Greg Zanetti Cites Ayn Rand on Consuming vs. Producing

Fellow New Mexican (woo hoo!) Greg Zanetti cites Ayn Rand in his market report his week. Some excerpts:

In America, we have adopted the philosophy that consumption is more important. 70 percent of our economy is consumption based. After the 9-11 attacks, President Bush told us to go shopping. Alan Greenspan even went so far as to say we were doing the world a favor by consuming their goods and thereby acting as the worldâ??s growth engine. …

A contrary opinion, however, comes from the brilliant free market thinker and author Ayn Rand.

To Ms. Rand, â??consumersâ?¦ are irrelevant to economics.â? She believed the title of consumer must be earned by first being a producer. She goes on to say that â??wealth represents goods that have been produced but not yet consumed.â?

Think of it this way: Imagine you are a farmer and winter is approaching. You have had a good year though and you have plenty of food to last you until the next harvest. Beyond this, you have seed to plant for next spring. In short, you have saved, you have produced wealth that has not yet been consumed.

And here is where Ayn Rand will say we in America have turned economics on its head. Today, in order to consume, you do not first have to produce; all you have to do is borrow. Thus, you are reaching into the future and pulling demand into the present. Thus, you are using wealth that has not yet been produced. Or to continue our farmer analogy, we are consuming our seed stock.

Keep reading for the punch line.