Fallacies within Fallacies
My former student (he took classes with me, I wasn't his adviser or anything) Steve Horowitz has a post over at The Austrian Economists that says in part:
"What is the fallacy of fact and fallacy of theory that the reasonably well-informed layperson believes about economics that are most in need of correction? That is, which ones do the most damage? Here's are my nominees: For "Fallacy of Fact": that the economic well-being of the average American is on the decline. For "Fallacy of Theory": that consumption (rather than savings/investment) is the source of economic growth. Both of these are utterly wrong"
Well I am basically sympathetic Steve, but I have to say that there is a fallacy in your second fallacy, viz. the fallacy that investment is the key to growth.
The whole point of the neoclassical growth model (NGM) is/was that investment is NOT the key to growth, but rather that technological progress is the key to growth. That's what got Bobby S. his prize. You have to be an AK guy (or gal) to think investment drives growth, and after Chad Jones showed for a number of countries that investment rates have risen a lot while growth rates have not, there aren't many AK folks still around.
Now, Mrs. Angus and I are on record as being extremely skeptical over the overall efficacy of the NGM, but the insight that investment does not drive growth is one thing that I think it does get right.