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Talk about taking the contrarian view! In his book, history professor James Livingston revels in debunking what he considers misguided examples of common sense. Frugality is the path to prosperity, right? Wrong, Livingston argues; thrift is a surefire way to anemic growth and a concentration of wealth. And isn’t advertising an anti-intellectual tool of greed and conformity? Nope; ads are powerful forces for morality and freedom, he says. Livingston is so incessantly ornery in this essay that the reader is tempted to wonder if he really believes all his arguments. Yet he manages to produce a thought-provoking, though sometimes dense, read that raises a number of worthy questions about conventional wisdom. getAbstract recommends this analysis to readers who enjoy a skeptical perspective on economic theory.


Conventional Wisdom Is Wrong

Americans take it on faith that the 2008 economic crisis offered a valuable lesson in the folly of overconsumption. They’ve been led to believe that they lost their minds and their morals. They spent too much and saved too little, and now they’re fixing their mistakes through a new era of frugality, atoning for their sins by scrimping and saving. This theory has only one flaw: It’s wrong. In fact, the huge run-up in household debt from 1990 to 2007 propped up growth, no matter what the pundits, politicians and economists say.

Getting the economy back on track doesn’t require that Americans become tightwads or that US companies become hugely profitable. The true cure will come from higher wages, more consumer spending and lower profits for US corporations. That sounds counterintuitive, but the truth is that corporations rarely invest their profits in ways that create jobs and economic growth. Profit levels that were too high and wages that were too low created both the Great Depression of the 1930s and the collapse of 2008. A cure for what ails the economy is obvious: Redistribute money from corporations to consumers, who, in turn, can ...

About the Author

James Livingston, a professor of history at Rutgers University, is the author of four previous books on economics and culture.

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