This is the paradox of thrift: belt-tightening causes people to lose their jobs, because other people are not buying what they produce, so their debt burden rises rather than falls.
Interpretation
The paradox of thrift suggests that when everyone saves more money, overall economic demand decreases, leading to job losses.
Robert J. Shiller's quote highlights the paradox of thrift, which contends that while individuals may attempt to save money by reducing spending, this collective behavior can have adverse effects on the economy. When consumers cut back on purchases, businesses face lower sales, which may lead to layoffs and increased debt for those affected, ultimately undermining the initial goal of saving money and creating a vicious cycle that exacerbates economic distress.
In practice
Use this quote in a speech about the impacts of consumer behavior on the economy.
Those on the downside of rising economic inequality generally do not want government policies that look like handouts. They typically do not want the government to make the tax system more progressive, to impose punishing taxes on the rich, in order to give the money to them. Redistribution feels demeaning. It feels like being labeled a failure.
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The modern corporation must manufacture not only goods but the desire for the goods it manufactures.
Every dollar released from taxation that is spared or invested will help create a new job and a new salary.
I believe myself to be writing a book on economic theory which will largely revolutionize - not, I suppose, at once but in the course of the next ten years - the way the world thinks about economic problems.
It is a [disputed] question, whether the circulation of paper, rather than of specie [gold and silver coin], is a good or an evil I believe it to be one of those cases where mercantile clamor will bear down reason, until it is corrected by ruin.
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When the word 'morality' comes up in connection with economics, income distribution and financial stability are usually the issues. Is it moral for rich countries to use such a high proportion of the world's resources or for investment bankers to earn large bonuses?
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