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HomeIllinois NewsHow Lockdowns Shattered the Structure of Production

How Lockdowns Shattered the Structure of Production

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UnnamedOld fallacies have a way of reappearing, especially, during times of social and economic crises. The current coronavirus crisis has opened the door to a variety of them, including the notion of a “paradox of thrift.” It is the idea that if people save more of their incomes by reducing their consumption expenditures, they will lower the market demand for final goods and services, thereby reducing earned profit margins, and thus eliminate the incentive for that greater savings to be borrowed for investment purposes, which will put a drag on employment opportunities. It is a fundamentally flawed notion.

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