We should convert to a system of exchanging silly dances for good and services. Either that or a bartering system based on 3 day old oatmeal.
This is the problem with most Americans. How many of these countries have you been to? Or do you get all your information about other countries from American magazines? Keep believing that the only people that are happy in the world are Americans and that everyone still wants to be us. That was yesterday, things have changed.
I really don't give a flying if the French or any other Euros would want to live in the US. I only know that I wouldn't want to live there.
So you've been?
Who said anything about a handout? I make good money. My point is that I don't get a salary and I feel the first effects of an economic downturn. So I do have some concerns about a downturn. I've talked to people who say "Well, I get a salary, so I'll be fine." I don't get a salary. My money comes directly from people wanting to purchase my services and having money to pay for them.
Like it or not, we already distribute wealth. My tax money goes to government contractors for various projects, government employees, and government subsidies and grants.propaganda. I'm not seeing a similar thing in my business. There are things we can do to make this economy grow and create more opportunities for everyone, but redistribution of wealth isn't one of them. Doesn't matter what I think, you will have the power and communisim will be that much closer.
But again, you are not answering the question. My only question is whether it is an ideal situation in our economy to have so much of the wealth concentrated in so few people? That's all I'm asking. I'm not saying it needs to be redistributed, I'm not advocating for any candidate. Like I explained, I read this quote, found it interesting, and want to know if what it said was true.
if you have something of value, they will continue to purchase. energy independence and healthcare reform is where your focus should be. wealth redistribution, though you think it will help you in the short-term, long-term will hurt you.
supposedly we're pooling our money for defense, utilities, and infrastructure.Like it or not, we already distribute wealth. My tax money goes to government contractors for various projects, government employees, and government subsidies and grants.
you're arguing with natural occurances. take a group of 1000 random people and invariably 20% of them will own more than the rest combined. You're a business man, I'm sure you have heard of the 80/20 rule. Same with the workforce, 20% of your employees will outproduce the other 80%. The only problem I see is that too many people place their value as human beings on the size of their wallets. Money in no way brings happiness.But again, you are not answering the question. My only question is whether it is an ideal situation in our economy to have so much of the wealth concentrated in so few people? That's all I'm asking. I'm not saying it needs to be redistributed, I'm not advocating for any candidate. Like I explained, I read this quote, found it interesting, and want to know if what it said was true.
The problem is that we're not even talking 80/20. It's more like 90/20 -
Financial Wealth
Top 1 percent Next 19 percent Bottom 80 percent
1983 42.9% 48.4% 8.7%
1989 46.9% 46.5% 6.6%
1992 45.6% 46.7% 7.7%
1995 47.2% 45.9% 7.0%
1998 47.3% 43.6% 9.1%
2001 39.7% 51.5% 8.8%
Again, is this a good thing for the economy? And if it is, why?
Tell that to the dude I saw run out the door of the grocery store the other day with cans of.... baby formula?? The dude had to steal to feed his kid.
But f 'em right? It's Social Darwinism. If he was meant to have money to feed his kid, he'd have it.
Again, looking at this chart describing wealth allocation for the past 45 years or so - are these developments a good thing for our economy?
If this is a positive development, why is it positive? If it's negative, why is it negative?
It's positive because the top 10% are good and kind enough to create jobs for the rest of us slobs. it's called trickle-down economics. Look it up, wise guy.
The problem is that nothing is "trickling down." Look at the stats. Instead of trickling down, it's crawling back up.
It's not a stalagmite, it's a ing stalac e.
/end thread
I think you would need to adjust the numbers into different categories and compare them to numbers from the past. For example (A) Job Creating Wealthy (i.e. - business people), and (B) Non Job Creating Wealthy (i.e. - actors, athletes, etc.)
I think it is ok for the job creating wealthy to hold much of the wealth, since in their daliy business they are allowing others to live and prosper.
For the non job creating wealthy, if the numbers are large enough I think it might be disturbing since they would actually be an expense (paying to see their films/games) to the normal man instead of a source of income.
"Job Creating Wealthy (i.e. - business people)"
very simplistic trickle down bull . Capitalists have been playing games with debt paper, CDOs, MBSs, DCSs, etc, NOT investing in the "real" economy.
The big picture confirming this that the financial sector of the economy has exploded in last 10 - 15 years as percentage of the economy, while the REAL economy has not, and REAL people have seen their household incomes go down, their household debt reach highest ever, as their productivity went up.
How does this work when they are hiring Sandeep, Kelpesh, and Baboo from India? Does that trickle back across the ocean to us somehow?
That statement from Eccles is the ultimate problem. Carroll Quigley also talks about it for a few pages of Tragedy and Hope. It comes from the fact that even though a person from the top 1% consumes more than a person from the bottom 95%, they consume a much smaller ratio of their income than a person from the bottom 95% does. (You can only buy so many toys, and you want to make sure that you and your family remain wealthy.) The stats I see say that the top 1% in America own 40% of the wealth, the bottom 95% own 40%, and the top 2-5% own the remaining 20%. I’ve read in textbooks that the average person in average modern times consumes 70% of their income and saves 30%.
So let’s look at an example where, in a $10 trillion economy, the bottom 95% consumes 70% of its income and saves 30%, the top 2-5% consumes 50% of its income and saves 50%, and the top 1% consumes 30% of its income and saves 70%. (These ratios are surely conservative with respect to the point being made.) I’ll use 4 different wealth distribution ratios, going from more equal to less equal. Numbers are in trillions of dollars.
