‘You can’t spend your way into prosperity’
Re: Bring On The Spending, letter to the editor, Jan. 7. One needs to question letter-writer Larry Kazdan’s bromide that, “the private sector hoards cash and is not willing to invest.” If he understood the essence of investing, he would realize that the goal of the private sector, or anyone for that matter, is to maximize one’s return on investment.
If one chooses not to invest in a particular segment of the economy that fails to deliver a reasonable rate of return, then one is justified in looking to place his investments elsewhere; this is called the free market — note the word free, as in freedom to choose. However, those who believe the government is there to solve all their problems also choose to take money away from the private sector, so as to spend it as they see fit, regardless of whether it achieves any sort of return at all. Whether a government or an indi vidual, you can’t spend your way into prosperity — just look at Greece.
Scott Hoffman, North Vancouver, B. C. Letter-writer Larry Kazdan feels the void created by private sector parsimony must be filled by government investment. But businesses are still investing: their fixed costs are financial obligations that must be met, in order to ensure their survival, so that when the economy improves, investments in new plants, inventory and staff can be considered. The idea that the private sector is sitting on mountains of unproductive cash is often part of the rhetoric, which includes the canard that government can and should spend it’s way out of a recession.
Darcy Charles Lewis, Calgary.