By now, householders must be used to being exhorted by politicians, economists, and international agencies to save more.

Yet, some policies encourage them to borrow in order to save or invest.

This is one likely effect of Kiwisaver subsidies. For some years, government led by example by contributing to the New Zealand Super Fund. These contributions were funded by not reducing government borrowing.

Some argue that higher household savings would reduce the balance of payments deficits directly, take the heat off the housing market, reduce the foreign capital inflow, and lower the exchange rate and interest rates, thereby promoting investment and economic growth.

Not so fast. Economics 101, circa 1970, posited that counterintuitively, a spontaneous increase in the propensity of citizens to save could reduce national aggregate savings. Here is why: Less consumer spending means less business turnover. Investment spending falls. The two combine to lower national income. Households have less money to spend and save. Unemployment rises. Aggregate savings could fall.

These are not the outcomes that those exhorting higher household savings have in mind.

Sure enough, after 2008, concerns that household spending was too low to sustain economic activity induced the IMF and many others to call on politicians to sustain government spending, at least until consumer spending confidence returned.

These calls for continued government spending, after decades of excess, must be among the most congenial public spending rationales offered to politicians.

Between fiscal years 2001 and 2009, core Crown spending per capita, excluding losses and finance costs, rose 31% faster than inflation and population growth. In 2008–09, spending was the highest in the history of New Zealand on this measure (around $15,750 in today’s dollars).

On the Budget 2013 figures, it will be fractionally below $15,000 in fiscal year 2015. This is still 23% higher than in fiscal year 2001. Government spending in 2015 will still be higher than in fiscal year 2008 on this measure. This is not fiscal austerity.

The public policy message for households is that they can’t win. They are apparently expected to save more, consume more, and pay more in taxes to close fiscal deficits.

Higher per capita incomes could achieve that. Bu