Charles Stucker
Senior Member
- Oct 13, 2009
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In an economy where the rich get richer, and the poor get poorer, then markets fail. Prices get skewed to pay the rich, and the poor can no longer afford them.
There exists a theory that rising productivity will increase the wealth of everyone, but if the wealth distribution shifts faster than the growth of productivity then those at the bottom suffer while those at the top prosper.
For example take a society of 100 people where everyone shares equally and productivity is 100 units. Everyone gets one unit.
Now change the society so the top 20 have twice the average and the bottom 40 have half while tripling productivity. You have 300 units, the average person gets 3 (yeah) the 'rich' gets 6, and the poor get 1.5. Here everyone came out ahead, even the newly created poor.
The system changes again so that total productivity is now 500 units, but the distribution is more skewed such that the middle 40 gets 3 each (what happened, aren't we making more?) and the poor 40 get one each (I liked it better before) and the top 20 get everything else (18 each)
What is worse is that it may occur, with inherited wealth, that the people in the top 20 don't create as much as those in the lower 80. This is seen as a problem for everyone not in the top 20.
As early as 1729 Dr. Jonathan Swift spoke disparagingly of the notion that "If we pay the poor more, they will work less" which was seen as the central thesis of the "Spirit of Industry" which promoted ever more earnings for the 'better' folk, while the workers lived miserable lives.
A strong case can be made that many current US government policies are hard on those who work for a living. My personal experience is those most in favor of "free trade" are in jobs with monopolistic protection against foreign competition provided by the US government at no, or only token, charge to those receiving the monopolistic advantage. Lawyers and Accountants are prime examples of this.