Savings - part deux

I was talking to a friend of mine over the weekend after writing the first part on the Savings topic. He was suggesting that we as consumers need to make some sacrifices - meaning consume a little less and save more. I can understand cutting down office drive time, live more closer to the office - by doing that, we are cutting down on oil consumption and doing something good for the environment. Most oil is imported and so would not have a big direct impact on US jobs. maybe live in smaller sq ft homes - again benefits the environment by cutting down usage of natural gas, electricity etc. but how far do you go down this sacrifice path - do you cut down all non-essential consumer things. If so, that will have a direct impact on jobs. If we save more, there should be some capitalist who will be able to borrow that money and produce something that is valuable to society. If all the savings is just going into financing wasteful govt spending, those savings won't have much value to the society as a whole. We have to be careful on the reasons behind asking everybody to save more and under consume. If those savings can't be put to greater use within the society, there won't be any value to those savings. yes, there is a need for people to save some amount of money for an emergency so that they have some time to reach in logical way to some sudden changes in life like job loss, additions to family, sickness, accident etc. But beyond that, there needs to be a real reason for savings. If everybody has to save because they won't get another job for the next 10 years if they lose their current job, then the economy as a whole has failed and no amount of savings is good enough for such scenarios.

There is this argument that people in the US are not saving enough for retirement and so they should start saving more for retirement. but all those savings could be lost in the stock market if the fundamental economy is not strong enough. If it can be shown that some parts of the economy is getting starved of capital because of the current over-consumption trends in a certain other part of the economy (that over-consumption is driving more money and human resources into a wasteful activity), then it is needful to ask people to underconsume in those sectors to allow some more value-adding sector to get more capital allocation and grow.