I agree—in fact, we’re seeing some of this right now, with the financial crisis. It’s related to the paradox of thrift: if everybody saves, the economy collapses and we’re all in trouble.
Similarly, if instead of spending money on consumption and local goods, I sent it all to the poorest people I could find, a whole variety of other people would have no means of income. Remember that spending on consumption goods doesn’t destroy the money (or more to the point, prevent charity from being done), since somebody else still gets it.
As an offset, of course, we might expect the poorest countries to become legitimate markets and thus increase total wealth.
I agree—in fact, we’re seeing some of this right now, with the financial crisis. It’s related to the paradox of thrift: if everybody saves, the economy collapses and we’re all in trouble.
Similarly, if instead of spending money on consumption and local goods, I sent it all to the poorest people I could find, a whole variety of other people would have no means of income. Remember that spending on consumption goods doesn’t destroy the money (or more to the point, prevent charity from being done), since somebody else still gets it.
As an offset, of course, we might expect the poorest countries to become legitimate markets and thus increase total wealth.