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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: 5, Interesting) by PizzaRollPlinkett on Friday June 19 2015, @04:01PM
I've made this point before, too, and not a lot of people seem to appreciate this. (Particularly who make public policy. They have no understanding of what being poor means.) Poor people have no margin. Any money they save goes to pay for the NEXT disaster. It's hard to build up surplus money when you exist close to subsistence. The next car repair bill or whatever tends to use up whatever savings you have accumulated, and you're back where you started. You can't not respond to emergencies, since you lose what little you have if you can't, say, work because you have no reliable transportation. (Not everyone lives in large cities with reliable public transportation.) Or if the furnace needs a repair during winter, or pick any emergency. The rich have more margin, and can absorb emergencies better. Then they start accumulating surplus money which can be saved, invested, etc. Once you get to a certain point, you can pay cash for a reliable car instead of taking out a loan to buy a clunker. Getting "over the hump" is what is next to impossible for poor people because there's always another emergency.
Someone I knew used to say that the person dreaded getting a tax refund, because it meant another unexpected emergency expense was coming. That's what life is like for the poor.
(E-mail me if you want a pizza roll!)
(Score: 1) by khallow on Friday June 19 2015, @07:22PM
(Score: 2) by c0lo on Friday June 19 2015, @08:05PM
https://www.youtube.com/watch?v=aoFiw2jMy-0 https://soylentnews.org/~MichaelDavidCrawford
(Score: 1) by khallow on Friday June 19 2015, @08:27PM
(Score: 2) by c0lo on Friday June 19 2015, @08:40PM
https://www.youtube.com/watch?v=aoFiw2jMy-0 https://soylentnews.org/~MichaelDavidCrawford
(Score: 1) by khallow on Friday June 19 2015, @09:46PM
(Score: 0) by Anonymous Coward on Friday June 19 2015, @09:19PM
IOW, you have no experience being poor or experience with the poor.
(Score: 1) by khallow on Saturday June 20 2015, @02:01PM
IOW, you have no experience being poor or experience with the poor.
Which isn't true. But I do have considerable experience with elevating myself from poverty and learning how to save and invest money.
(Score: 3, Touché) by tathra on Friday June 19 2015, @11:22PM
you're claim that people blowing all their money on drugs is unsupported and definitely not as widespread as you're trying to claim. a similar claim to yours is that welfare recipients blow all their money on drugs, yet the facts show [thinkprogress.org] this is not the case. vice-spending increases during tough times, but not to the levels you're suggesting.
(Score: 1) by khallow on Saturday June 20 2015, @01:57PM
you're claim that people blowing all their money on drugs
Alcohol and cigarettes are drugs too.