the thousand people in your example were presumably paid for their work, and able to feed their families. in turn, the grocery stores take that money and pay the farmers, who can then afford to buy seed and fertilizer, etc. Yes, I say that society is better off because people are employed and children aren't starving.
Don't get me wrong--we need to get weaned off our debt drug, and start saving more. but walmart, target, sears, they all need customers to SPEND money, or they go out of business. And the companies that produce those products--Volcom, Procter & Gamble, Carters--also need people to spend money, or they go out of business.
Savings make investing in increased production possible. But if you don't have sufficient demand for your existing capacity then you don't need to borrow more.
Or, you know, these people could get real jobs to contribute to society, and the government can offer welfare to help them out in the meanwhile at lesser cost.
Because you have to realize that these hole diggers don't get magically paid. To pay them to dig holes, the government needs to tax you, preventing you from using that cash on other consumer goods.