1% = 1 wealth >> .7 savings
2-5% = 2 wealth >> 1 savings
95% = 7 wealth >> 2.1 savings
Total = savings 3.8 consumption 6.2
1% = 2W >> 1.4S
2-5% = 3W >> 1.5S
95% = 5W >> 1.5S
Total = 4.4S, 5.6C
1% = 3W >> 2.1S
2-5% = 2W >> 1S
95% = 5W >> 1.5S
Total = 4.6S, 5.4C
1% = 4W >> 2.8S
2-5% = 2W >> 1S
95% = 4W >> 1.2S
Total = 5S, 5C
So, because of the different consumption ratios of the income classes, as the ratio of wealth in a country becomes more and more unequal, the ratio of consumption of wealth falls and the ratio of savings rises. So the question is this: How can this ever greater supply of savings continue to find profitable new investments at the same time that the ratio of the consumption of total wealth is falling? The answer is that eventually, it can’t. The total purchasing power (aggregate demand) has been outstripped by the capacity of the system to produce (aggregate supply). The excess savings can be exported as foreign investment, but eventually global purchasing power will be outstripped by the capacity of the global economy to produce; there aren’t a lot of middle class people in the world.
In the short run, people in the bottom 95% can go into debt to buy the products of the system at near-full capacity. (Of course, the top owns the banks, so basically people are borrowing credit from wealthy people to buy their products so that everyone’s savings can still find profitable investments.) This is what is happening today; we’ve had a negative savings rate since 2005 (for the first time since 1932-33). On its face it seems absurd that we should have a problem involving excess savings at the same time that the country as a whole has a negative savings rate, but that is the situation. The question is how this ends.
Theory says that the government should, essentially, take the excess savings from the top and redistribute it from the bottom up, decreasing savings and investment while increasing purchasing power and consumption - shifting the AS curve down and the AD curve up so that they are again in equilibrium at a lower, but not considerably lower, standard of living. In time, the economy will recover with its new purchasing power and fill in the excess capacity and create the jobs that the newly unemployed need, and in more time, the economy will create an even greater capacity to produce than it has today, but this time there will be sufficient purchasing power to consume its products. Until there isn’t, and then the government does the same thing a couple of generations later.
Obviously, we live in a pyramid scheme. But what is it, exactly? Is it capitalism itself? Karl Marx thought it was. He said that because of the way money cycles through markets, eventually wealth will be overly concentrated at the very top, and then the whole thing comes crashing down if the inequality isn’t corrected. He’s actually half right. He identified the problem, but he misdiagnosed the cause. The cause is inflation and the way money is created, not capitalism itself.
The pyramid scheme that is the essential cause of this problem is fractional reserve banking – the fact that banks create almost all of the money by creating credit off of already existing wealth. If you have enough wealth, then you can legally create new money (credit) off of that wealth and lend it at interest. So, our money is created by the top, and lent at interest to the rest. It’s a never ending cycle of payments from the large bottom to the smaller top, all off of the money that the top created from the wealth they had already ac ulated. It’s a truly insane system when you really think about it. And when you do, you realize that it is no surprise at all that wealth becomes concentrated more and more at the top, because the top is who creates the money – the system can’t distribute wealth any other way over its life.
Sir Josiah Stamp, a former director of the Bank of England and the 2nd richest man in England at the time of his death:
He's telling us how it really works.Banking was conceived in iniquity and was born in sin. The bankers own the earth. Take it away from them, but leave them the power to create money, and with the flick of the pen they will create enough deposits to buy it back again. However, take it away from them, and all the great fortunes like mine will disappear and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of bankers and pay the cost of your own slavery, let them continue to create money.
Thanks for explaining this. I don't know as much about economics as you obviously do, but I thought Eccles quote was an interesting one and seemingly relevant to the current state of our economy.
The original post and the ones by BradLohaus paint a very good picture of how our economy works and why there is no such thing as a true free market country/economy. The whole premise of free market is that the people will decide how much something is worth by what they are willing to spend for it. While this sounds great in theory what eventually happens as Karl Marx pointed out in Lohaus' post is that when money becomes to concentrated at the top, the general population cannot afford to buy products/services and it will massively and unfairly devalue whatever is trying to be sold just because they don't have the money to afford it. This undercuts capitalism in general and will eventually lead to it's destruction if the government doesn't try to step in with programs such as minimum wages, tariffs (to protect a countries goods), short term fix stimulus programs, etc.
This is the main reason why trickle down economics doesn't work because a trickle is exactly what it is. The top can only consume and buy so much, if they hold on to such a large percentage of a nations money then it will undoubtedly have a huge negative effect on tons of goods and businesses. This is where the fallacy of, if the product is good enough they will buy it comes in. If it isn't a necessity what will happen is that they just won't buy it or only be willing to buy it at such a reduced rate that it won't be worth the time to even develop or make it at all because the profits do not offset the time or effort spent in it.
Then this is where banks come in and lend to people which provides the capital to the general population so they can buy and consume, which in turn fuels the economy. Since lending is done for profit and not just good will there again will only be so much money that can be circulated. Unless of course they decide to print more money which leads to inflation and so on. Very hard to try to explain it in only a couple of paragraphs coherently, but this is pretty much what happens and why economies go through so many up and down cycles. Trickle down economic policies will always lead to this because they are undercutting the very group that supports the economy the most.
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