Question

How forgetfulness is both vice and virtue?

Answer 1

The different opinions are given by different economists- whether saving is a Vice or a Virtue- Private or Social from the point of view of investment multiplier. These different opinions are categorised into parts which are discussed as follows.

i) Classical View- These economists related saving concept in accordance to micro economics. According to them, an individual should save a large part of his/her income. They considered saving as a virtue both from the point of view of private as well as social.

ii) Keynesian View- Keynes has related saving concept in accordance to macro economics. He considered saving as virtue from private point of view but vice from social point of view. According to him, when private savings increase, aggregate saving will fall. As a result, the level of output and employment will get negatively affected.

iii) Modern View- They have considered factors like economic development, how savings are being used etc. to draw their conclusion whether saving is a vice or a virtue. They believed that developed countries should not save more and underdeveloped countries should pay more attention to increase their savings. Therefore, savings are considered as a social vice from the point of view of developed countries and social virtue for the countries that are underdeveloped.