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Old 09-20-2011, 03:07 PM
eeeeeeeli eeeeeeeli is offline
Join Date: Jun 2009
Location: Palm Desert, CA
Posts: 811
Default Question on Consumer Spending and Productivity

OK, at risk of exposing myself as an economic dunce, I've been bothered by this question for some time, and someone might be able to shed light on it for me.

Basically, what types of consumer spending are more productive than others, and how much does it matter? For instance, does it matter much whether I spend $100 on groceries, or a piece of artwork? In both cases, the money would seem to go back into the economy, creating value elsewhere. But wouldn't it matter what labor is getting paid for, in other words, what labor is getting done and what use it has for the economy?

The grocery transaction is powering myself and family, as well as supporting a business owner servicing his community, as well as the chain of businesses he is supporting. The art transaction is I suppose providing me a sort of inspiration - but for argument's sake, let's say it is overpriced and of marginal value to me. To the artist, it pays the bills, but his labor has been wasted on a relatively unproductive effort.

It ultimately seems a very difficult problem to untangle, as finding and weighing the productivity in these transactions is so complex. I'm reminded of an old device an early economist had built with the intention of creating a physical replication of an economy. It resembled a Rube Goldberg contraption.

Do economists have an opinion on this question? Does it matter? I can help but think it must, the same way that an investment can either by good or bad - there surely is a spectrum productive activity. Is luxury spending more wasteful than basic essentials?

Lastly, and you might have guessed this: what does it portend for distribution of wealth? Returning to groceries and art, while the arts are important, they do seem at some level a luxury - in the productive sense. And given that 37% consumer spending is now done by the wealthiest 5%, whether fair or not, it would seem to suggest considerable waste.
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