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Article: Learning too late about the 'paradox of greed'. (Commentary).(Brief Article)(Column)
- Article from:
- Los Angeles Business Journal
- Article date:
- July 8, 2002
- Author:
CopyrightCOPYRIGHT 2002 CBJ, L.P. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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SOMEWHERE in the introductory course in economics, students will come across the paradox of thrift, a Keynesian construct that, like many others, is better in theory than in practice.
While thriftiness is a desirable goal for an individual, for the nation as a whole it's a disaster. If we all decide to save -- that is, not to spend - the economy, and national income, will fall, making everyone poorer.
Such is the paradox of thrift: what's good for the individual and for the nation as a whole when practiced on a small scale is detrimental when universally applied.
Before encountering the paradox of thrift, economics students will no doubt become ...