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Jonathan Tobin: Defending the Right to a Jewish State

Heather Hale: Compliment your kids without giving them big heads

Megan Shauri: 10 ways you are ruining your own happiness

Carolyn Bigda: 8 Best Dividend Stocks for 2015

Kiplinger's Personal Finance editors: 7 Things You Didn't Know About Paying Off Student Loans

Samantha Olson: The Crucial Mistake 55% Of Parents Are Making At Their Baby's Bedtime

Densie Well, Ph.D., R.D. Open your eyes to yellow vegetables

The Kosher Gourmet by Megan Gordon With its colorful cache of purples and oranges and reds, COLLARD GREEN SLAW is a marvelous mood booster --- not to mention just downright delish
April 18, 2014

Rabbi Yonason Goldson: Clarifying one of the greatest philosophical conundrums in theology

Caroline B. Glick: The disappearance of US will

Megan Wallgren: 10 things I've learned from my teenagers

Lizette Borreli: Green Tea Boosts Brain Power, May Help Treat Dementia

John Ericson: Trying hard to be 'positive' but never succeeding? Blame Your Brain

The Kosher Gourmet by Julie Rothman Almondy, flourless torta del re (Italian king's cake), has royal roots, is simple to make, . . . but devour it because it's simply delicious

April 14, 2014

Rabbi Dr Naftali Brawer: Passover frees us from the tyranny of time

Greg Crosby: Passing Over Religion

Eric Schulzke: First degree: How America really recovered from a murder epidemic

Georgia Lee: When love is not enough: Teaching your kids about the realities of adult relationships

Cameron Huddleston: Freebies for Your Lawn and Garden

Gordon Pape: How you can tell if your financial adviser is setting you up for potential ruin

Dana Dovey: Up to 500,000 people die each year from hepatitis C-related liver disease. New Treatment Has Over 90% Success Rate

Justin Caba: Eating Watermelon Can Help Control High Blood Pressure

The Kosher Gourmet by Joshua E. London and Lou Marmon Don't dare pass over these Pesach picks for Manischewitz!

April 11, 2014

Rabbi Hillel Goldberg: Silence is much more than golden

Caroline B. Glick: Forgetting freedom at Passover

Susan Swann: How to value a child for who he is, not just what he does

Cameron Huddleston: 7 Financial Tasks You Should Tackle Right Now

Sandra Block and Lisa Gerstner: How to Profit From Your Passion

Susan Scutti: A Simple Blood Test Might Soon Diagnose Cancer

Chris Weller: Have A Slow Metabolism? Let Science Speed It Up For You

The Kosher Gourmet by Diane Rossen Worthington Whitefish Terrine: A French take on gefilte fish

April 9, 2014

Jonathan Tobin: Why Did Kerry Lie About Israeli Blame?

Samuel G. Freedman: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Jessica Ivins: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Kim Giles: Asking for help is not weakness

Kathy Kristof and Barbara Hoch Marcus: 7 Great Growth Israeli Stocks

Matthew Mientka: How Beans, Peas, And Chickpeas Cleanse Bad Cholesterol and Lowers Risk of Heart Disease

Sabrina Bachai: 5 At-Home Treatments For Headaches

The Kosher Gourmet by Daniel Neman Have yourself a matzo ball: The secrets bubby never told you and recipes she could have never imagined

April 8, 2014

Lori Nawyn: At Your Wit's End and Back: Finding Peace

Susan B. Garland and Rachel L. Sheedy: Strategies Married Couples Can Use to Boost Benefits

David Muhlbaum: Smart Tax Deductions Non-Itemizers Can Claim

Jill Weisenberger, M.S., R.D.N., C.D.E : Before You Lose Your Mental Edge

Dana Dovey: Coffee Drinkers Rejoice! Your Cup Of Joe Can Prevent Death From Liver Disease

Chris Weller: Electric 'Thinking Cap' Puts Your Brain Power Into High Gear

The Kosher Gourmet by Marlene Parrish A gift of hazelnuts keeps giving --- for a variety of nutty recipes: Entree, side, soup, dessert

April 4, 2014

Rabbi David Gutterman: The Word for Nothing Means Everything

Charles Krauthammer: Kerry's folly, Chapter 3

Amy Peterson: A life of love: How to build lasting relationships with your children

John Ericson: Older Women: Save Your Heart, Prevent Stroke Don't Drink Diet

John Ericson: Why 50 million Americans will still have spring allergies after taking meds

Cameron Huddleston: Best and Worst Buys of April 2014

Stacy Rapacon: Great Mutual Funds for Young Investors

Sarah Boesveld: Teacher keeps promise to mail thousands of former students letters written by their past selves

The Kosher Gourmet by Sharon Thompson Anyone can make a salad, you say. But can they make a great salad? (SECRETS, TESTED TECHNIQUES + 4 RECIPES, INCLUDING DRESSINGS)

April 2, 2014

Paul Greenberg: Death and joy in the spring

Dan Barry: Should South Carolina Jews be forced to maintain this chimney built by Germans serving the Nazis?

