Here are some key sentences from Horowitz’s article:
One of the most pernicious and widespread economic fallacies is the belief that consumption is the key to a healthy economy.
…we only have the power to consume if we have produced and sold something in order to acquire the means to engage in consumption. Starting the analysis with consumption assumes one has already acquired means. Contrary to that analysis, wealth is created through acts of production that rearrange resources in ways people value more than alternative arrangements. These acts are financed with savings that come from households refraining from consumption.
Folks often skip right past the true source of consumption and skip right to the consumption. They mistake consumption for wealth. Wealth first had to be created somewhere.
Even the wealth acquired by rent-seeking bureaucrat was created somewhere merit-worthy before being directed into his pocket.
The health of the economy isn’t economic activity, rather it’s value creation. There’s an old saying that what matters most can’t be measured, but what can be measured will be managed. We measure economic activity with GDP. That’s not value creation. Much damage has been caused trying to manage GDP.