The Problem of Abundance
But let’s go back ten years and look at the debate that emerged following the post-Waterloo recession in the British economy. This recession led to the first attempts by economists to understand how abundance can be more damaging than scarcity.
.. Classical economists rejected the possibility of a ‘general glut’, in keeping with Jean Baptise Say and his law that “production creates its own demand”, which said that everything produced is done so in order to exchange it for something else. Here is David Ricardo’s explanation:
.. This reasoning suggests it is possible for industries to suffer but not for an economy as a whole to slow down; the cobbler might struggle if there was less demand for shoes, but this was a boon for the milliner as he can now exchange fewer hats for more shoes.
.. In addition, if everyone were to try to save at once then there would be a decrease in consumption and so production and income.
.. but if either one or both of the parties were disposed to save largely, with a view of bttering their condition, and providing for their families in future, the state of things would be very different. The farmer, instead of indulging himself in ribands, lace, and velvets, would be disposed to be satisfied with more simple clothing, but by this economy he would disable the manufacturer from purchasing the same amount of his produce; and for the returns of so much labour employed upon the land, and all greatly increased in productive power, there would evidently be no market. The manufacturer, in like manner, instead of indulging himself in sugar, grapes, and tobacco, might be disposed to save with a view to the future, but would be totally unable to do so, owing to the parsimony of the farmers and the want of demand for manufactures.
.. You can get a job but there’s nowhere you can afford to live that is anywhere near that job. You can create your own job but, absent access to capital markets, you can’t compete with those who have it. Plenty of hiring in New York and San Francisco. Good luck living there.