Most economists, particularly those who claim to be macroeconomists, underestimate the importance of the consumer. They don’t seem to understand that all economic activity exists to satisfy consumers' wants and needs. Ludwig von Mises even coined the phrase “consumer sovereignty” to indicate the importance he placed in consumers' actions.

Even the notorious John Maynard Keynes came close to recognizing the significance of consumers. He referred to “aggregate demand.” However, his concept was flawed in two key aspects. First, consumer demand does not manifest in the aggregate. It is not possible to add the demand for shoes and cornflakes and arrive at a meaningful figure. Second, consumer demand in the economic context is not about people clamoring for something. It is about bringing a product to the market that was acquired through production or borrowing. You cannot “stimulate” an economy by simply giving consumers more money. Increased money supply does not equal genuine demand.

It is crucial to remember that everything I write in these publications underscores the significance of the consumer in the economic process. Producers adjust their output based on the economic demands of consumers. Prices at all levels of production fluctuate in response to price signals that originate from the consumer.

Market interventionists (primarily politicians) frequently talk about increasing the number of jobs or raising the employment rate. Yes, jobs are important, but only in the sense that they satisfy the needs and wants of other consumers (i.e., other producers.)

I suggest that my readers refer to what’s commonly known as Say’s law. The short form of this “law” says that production creates its own demand. Producers use the rewards of their output to acquire the goods they wish to consume.

Always remember the critical question in everything you read about the economy. What does it do for the consumer?