Paul Parkinson

Let's settle this will a quick economics 101. Imagine an island with 100 people. All of them have just a crude spear allowing them to catch 1 fish per day. GDP is 100 fish per day. So long as everyone eats one fish per day, the economy will never grow. They're consuming their whole output and there is no savings. How does the economy grow? Someone eats half a fish and saves the other half. That savings allows them to spend a day building a fish trap instead of fishing all day. The trap allows him to catch 3 fish per day. The savings became capital which was invested into capital equipment that made him more productive. Now that he's catching 3 fish, he can eat 1 like everyone else and still have 2 leftover. Now someone sees his surplus and says - I'm better at building than fishing. If I build you a hammer will you give me a fish? Another guy decided to harvest coconuts in exchange for the third fish. In other words. now that the economy is productive enough to cover basic food needs with less people, some folks can do other things. The net maker, realizing other fisherman want a net like his, enters the net industry and makes more in exchange for other people's fish. Eventually the whole island is so productive fishing that they only need 30 or so fisherman and 70 people are free to solve new problems and improve their neighbors lives All of these people in turn save more than they consume and continue to reinvest the savings into more capital goods that make them more productive, and an ever growing abundance of goods and services becomes available on the island, making everyone's life better. The key, and in fact the only way, for an economy to grow is by consuming less than you produce which is called SAVING. A last note: The "demand" from the people on the island is restricted by their productivity. They always demanded housing, clothes, more food, tools, medicine, etc. The problem was never a lack of demand. It was a lack of the productivity that would allow them to create all of that stuff. You first produce, then use the fruits of your production to demand things in the market. The key is productivity, which is driven by savings. Not demand. Thank you