Hi, I'm from Taiwan. I don't really have a solid background in Economics, nevertheless here's what I want to say.
I my opinion. Economic inequality is the major cause of current economic regression.
First, I want to point out that investment itself doesn't contribute to real economy. Solid economy depends on consumption. That is to say, one cannot invest in something and make money without consumers buying the end product.
What happens when the majority of GDP goes to a few people and corporations?
The result is that, while the majority of people have their ability to consume reduced, the rich and the corporations, who are unable to spend all the money, invest the excess money somewhere in hope to make more. This means that interest rate will be low because there's too much idle money (not helping consumption) around. Reduced consumption means declined demand for products (not because people have less needs, they just can't afford to satisfy them), which then create a surplus of man power, resulting in high unemployment.
This is bad because high unemployment further make consumers poorer, reduce consumption power and demand even more.
In my country, corporations usually raise price when material price rise, but almost never lower it for any reason. Worker's salary is forever thinning out by inflation. Salary rise never keeps up, for the reason that industry will move to other country. Further more when corporations needs to cut cost in hard times, they usually look to workers first. This is really imbalanced and is, imo, the main reason behind the growing gap between the rich and the poor.
My government is doing little in either easing inflation or taking care of labors. On one hand they kind of think people can't find jobs because they lack competency, on the other hand they spend tax money lavishly, sometimes ridiculously just to digest budget, saying that government spending can boost economy automatically. I don't think so because the majority of those money still goes to corporations.
To summarize, I think corporations cannot make money without consumers buying their products, yet their typical behaviors are thinning out consumers ability to purchase. If the government(s) don't make efforts to stop this feedback, economy will be bad.
I my opinion. Economic inequality is the major cause of current economic regression.
First, I want to point out that investment itself doesn't contribute to real economy. Solid economy depends on consumption. That is to say, one cannot invest in something and make money without consumers buying the end product.
What happens when the majority of GDP goes to a few people and corporations?
The result is that, while the majority of people have their ability to consume reduced, the rich and the corporations, who are unable to spend all the money, invest the excess money somewhere in hope to make more. This means that interest rate will be low because there's too much idle money (not helping consumption) around. Reduced consumption means declined demand for products (not because people have less needs, they just can't afford to satisfy them), which then create a surplus of man power, resulting in high unemployment.
This is bad because high unemployment further make consumers poorer, reduce consumption power and demand even more.
In my country, corporations usually raise price when material price rise, but almost never lower it for any reason. Worker's salary is forever thinning out by inflation. Salary rise never keeps up, for the reason that industry will move to other country. Further more when corporations needs to cut cost in hard times, they usually look to workers first. This is really imbalanced and is, imo, the main reason behind the growing gap between the rich and the poor.
My government is doing little in either easing inflation or taking care of labors. On one hand they kind of think people can't find jobs because they lack competency, on the other hand they spend tax money lavishly, sometimes ridiculously just to digest budget, saying that government spending can boost economy automatically. I don't think so because the majority of those money still goes to corporations.
To summarize, I think corporations cannot make money without consumers buying their products, yet their typical behaviors are thinning out consumers ability to purchase. If the government(s) don't make efforts to stop this feedback, economy will be bad.
