I’m surprised by your surprise. It might be hindsight bias on my part, but not wanting to save money in a totalitarian Communist society makes perfect sense to me. Live for today, because tomorrow you might be locked up or the government might embark on some bone-headed 5-year economic plan and your money would be worthless.
I’m surprised by your surprise. It might be hindsight bias on my part, but not wanting to save money in a totalitarian Communist society makes perfect sense to me. Live for today, because tomorrow you might be locked up or the government might embark on some bone-headed 5-year economic plan and your money would be worthless.
When you look at national savings, 5-year plans suggest that the savings rate should be higher, because the government is forcing people to invest money that they otherwise might have consumed. [Edit] Also, a feature of econ textbooks in the US from ~1950 to ~1990 were dire predictions that the USSR would overtake the US because the national savings rate in the USSR was higher than the US, and the Solow growth model suggests that GDP growth is proportional to savings rate. (Turns out, socialist countries are better at saving at the national level but worse at using those savings to achieve real growth.)
The actual heuristic that generated my surprise had to do with personality rather than incentives, though: I didn’t think that even communism was enough to defeat the Chinese propensity to save, and it struck me as unlikely that the savings rate in China would be high from antiquity to 1900, drop for a few decades, and jump back to high.
When you look at national savings, 5-year plans suggest that the savings rate should be higher, because the government is forcing people to invest money that they otherwise might have consumed.
As far as I understand command economies, it’s not like the government is forcing people to invest their money, it’s more like the government decides how much to allocate for consumption and pays it out as salaries—and the rest it wastes… err, I mean uses for capital spending. In this case the “national saving rate” does not reflect any population preferences, only Politbureau considerations.
I would also be quite wary of savings statistics coming from communist times as I would expect most savings of actual people to live in shadow/underground economy and not be seen officially.
As far as I understand command economies, it’s not like the government is forcing people to invest their money, it’s more like the government decides how much to allocate for consumption and pays it out as salaries—and the rest it wastes… err, I mean uses for capital spending. In this case the “national saving rate” does not reflect any population preferences, only Politbureau considerations.
Agreed; I think the grandparent refers to money earned by people and spent by the Politbureau as “their” (i.e. the people’s) money, which is an implicitly political use of language (because I’m libertarian).
I would also be quite wary of savings statistics coming from communist times as I would expect most savings of actual people to live in shadow/underground economy and not be seen officially.
I’m surprised by your surprise. It might be hindsight bias on my part, but not wanting to save money in a totalitarian Communist society makes perfect sense to me. Live for today, because tomorrow you might be locked up or the government might embark on some bone-headed 5-year economic plan and your money would be worthless.
When you look at national savings, 5-year plans suggest that the savings rate should be higher, because the government is forcing people to invest money that they otherwise might have consumed. [Edit] Also, a feature of econ textbooks in the US from ~1950 to ~1990 were dire predictions that the USSR would overtake the US because the national savings rate in the USSR was higher than the US, and the Solow growth model suggests that GDP growth is proportional to savings rate. (Turns out, socialist countries are better at saving at the national level but worse at using those savings to achieve real growth.)
The actual heuristic that generated my surprise had to do with personality rather than incentives, though: I didn’t think that even communism was enough to defeat the Chinese propensity to save, and it struck me as unlikely that the savings rate in China would be high from antiquity to 1900, drop for a few decades, and jump back to high.
As far as I understand command economies, it’s not like the government is forcing people to invest their money, it’s more like the government decides how much to allocate for consumption and pays it out as salaries—and the rest it wastes… err, I mean uses for capital spending. In this case the “national saving rate” does not reflect any population preferences, only Politbureau considerations.
I would also be quite wary of savings statistics coming from communist times as I would expect most savings of actual people to live in shadow/underground economy and not be seen officially.
Agreed; I think the grandparent refers to money earned by people and spent by the Politbureau as “their” (i.e. the people’s) money, which is an implicitly political use of language (because I’m libertarian).
Agreed.