PrintJanuary 15, 2011
A Dearth of Savings
The economy is floundering as a result of increasing regulations, ill-advised monetary and fiscal policy trying to prop everything up, and more international competition at every turn. One other thing is also true: as a nation, we are told, we are not saving enough.Well. Maybe that's not true. What is "enough," really? And enough compared to what? The personal savings rate is actually up from its all-time lows of the last decade. (Historically, U.S. saving has also been low compared to in other countries.) But in this case, comparisons matter little. The reason that we don't save enough is simple: We don't save "enough" because economic growth has slowed -- making us worse off; and savings fuels economic growth -- making us better off. Any student taking an undergraduate intermediate macroeconomics course should be able to expound on the subject through a reasoned explanation of what is called the Solow Growth Model,...(Read Full Article)
