Consumers spend money on goods and services. They may obtain that money from current earnings (derived from their participation in wealth creation) or from other sources of finance: savings, or benefit payments from the government. Tax, health insurance and mortgage payments might have to be deducted from their earnings before they are free to spend the remainder – their so-called disposable income – which enables them to buy what they want. Their freedom of choice has several considerable advantages:
- Their purchasing decisions reflect their personal preferences, not what someone else thinks they might want.
- People’s tastes keep pace with modernity – and partly define it.
- People’s purchases can reflect their cultures in a pluralist society.
Economic governance is more acceptable as it increases people’s disposable income, and therefore their opportunity to choose for themselves.
People’s desire to have money to spend is a powerful incentive to earn money, whether through employment or by being self-employed.
Consumer spend is important in providing customers for those who want to create wealth. When consumers choose to spend their money immediately, rather than save, they boost economic growth.
© PatternsofPower.org, 2014