Greenspan makes a false equivalency and misuses common economic terms.
1: “Desires for luxuries are unlimited, therefore luxuries are always in demand”i.
Greenspan draws a false equivalency between “desire” and “demand”. “Desire” is an emotional “wish” for something. “Demand” is a technical term of economics which means someone has both desire and the ability to pay a price for something. A person, or society, may desire luxuries and yet not be able to pay, therefore no demand.
2: “Luxuries are always in demand”.
Greenspan’s conclusion contradicts the definition of luxury good. The demand for a luxury good, by definition, is elastic. Poor people don’t buy luxury goods, therefore luxuries are not always in demand. “Always in demand” is the definition of a “necessity good”. It’s as if Greenspan is saying luxuries are necessity goods, which is incorrect.
Alan Greenspan makes a false equivalency between “desire” and “demand”, and misuses the economic terms “demand” and “luxury”.
Pg 97, Gold and Economic Freedom by Alan Greenspan, in Capitalism:The Unknown Ideal by Ayn Rand Signet Books, New American Library