Editor, The New York Times
620
To the Editor:
Editor, The New York Times
620
To the Editor:
Jeffrey Sachs correctly insists that "the numbers don't add up" to support Paul Krugman's claim that the current economic crisis is caused by Asians' "oversaving" (Letters, March 8).
But both Messrs. Sachs and Krugman ignore the deeper question: How can savings be excessive? If people are frugal, entrepreneurs might have difficultly luring them to buy greater quantities of output, but surely these entrepreneurs can find ways to use the saved resources to improve the efficiency of producing those goods and services that consumers DO buy. Frugal consumers, after all, will be especially eager to patronize producers who lower their prices. And a large and growing supply of saved resources is just the ticket to create the greater efficiencies that make possible these lower prices.
Scholars such as J.M. Keynes have speculated that savings can be excessive, but I know of no hard evidence that these speculations are valid.
Sincerely,
Donald J. Boudreaux
Don Boudreaux is the Chairman of the Department of Economics at George Mason University and a Business & Media Institute adviser.
