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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: 1) by khallow on Friday June 19 2015, @07:30PM
(Score: 1, Insightful) by Anonymous Coward on Friday June 19 2015, @10:07PM
And the obvious problem with your model is that the pie isn't fixed in size. While "trickle down" may be bullshit, I don't see how obsessing over the size of each persons' piece of the pie will help that pie grow larger.
The pie is at any given moment a fixed size. It must grow in size because of population growth. That was my first point, responding to the OP's question about why growth is necessary at all.
The thing is, that growth will occur naturally in any event. It is only because of a compulsory need of some to possess more pie than strictly necessary that drives the scarcity of pie, but I digress.
Pie measurement does not need to come from some grand theory of pie envy. Rather, it is the recognition that literally ten percent of the population controls ninety percent of the pie. And that last ten percent that we ninety percent get to have left to us doesn't seem to be enough to feed everyone else. And yet there's enough pie for all. So yes, I feel entirely justified and entitled to look at that ten percent and demand they slice what we've got right now a little more equitably, because they have NOT historically, that's for damn sure.
Or the population will shrink. The problem is, it won't be that one or ten percent that's pruned.
(Score: 3, Insightful) by tathra on Friday June 19 2015, @11:00PM
it isn't fixed in size, but it does have a definite size at any point in time, and that size can't increase without growth of some sort. the only reason each person's piece of the pie is a big deal is because of how extreme the difference is, with equivalently 1 person holding 80% of the pie and the other 9 having the other 20% between them. not only is it unfair, since only the luck of being born into it allows one to have a larger portion, not hard work and good work ethic, but its also unsustainable. those holding the most didn't achieve it through their own merits or work, so the typical argument of "taking from those who produce" does not apply in any way here. sociopathy is not something society should encourage or enable, especially when acquiescing and allowing those sociopaths to take everything and keep it to themselves makes that society extremely unhealthy and pushes it towards destruction.
(Score: 1) by khallow on Friday June 19 2015, @11:44PM
it isn't fixed in size, but it does have a definite size at any point in time, and that size can't increase without growth of some sort.
I get what the thread was about.
the only reason each person's piece of the pie is a big deal is because of how extreme the difference is, with equivalently 1 person holding 80% of the pie and the other 9 having the other 20% between them. not only is it unfair, since only the luck of being born into it allows one to have a larger portion, not hard work and good work ethic, but its also unsustainable. those holding the most didn't achieve it through their own merits or work, so the typical argument of "taking from those who produce" does not apply in any way here.
There are two things to note. First, what does "unsustainable" mean? It means wealth transfers from those who have, but do not have the competence to keep what they have, to those who do. It's a problem that continually solves itself little by little every day. And I don't see a reason to care about "fairness" when it's just an excuse to take from the more fortunate.
sociopathy is not something society should encourage or enable, especially when acquiescing and allowing those sociopaths to take everything and keep it to themselves makes that society extremely unhealthy and pushes it towards destruction.
Welfare is such a problem both directly in encouraging the growth of a sociopathic underclass and in bribing said underclass to support the machinations of a similarly sociopathic elite class. I'm reminded of the "bread and circuses" of the Roman Empire. The underclasses watched fellow men fight to the death and the ruling elite indulged in their own vices and corruptions.