[I]f consumers were suddenly to become rational, an economic cataclysm would result, as households in all the rich nations would cut their consumption to only what they really needed. Such a crash would no doubt make the current economic doldrums look like the mildest hiccup.This is wrong because, no matter how generously we define "real needs" - surviving past age thirty? surviving past age forty? surviving past age forty with all four limbs and enough teeth to chew an apple? -, it can be perfectly rational to try to get a bit more in order to live longer and more healthily, to be more educated, or to better entertain ourselves.
But let's suppose that, for whatever reason, people suddenly preferred to consume much less. The economy would certainly change a lot. Nature believes that the shift would involve some kind of hardship, as implied by the words "cataclysm" and "crash" and its comparison with the current "hiccup." But if we suddenly preferred a simpler life, the transition would be hard only in the sense that for a while we would have too many things - e. g., too many teeth and limbs. And that kind of hardship would probably be easier to endure than the hardships of those who now suddenly find themselves without a job or unable to pay their loans.