Economic growth more likely when wealth distributed to poor instead of rich

[applegrove]

Economic growth more likely when wealth distributed to poor instead of rich

by Stephen Koukoulas at the Guardian

http://www.theguardian.com/business/2015/jun/04/better-economic-growth-when-wealth-distributed-to-poor-instead-of-rich?CMP=soc_567

"SNIP................


Having money from economic growth flow to poor people rather than the rich feeds into a lift in the rate of economic growth and lower unemployment. Conversely, as income inequality increases, the potential for economic growth is constrained.

The economic case for maintaining a progressive income tax structure and targeting welfare payments to those most in need is overwhelming.

The issue can be illustrated through a simple stylised example which outlines how a higher cash flow to the poorest is growth enhancing while a higher cash flow to the rich boosts savings, but keeps economic growth lower.

Take a situation where there is a $1bn addition to the economy via growth. That $1bn can be distributed in many different ways but let’s initially assume the 10 richest people in Australia each receive all of that gain, with $100m going to each person.



...............SNIP"

[Brickbat]

1. BUT SOMEBODY MIGHT GET SOMETHING THEY DON'T DESERVE.

[valerief]

10. Yeah, because the very rich deserve everything they get now.

They work 3000 times harder than Joe Schmoe. And they don't circulate their earnings. They offshore it. Squirrel it away for that rainy day that never rains. Not for them anyway.

[Raster]

2. Unfortunately, the rich don't care about any economic growth except for their own.

Certainly there's some OCCUPY Kids we slap around the parking lot to make our point.

[seveneyes]

3. You Look Like I Need A Drink

[cantbeserious]

4. Well Duh

eom

[99Forever]

5. Talk about a "No Shit Sherlock" moment.

(not directed at Applegrove)

The Byline on this should have been, Captain Obvious.

[applegrove]

6. I put up articles even if it is obvious if there is a good example in them. I keep in mind that

added context to our policy beliefs never hurts.

[99Forever]

7. I wasn't objecting.

If that wasn't clear, my apologies.

The article simply says what many of us have been saying for years, is all.

[applegrove]

8. I was agreeing with you. I didn't feel offended in any way.

[jwirr]

9. That was the whole basis of FDR's Keynesian economic policies. It worked.

[DirtyHippyBastard]

11. If poor people have money

they will just spend it on stuff, and then... ohhhhh, I get it now.

[Punx]

12. DUH!

But so many Americans have bought into the trickle down bs, that it's hard to convince them otherwise.

[The2ndWheel]

13. One of the reasons we're not going to do anything about our environmental issues

Well, not going to isn't the right phrase. Can't is better.

A good illustration of that is how civilization works in relation to the planet. Similar to the rich/poor economic example. Civilization is a resource concentration mechanism, so it's like the cash flow of the economy going to the rich. If that stops economic growth, then civilization concentrating the resources of the planet for a single species is going to cause problems for the rest of life.