Robert Heilbroner

Recent Articles

Saving Disgrace? More on Savings

F red Block and Robert Heilbroner, in "The Myth of a Savings Shortage" ( TAP , Spring 1992), want to persuade us that, contrary to the conventional wisdom, there is no scarcity of savings in the U.S. economy today. They say that the present national savings rate is as high as ever; that it plays no depressing role in our prolonged recession and sluggish growth, not to mention our lagging productivity and our weakness in international competition; and therefore increased saving would be no remedy for these problems.If their argument were valid, it would entail a revolution in public policy. But alas it is a muddle of misconstrued flows, confusion of categories, and reckless double counting. Trying to prove that the national savings rate has not really fallen below the 1970s level, Block and Heilbroner begin with corporate saving, which they say is five times as large as household saving. Their claim that "corporate saving shows no downward trend" as percent of GNP during the 1980s...

Saving Disgrace? More on Savings

F red Block and Robert Heilbroner, in "The Myth of a Savings Shortage" ( TAP , Spring 1992), want to persuade us that, contrary to the conventional wisdom, there is no scarcity of savings in the U.S. economy today. They say that the present national savings rate is as high as ever; that it plays no depressing role in our prolonged recession and sluggish growth, not to mention our lagging productivity and our weakness in international competition; and therefore increased saving would be no remedy for these problems.If their argument were valid, it would entail a revolution in public policy. But alas it is a muddle of misconstrued flows, confusion of categories, and reckless double counting. Trying to prove that the national savings rate has not really fallen below the 1970s level, Block and Heilbroner begin with corporate saving, which they say is five times as large as household saving. Their claim that "corporate saving shows no downward trend" as percent of GNP during the 1980s...

The Myth of a Savings Shortage

A precipitous decline in saving during the 1980s? A closer look shows it isn’t so.

The United States is being held hostage by a dubious statistic and a serious misapprehension. The statistic shows that household saving in the U.S. economy dropped precipitously during the 1980s. The serious misapprehension is that this drop has impaired economic growth and that the economy cannot revive until the savings rate increases. In the standard view, without savings there can be no investment, and without investment, no growth -- whence comes the deceptively simple but misleading idea that the path to recovery lies in a revival of household savings. The drop in household saving over the past decade reported by the Commerce Department is certainly dramatic. From 7.5 percent of disposable personal income in 1981, saving fell to only 2.9 percent in 1987, the lowest ever recorded. Since then the rate has moved up to just over 4 percent. Household saving by no means comprises total national saving. It is dwarfed by corporate saving (profits plus depreciation), which is some five...