack Says:
    November 23rd, 2010 at 8:10 am

    “You can’t even buy a pair of glasses without a prescription.”

    Go to CVS, Rite Aid, or Walgreen’s. They have glasses there. Just go try on a few until you find a pair that gives you the best vision. They cost about $10.

  6. DIY Investor Says:
    November 23rd, 2010 at 8:20 am

    I love the quote. The Classical economists thought long and hard about the economy and unfortunately many of their ideas were cast aside by Keynes’ brilliance. Keynes was focused on a singular situation – massive unemployment. In that instance the problem was inadequate demand.
    Unfortunately, politicians took Keynes’ analysis as a ticket to spend like drunken sailors and finance it with the hidden tax of monetizing the national debt.
    If we understood and followed the insights of Jean Baptiste Say we would be a helluva lot better off today. But his is a long term disciplined view.

  7. Jack Says:
    November 23rd, 2010 at 9:06 am

    “But his is a long term disciplined view.”

    And our congresscritters are focused on nothing but the next election.

  8. BG Says:
    November 23rd, 2010 at 11:38 am

    Jack) Yeah, I know you can buy ‘reading’ glasses. I don’t personally wear them. I’m just complaining about the wife needing new glasses and contact lenses. Shops will NOT sell you these things without a “valid” prescription, and a “valid” prescription is one that is not a year old.

    My point is that certain industries have gotten very cozy with government in their niche monopolies. I’d love it if government REQUIRED that someone purchase my _services_ before being able to purchase _your_ product.

    For it to be claimed that government is somehow shackling business — I claim the opposite, government is shackling the consumer to specifically help (certain) business.

    And when you start looking back through history, you start seeing lots of examples of BIG NAME-BRAND companies, that only got that way because they petitioned government to monopolize then in one way or another.

    Look at Henry Heinz and how he had federal regulations created that enforced how thick ‘ketchup’ must be, what spices can and can’t be used in the making of ketchup, among other things. Of course his ‘product’ already fit the new definition, and his competitors did not.

  9. Jack Says:
    November 23rd, 2010 at 2:11 pm

    One can buy other glasses at the pharmacies, not just reading glasses.

    Your broader point, however, is a valid one, and one that matches the point of this article — that there is too much government regulation of business.

  10. JLP Says:
    November 23rd, 2010 at 2:18 pm

    Dan,

    I’m not sure how you arrived at your comment from the quote I posted. I don’t think there’s anyone—liberal or conservative—who thinks that hedge fund managers should not pay their share of taxes. Please explain yourself.

  11. JLP Says:
    November 23rd, 2010 at 2:19 pm

    Rob,

    The quote didn’t claim that consumption wasn’t important. Obviously it is. BUT…consumption should be fueled through production and not the other way around.

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