His first sentence is true. It can even be argued, in the very short term, that his second sentence is true. A static economy is ‘zero-sum’. But the consequences of redistribution from those with wealth to those who lack it are not static, and so his ‘truth’ only holds in the very short term. Thereafter, such a redistribution is bound to promote growth, because the redistribution comes from money that has been saved, and which is therefore not in use in the economy, into money that will be spent, thereby generating growth.
The conclusion Wolf offers is, therefore, wrong, with one caveat. Redistribution shatters ‘zero-sum’ economics because the marginal propensity to consume of those with money in the economy changes beneficially.
If the economy is – largely – at capacity then increased demand turns up as inflation, not more growth. Given that we’ve got inflation we can back-conclude that we at or around capacity.
Therefore, to gain growth we’ve got to increase capacity. Which means investment. Which is financed by savings, not by demand.
No, don;t give us all buggery bollocks about cash savings not financing investment – something that’s untrue anyway. Investment is, by definition, deferred consumption.
Sigh.
Murphy’s opening line …” I asked ChatGPT to summarise my own work on this, and it offered the following summary:”
Is this a parody account or has the fella zero self awareness?
“does not compute.”
I’m ashamed I didn’t grasp the obvious before. The wisdom of Spud is just the ramblings of the forerunners of ChatGPT when it used COBOL…
ChatGPT + Spud-U-Loathe = ChatNBG
So, did Spud just recognize that there are differences in the propensity to save vs. spend? And also, that the economy is not a zero-sum game? Doesn’t this run counter to quite a few of his usual arguments?
‘But the consequences of redistribution from those with wealth to those who lack it’
Commie bullshit. Wealth CANNOT be redistributed, it can only be DESTROYED.
The objective is NOT to help the poor; it is to destroy the rich. They couldn’t care less about the poor. Indeed, they WANT EVERYONE TO BE POOR.
I wonder whose view carries more weight
Martin Wolf, CBE
or
Richard Murphy, TWAT
Murphy ‘s a regular and vitriolic critic of Wolf these days, I think he used to be a supporter? Have they ever interacted I wonder or is this just another in the long trail of Murphy’s broken personal relationships and envy.
His argument is consistent with his belief that the supply of money is unlimited therefore banks can simply print money so everyone can have everything. He is blind to the effects of supply of goods being limited.
“… money that has been saved, and which is therefore not in use in the economy …”
Banging this drum again, the same old Scrooge Mc Duck fallacy. He believes so many impossible things he might as well round it off with breakfast at Milliways.
Selfish gits. They could afford ALL of my desires if they would simply sell their car and rent out that extra room. Their cries of poverty ring hollow.
How is a ‘static’ economy zero sum?
The core thing a market does is move value around. As long as people are doing things the resources are being moved from lower value to higher value positions – thus everyone still gets richer.
Also, I suspect that he is using words on ways that no English speaker or economist would – how can an economy be ‘static’? Economic activity produces (or destroys) value by definition. If that isn’t happening then you don’t have an economy.