We Grow By Producing, Not Just Consuming
This is part 1 of answering the question: Why can’t we just get rich quick?
One Takeaway
Long-term prosperity begins with production, not consumption, because nothing can be consumed that wasn’t first produced.
We Can’t Consume What We Don’t Create
It’s common to hear people say that spending drives the economy. You’ll hear that “consumption makes up 70% of GDP,” or that economic growth depends on getting people to spend more. But this flips the order of things. You can’t consume what hasn’t first been produced. And you can’t grow an economy by focusing only on spending.
At the root of every sandwich, car, or concert ticket is one thing: production. Someone created something valuable, and only then can someone else consume it.
Production Comes First
Production means using resources (time, effort, tools, materials) to make something that others want. Whether it’s plucking an apple from a tree, designing a smartphone, or teaching a class, production is what makes consumption possible.
Even in simple societies, no one can eat unless they first gather, hunt, or grow. Nothing gets consumed unless someone first creates, collects, or contributes something. In that sense, every act of consumption depends on someone else’s prior act of production.
Consumption Feels Good, But It’s Not the Only Goal
Consumption is necessary. It is necessary for our needs and it satisfies our wants. But if we consume everything we produce, there’s nothing left to invest in tools, skills, or systems that help us produce more in the future. In this case, growth slows and options shrink.
Think of it like this: if a farmer eats all the grain they harvest and saves none to plant next season, their future harvest disappears.
How Societies Grow
What really fuels economic growth is the ability and willingness to:
Save some resources rather than consume them all,
Invest those savings into productive tools and processes, and
Build capital goods, like machines, that make future production easier and more efficient.
This shift, focusing less on consumer goods and more on capital goods, can transform living standards over time.
An Everyday Example
Take two communities. In the first, people work hard and spend everything they earn. In the second, people still enjoy life, but they also save a portion of their income and use it to invest in better tools, education, and infrastructure.
After a few years, the second community:
Produces more with less effort
Has higher wealth
Offers more job opportunities and
Enjoys greater stability
Why? Because they didn’t just work and spend. They produced and reinvested.
Time Preferences: Now vs. Later
One of the key drivers behind all of this is what economists call time preference: how much you value things now versus in the future.
High time preference means spending now, focusing on short-term enjoyment.
Low time preference means delaying gratification and saving today so you can build something better for tomorrow.
Individuals with lower time preferences tend to invest, build skills, and grow businesses. Societies with lower time preferences tend to develop stronger economies.
Consumption Isn’t Bad, but It’s Not Enough
None of this means consumption is bad. It’s the reward for productive effort and often lead to an enjoyable life. The simple point is, consumption is not the cause of growth. If we focus only on what people want today, we miss the chance to build a better tomorrow.
All work and no play isn’t the goal. But all play and no work isn’t either.
The Bottom Line
Economic growth is based on production not spending. Creating, saving, and investing are what lay the groundwork for future prosperity. It’s true in households, businesses, and entire economies. When we focus on producing and saving value, rather than just consuming it, we build the tools, skills, and systems that make life better for everyone.