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A new study (abstract and free PDF available) authored by several economists at the IMF (International Monetary Fund) reveal an inverse relation between increases in inequality and GDP growth. In what could also be considered a heavy blow to trickle-down economic theory, data analyses show (page 7) that increases of income share on the fifth quintile actually hurt growth, while increases in any other quintile favours growth with the lowest quintile showing the strongest push.
From the abstract:
We find that increasing the income share of the poor and the middle class actually increases growth while a rising income share of the top 20 percent results in lower growth—that is, when the rich get richer, benefits do not trickle down. This suggests that policies need to be country specific but should focus on raising the income share of the poor, and ensuring there is no hollowing out of the middle class.
Original Submission
(Score: 2) by monster on Monday June 22 2015, @03:54PM
It's really irony that you say this just a few comments back, given your current comment:
If you keep raising strawmen at the rate you do in this article, you could have a whole division in little time.
Very nice of you to worry so much about how I misuse my time. But don't worry, I'm not one of the people who took the time to make a study which just by coincidence is at odds with your vision of reality. I guess it's the new motto in the USA: "If the facts don't agree with your theory, ignore the facts"
(Score: 1) by khallow on Monday June 22 2015, @04:22PM
I'm not one of the people who took the time to make a study which just by coincidence is at odds with your vision of reality.
How is the study actually at odds? The conclusions are at odds, but the study itself isn't. They just choose to ignore the common factors (such as being an uncompetitive developed world country in a world subject to globalization) which provide a better explanation.
Speaking of dishonest language, we have you using the term, "hoarding" to mean without distinction any use of money which doesn't involve destroying or giving it away. And how do you measure "excessive hoarding" when you don't consider the use of the wealth in the first place? And then there's the vague concern about "accumulation of economic power". There's all this bizarre economics-like language, but nothing serious to attach that language to. But at least it sounds alarming.
If you keep raising strawmen at the rate you do in this article, you could have a whole division in little time.
Perhaps you should write something less full of straw, if you don't want me to characterize it so easily? You were the one stating coyly that rich people buying megayachts or pools of gold coins somehow magically demonstrates the "myth of the 'enterprising capitalist'" which I gather somehow is supposed to be a devastating rebuttal of Reagonomics (at least the "trickle down" idea which kicked this thread off), but is rather an embarrassing display of juvenile rhetoric. I believe I characterized that accurately: rich people buy toys hence they can't possibly be enterprising capitalists.
(Score: 2) by monster on Monday June 22 2015, @04:49PM
Maybe you didn't read it? I did before submitting, given the controversy it would likely raise here, and the data is clear. Let me quote it again for you: "If the income share of the top 20 percent increases by 1 percentage point, GDP growth is actually 0.08 percentage point lower in the following five years". Maybe you disagree with the next sentence ("suggesting that the benefits do not trickle down") but such disagreement doesn't negate the stated fact.
Let me google the word for you:
Hoarding: To accumulate money, food, or the like, in a hidden or carefully guarded place for preservation, future use, etc.
Do you find dishonest the use of the word? Why? Also, would you agree that we can call "excessive hoarding" to when some people have so much money they couldn't spend it in their lifetimes, even if they tried? Because there are people like that, you know.
As for your language rant, let me introduce you a new word: Synonyms.
(Score: 1) by khallow on Monday June 22 2015, @06:12PM
Hoarding: To accumulate money, food, or the like, in a hidden or carefully guarded place for preservation, future use, etc.
Now, let's look at what you claimed was hoarding: investing, buying a big yacht, and the pool of gold coins. Investing is by definition risky so it fails the definition. Buying large status objects like yachts fails because the rich guy isn't preserving the wealth. Finally, the pool of gold coins might be or it might just be another bling expenditure. Definitions are nice because if you had followed your definition, we wouldn't have bothered with this thread at all and have had more time for cat videos.