[zipdog]

There's two big problems I can see with your argument that we need more consumption.

But first, I agree that consumption is one of the factors that has helped raised the standard of living worldwide.

The first problem is the broken windows fallacy. Just because buying cheap t-shirts to throw out generates a lot of beneficial economic traffic doesn't mean that its not very wasteful. The 27 extra t-shirts being thrown out each year require a substantial amount of resources to produce: if redirected elsewhere that might be another space shuttle, or something else slightly grander than a bin full of discarded linen. (Of course some of it gets trickled down to other countries to provide more clothes).

But the bigger problem is the idea that the rest of the world only lives because America consumes. This is like a fable of an island with 50 people. A dozen fished each day, a bunch grew crops, etc, etc.. and from the hard work of all of these 20% was gathered and the final person consumed it. Without that final person, the demand for all those goods would go and the entire economy would suffer. Everyone else would have much less work to do.

Why would any group of people happily put up with one of them 'doing their share' by consuming, consuming, consuming while all the others work to provide? In the short term its due to stability emerging from the historical processes that led us to this point. And also the hard and soft power of the US. But its not an endearing quality.

[confluence]

T-shirts aren't broken windows - people want them, they are supplied, the economy rolls on. Just because you think they are a waste - doesn't mean the market does - and all that matters is what people demand. That's the great thing about the market - it's not what you want - it's what everyone else demands - and people really like clothes and they really like t-shirts, and they don't mind paying for it.

Secondly, your making a false comparison between islands and countries. That's a closed system. America exports IP and brings back it's surplus through the investment of everyone else lowering their cost of borrowing (0% T-bills).

It's irrelevant how many people in America actually produce - what is relevant, is that enough production is carried out. Nowadays that means robots and automation - not people. America will do fine so long as it stays innovative and keeps itself at the centre of the IP world - even if the vast majority of Americans don't do jack (but then again so do the vast majority of Chinese - most could be replaced with a machine).