PERI: : Searching for the Supposed Benefits of Higher Inequality: Impacts of Rising Top Shares on the Standard of Living of Low and Middle-Income Families
The results of this study indicate that increases in the top share of income (whether of the top 10 percent or top one percent) lead to declines in the actual incomes (and earnings) of low and middle income households.
I do NOT think it is a straight line trend, TM.
I think that in this system we have, we need to have an invesment class and a worker class.
If the investment class does not have enough money, if the consuming classes are eating up all the seed corn (in our case that seed corn is money) then it does behoove us to initiate SUPPLY SIDE policies such that there is capital for furture development.
This is, of course, not the situation facing us today.
Today we are imbalanced in the other direction.
One where the investment class has all the seed corn and realizing that there is no market for new corn harvests, they are NOT investing in future projects to the extent is necessary for a healthy economy.
We need to change the system such that those with all the corn start planting it again.
Sticking with your analogy ed, people have to want the corn, otherwise what point is their in planting it.
True enough.
In other words there has to be demand.
Precisely.
For their to be demand there has to be some level of certainty of wha the future will hold.
Yes
Right now the investment class doesn't have that which is why they are hoarding the 'corn' taking a wait and see approach.
Yup. Their uncertainty is quite reasonable, too. They see that the consumers are not spending and they see WHY the consumers are not spending, too. Because in the last 40 years the consumers have taken every avenue available to them to keep going (sending their women to work, working more hours, borrowing on credit cards, and then borrowing on the equity of their homes) and are now pretty much berift of new options to keep up the former q1uality of life.
Demand, in the economic sense of the word, is not just people wanting something. Most of us want new stuff. It's our financial situation that is preventing them from acting on those wants.
Yup. From an economic Supply/DEMAND standpoint demand isn't really demand until somebody BUYS something.
This includes corporations, there are the ones that really need to start buying to get this kick started. The best way I can think to do that is to make it easier for them to do business. Reduce their liabilities to the government and remove some government red tape.
What "red tape" exists today, after the meltdown that did not exist BEFORE the meltdown?
Aside from the Obama HC fiasco, I mean?
YOu see, I think you're putting the cart before the horse, here.
Businesses didn't stop investing until the consumers stopped consuming.
Now I completely agree with you that businesses must invest and that will certainly help in recovery.
But as I think we both know, businesses aren't going to invest until the consumers start spending, too.
We're NOT in a recession because businesses are paying too high a tax. We're not in a recsssion because big businesses are lacking capital, either.
Finally I don't buy the premise that businesses are being discouraged by regulations because if anything, they are in a more regulatory free environment now
than ever!
We're in a recession because the MARKET (read the buyers) are broke.
Why are they broke?
In part because their purchasing power over the last 4 decades has eroded.
Now what caused that?
Trade laws that sent their job offshore in the biggest factor, and the fiat money game (where the workers ALWAYS lose) is the other biggest factor.
If we truly want to fix the American economy, we have to start by finding ways to fix the working class economy.
Beating down unionism and sending more jobs off shore is clearly NOT the way to do that.
Neither incidetly is increasing taxes on the wealthy.
Neither is decreasing the amount of money governments spend.
Both of those ideas exascerbates the problem we are facing.
One is the DEM solution, the other the REP solution.
