I don't recall that anyone here has addressed the question of what a
successful program of 'voluntary simplicity'--say the suggested 10%
reduction in the overall consumption of each family--would do to the economy
at large and, in particular, to the national employment rate. This is a
routine exercise in every undergraduate college course in economics. A drop
in consumption means a fall in sales, which in turn requires producers to
cut down their output volume, and that of course requires that a part of
their workforce be laid off--thus raising unemployment.
As jobs are lost, consumer purchasing power (involuntarily)
declines, causing a 2nd round of shrinkage in consumer spending--which leads
to further cuts in production, the laying off of still more workers, and a
2nd ratcheting up of the unemployment rate. When that 2nd wave of workers
loses its paycheck, overall consumption takes a 3rd drop, setting off a 3rd
round of production cuts, job cuts, and hikes in the national unemployment.
New investment in new plants and equipment will first decline, then stop,
and the familiar 'reverse multiplier effect' will kick in, setting in motion
an ever-enlarging cycle of recurring plunges in consumption, production,
jobs--and thus in overall consumer income.
During the 1929-1933 Great Depression years, as I recall, this
country's GNP declined by some 50% and the unemployment rate rose to roughly
25%.
I would be very interested in learning how the supporters of a 10%
(and ultimately maybe 50% or more?) cut-back in nationwide consumption
propose to keep it from cascading into a serious recession or even a repeat
of our Depression of the '30s. Is there a plan for protecting the
non-volunteers, to prevent their jobs and incomes--and thus their
consumption--from being involuntarily taken from them by this 'voluntary
simplicity' program?
Charles Mueller, Editor
ANTITRUST LAW & ECONOMICS REVIEW
http://webpages.metrolink.net/~cmueller
******************
