He who places his hope on thee, O Virgin all-glorious, will prosper in all he does.

Inscription on Byzantine coin during reign of Romanus III

Tuesday, February 23, 2010

The Irrelevant Un-Maestro

There he goes again. Alan Greenspan sees little economic light as the recovery remains "unbalanced", with only high earners and big companies driving growth so far.

The reasons for Alan's pessimism are my reasons for optimism. Concentration of capital, such as those in the hands of high earners and big corporations, are what sets in motion a solid recovery. Small businesses can't borrow unless capital is available. The unemployed can't get jobs until capital is amassed and used to purchase productive capacity. Production must precede consumption.

This truth is the reason why the Gospel's admonition to aid the poor cannot constitute the basis for sound economic policy. Dispersion of capital--dissaving--is what wrecks economic recoveries. One aids the poor from one's surplus, not from one's seed corn.

The decision about how much to save and how much to consume--and how much to give to the poor--is a decision best made by each believer, not by the State.

1 comment:

Stella said...

Do you win a prize for terseness?