Given that the aim of growth is to increase per capita consumption, is it possible for there to be too much investment?

The aim of economic growth is to increase per capita consumption. This means that an economy aims to produce more goods and services to improve the standard of living and well-being of its citizens over time.

Investment is vital for economic growth, as it involves putting resources, such as money or labor, into the production of goods and services to create more output in the future. This can be done through various types of investment, such as purchasing new equipment, building infrastructure, investing in research and development, or training employees. An increase in investment leads to an increase in the capital stock of an economy, which ultimately results in higher productivity and economic growth. This, in turn, can lead to an increase in per capita consumption, assuming that the new wealth is distributed evenly among citizens.

The law of diminishing returns is an economic principle that states that as more investment is made into a given resource or factor (such as labor or capital), the incremental benefit gained from each additional unit of investment will eventually decrease. This means that, at some point, investing more resources will result in smaller gains in output.

Given the concept of diminishing returns, it is possible for there to be too much investment. When investment increases beyond a certain point, the gains in output (and therefore, per capita consumption) from additional investment become smaller and may eventually become negative if costs outweigh the benefits. For instance, an economy might experience a high level of investment in infrastructure projects, leading to better connectivity and improved market access initially. However, if investment continues beyond the point where the marginal returns diminish, it may result in an over-built and inefficient infrastructure, leading to higher maintenance costs and a reduced benefit for citizens. In summary, there is a possibility for there to be too much investment, especially when the focus is only on increasing per capita consumption. At some point, additional investments will produce diminishing returns, and the benefits of those investments may not outweigh their costs, potentially lowering the overall welfare of the citizens.