Mayra Bitsko: Save me! An alien took over my child's personality

Frank Clayton: Get happy: 20 scientifically proven happiness activities

Susan Scutti: It's Genetic! Obesity and the 'Carb Breakdown' Gene

Lecia Bushak: Why Hand Sanitizer May Actually Harm Your Health

Stacy Rapacon: Great Funds You Can Own for $500 or Less

Cameron Huddleston: 7 Ways to Save on Home Decor

The Kosher Gourmet by Steve Petusevsky Exploring ingredients as edible-stuffed containers (TWO RECIPES + TIPS & TECHINQUES)

Jewish World Review January 12, 2009 / 16 Teves 5769

Ethics of encouraging spending during recession

By Rabbi Dr. Asher Meir


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http://www.JewishWorldReview.com | In times of economic downturns, people have less income, so they spend less. Or is it the other way around? Perhaps when people spend less, there is less income — after all, every person's income is the spending of some other person.


This little chicken-and-egg conundrum is at the heart of what economist John Maynard Keynes called the "paradox of thrift" — thrift on the part of an individual doesn't always translate into investment in the economy as a whole. Normally, savings and investment are directly connected: Yael the dentist decides to eat out less often; the money she saves on restaurant bills accumulates in her bank account; the bank now has money to lend Zvi the restaurant owner; Zvi uses the money to expand his restaurant to accommodate future demand; the new demand is realized when Yael ultimately dips into her savings.


But sometimes the mechanism can backfire: Yael decides to eat out less this month; Zvi the restaurant owner now has less income, and decides to put off his dental work; Yael's own income then contracts by what she thought she was saving. In this case, private saving translates into general contraction in the economy. In the end, Yael and Zvi passed up on consumption, but didn't reap the benefits in increased savings.


When economists, or politicians, believe that we are having one of these "gloom" recessions, as opposed to downturns caused by some tangible misfortune, they are likely to try to stimulate the economy. The hope is that by putting a little money into the economy, for example through public works or tax cuts, you restore confidence and activity which ultimately finance the spending increase. (Self-financing spending increases are the liberal mirror-image of conservative self-financing tax cuts, and just about as realistic.) They may even tell you that "spending is a patriotic duty." For example, as the economy began to show signs of a downturn in late 2006, President Bush stated bluntly, "I encourage you all to go shopping more". (This echoed his request after the attack on the World Trade Center, when he asked Americans for their "continued participation and confidence in the American economy.")


Now let's get to the ethical part. Suppose you really believe your country faces a "gloom downturn." You too are gloomy and cautious and would like to spend less. You recognize that if everyone thinks like you, the result will be a general downturn that will harm everybody. But if everybody cheers up and opens their wallets, "happy days are here again." Do you in fact have an individual ethical duty to throw caution to the winds and spend more than you would like, hoping that others will do the same?


On the one hand, it seems like this is no different than scores of other civil-minded acts we do every day. If I cut in line, then I will get my errands done sooner, but if everyone does life will be harder for everybody — so I have an ethical duty to stand in line. If I skip voting, I will save time, and in any case my vote has no meaningful chance of changing the election, but if nobody votes our democracy will collapse — so there is an ethical duty to vote. The same goes for tipping, being polite, and so on.


On the other hand, all those other things don't cost money, or at least not real money. After all, the spending-mongers are not urging you to spend the couple of dollars you might spend on gas to the polls or a tip at a restaurant; they want you to Spend.


My feeling is that there is no reason to make a special effort to spend, and certainly no one should get over-extended financially (that's how we got into this mess in the first place), but we should strive to maintain our standard of living. This practice has the effect of putting a certain floor under psychological recessions; deciding that everything beyond subsistence is a luxury engenders a race to the bottom. As Thomas Malthus pointed almost two hundred years ago, "If every person were satisfied with the simplest food, the poorest clothing, and the meanest houses, it is certain that no other sort of food, clothing, and lodging would be in existence." This approach is also supported by Jewish tradition, which states that while charity does not extend to luxuries, its goal is to keep people at their accustomed standard of living, meaning those things that are considered necessities for people of their standing.


Others may tell you that it is your duty to spend, or that it is a virtue to tighten your belt. My feeling is that we are under no obligation to spend ourselves out of a recession, but we also should not save our selves into one.

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JWR contributor Rabbi Dr. Asher Meir, formerly of the Council of Economic Advisers in the Reagan administration, is Research Director of the Business Ethics Center of Jerusalem, Jerusalem College of Technology. To comment or pose a question, please click here.

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