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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: 3, Insightful) by Mr Big in the Pants on Friday June 19 2015, @09:06PM
This entire conversation is about as informed as a uninformed thing with no clue...
"That's what redistribution is, right? Taking from those who produce - and giving to those who don't."
Not necessarily. Redistribution comes in many forms. Also the opposite (wealth concentration) does and COMBATING it is called wealth redistribution.
For example, in the US wealth is being concentrated in the hands of shareholders - most of whom DO NOT PRODUCE. They used their concentrated wealth to capture the proceeds of further growth for themselves - many times to the detriment of those who DO produce.
To combat this you would simply have to return more of the profit to those that are doing the work and this would benefit EVERYONE long term.
I don't see why the concept of inequality harms growth is so hard to take and why it is such a surprise? Has the neoconservative insanity penetrated the mouth breathing consciousness that deeply....oh wait...stupid question.
Let's make it simple:
If most people have less money there is less money for them to buy all the stupid shit that makes the economy churn.
Rich people do not spend like the poor thus there is a LOT less churn when we shovel all the money to them.
QED
(Score: 0) by Anonymous Coward on Friday June 19 2015, @11:46PM
B-b-b-but, those are our job creators! We need them to keep the market for mansions and yachts growing! Think of all the suffering it would cause to the importers of fine champagne and caviar if we rob them so that Joe Sixpack can put food on the table for himself and his family! Next thing you know, Joe Sixpack and his mooching, freeloading kids will be expecting another meal tomorrow! It will never end, I tell ya!
/sarcasm Unfortunately, there are probably some idiots reading and posting comments here who actually believe this.
(Score: 0) by Anonymous Coward on Friday June 19 2015, @11:54PM
> shareholders - most of whom DO NOT PRODUCE
You're right. I don't produce. Well, I did produce to get the money I invest, but now I share my petty wealth so you can have some place to produce. Who do you think finances that building where you work? The furniture? The computer you waste half your day on watching cat videos?
All I ask is a small return on my investment. Many times I don't get it. Many times I end up with less than I started. That's called risk. I like to be compensated for risk too, hoping in the long run to come out ahead. But if there's no chance to earn a return, I won't invest, and you can go back to planting potatoes with your bare hands... on somebody else's land.
(Score: 1, Insightful) by Anonymous Coward on Saturday June 20 2015, @12:35AM
You remind me of the owner of my workplace. He talks just like you. He steals my wages - I'm not exaggerating, he modifies my time sheets because he feels that even though I worked through my meal break (for free, and in violation of the law) and my two ten minute breaks (also in violation of the law), and even though I just worked four hours for free, I'm not doing enough to earn $4 less than minimum wage.
Clearly, I'm just a lazy bludger, stealing from his $10 million yearly profit.
Those safety lights in the stairwell? Nobody needs those on. New equipment that actually works? Why? I can be blamed when it all breaks, and that helps.. well, with something.
As far as being a job creator, well, that's just not true. He makes $10 million a year because he creates those jobs, right? If it weren't for him, nobody would have anything to do, right?
Government funding pays for all of our wages, this "wealth creator" doesn't put a fucking penny up. Who bought all his equipment? The taxpayer. Of course, he bought second hand stuff that just won't last. He's relying on us to generate new ideas for him. Yes, that hour I didn't get paid for? I came up with ideas that will generate nearly half a million dollars in profit, to generate new wealth for him but I got nothing for it. Didn't even get paid for the hour I was labouring when I came up with them.
Well, that's too bad. He wants my ideas, he fucking pays me for each one. If I'm to be his wealth creator then he can give me 20% or just plain go without. Guess which he will choose - pay up or go without? He'll go without.
The loss of wealth is his problem. I've got my ideas on paper and I'm not able to use them because I'm owed about $65k in salary backpayments, so I will fucking well burn them. It'll keep me warm so I will profit from them. If he wants me to prop up his fortune, he can fuck off and die.
The sooner he dies, the better off we will all be.
(Score: 2) by Mr Big in the Pants on Saturday June 20 2015, @07:59PM
If you think the fact that you DID produce is relevant you are missing the point.
CHURN is what keeps an economy going, not historic production. The problem is the amount of wealth that is tied up this way, not that it exists.
I could just as easily say:
The only reason you have a place to put your investment to earn interest is that there are people with enough spending money to purchase the shit that place produces or other associated support industries.
And again we come back to inequality == bad!
It is not rocket science...
(Score: 0) by Anonymous Coward on Sunday June 21 2015, @01:45PM
So you two would rather I not invest the money I earned over my career, because according to you, investors are leeches.
So what do you want me to do with my earnings?
A. Spend them right away, on crap I don't need, so that I can be dependent on government benevolence in my old age? (How's that working out in Greece, BTW?)
B. Men with guns will force me to part with my money. In which case why did I bother to earn it in the first place?
You have to think about the incentives created by your success-hating proposals.
Oh and meanwhile where are the employers of the world going to get the money to buy trucks, lay railroad tracks, build factories and office spaces, and so on... everything you don't bring to the table when you demand a job because you have a right to employment because you breathe?
I suppose the government will provide that too.
So the choices are:
A. I earn money by producing, invest it so you can produce too, and we both gain.
B. I earn money. Men with guns take it. They use it to create infrastructure. You work there. They take your earnings too. Soon we both grow old and have to hope the men with guns haven't squandered all that money they took from us. (Hint: they have, sure as the sun shines.)
(Score: 2) by Mr Big in the Pants on Monday June 22 2015, @03:25AM
You have made your argument increasing both personal and anecdotal and with this post have reached 100% irrelevant and off topic.
This has nothing to do with the money you currently have. Spend it however you will.
This discussion is fruitless and thus I am moving on...