Marginal Propensity to Consume 06: “Irrational Expectations”
Exogenous to “Failed Nations,” we in aggregate save only for the purpose of enhancing creative efficiencies in the coming years. Again, with population growth on hold, the problem of individual life cycle is irrelevant to the aggregate economic cycle. Necessity of GDP Growth. On the demand side, there are largely two drives for the national income per annum per capita to grow over the years expected to arrive. First, we have a dream of better future owing to ever-effective individual demand for utilities. If history is any guide, human desires do not recognize the limit. Second, we wish to outlive the individual wealth, which might be called “precautionary motive.” This leads to positive bequests of wealth in aggregate or in terms of average per capita on the way of crossing the River. The collective “bequests” in everyday language are an inevitable consequence of “uncertainties” when the eventual ...