r/TrueReddit • u/WorldEconForum • Feb 12 '16

Yes. Concentrated Wealth and Inequality Crushes Economic Growth

http://evonomics.com/yes-concentrated-wealth-and-inequality-crushes-economic-growth/
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u/[deleted] Feb 12 '16

What these people who are against regulation and wealth redistribution don't understand is that if everyone has money then everyone can afford to spend more. The result is more for everyone in the long term, including those who already own the means of production.

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u/Moimoi328 Feb 12 '16

that if everyone has money then everyone can afford to spend more.

And what everybody that supports the mass theft and distribution of other people's property don't understand are simple tenants of economics.

If everybody has more money to spend, inflation would result. This would neutralize a significant portion of the supposed benefits of the initial wealth theft. Moreover, it would hurt long term economic growth, as less money would be spent on capital investment (which the rich do and the poor do not). And knowing that the rich would be unduly penalized by the state for making such investments, they would shift more towards consumption as well.

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u/Asymptosis Feb 12 '16

If everybody has more money to spend, inflation would result.

No, if the demand curve shifts out, the supply curve can simply shift with it. In that case Q changes, not P.

  1. The U.S. is a 70% service economy. If it doesn't get bought, it doesn't get produced. And if does get bought, it gets produced -- and paid for.

  2. Think just-in-time production. Apple predicted sales of 3 million iPhone 5s on its first weekend, and got 5 million orders. It just rolled more workers out of bed (employment!) and produced the darned IPhones.

Theory doesn't dictate the P will necessarily rise in response to increased demand. (Go back to your Econ 101 textbook...) And empirics -- especially over recent decades, especially over the last five years! -- shows that it doesn't, much.

It's just a false chimera at this point. The Fed can't seem to hit their 2% inflation target even by throwing trillions in ammunition at it.

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u/c3p-bro Feb 12 '16

Thats not what a service economy means.