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The rich get richer and the poor get poorer. Is this a coincidence?

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The heart of conservative economics is the idea that rich people’s wealth eventually benefits everybody. Rich people begin businesses, hire the poor, and pay them. Rich people spend money on goods the poorer people manufacture. So the wealth at the top “trickles down.”

We’re supposed to see a diagram here of the shape of society as roughly like a diamond, viewed from the side, with most people in the middle class. And as the rich get richer, the top of the diagram moves up, pulling lower ranks up.

But actually the bottom of society is not moving up. So as the top goes up, society just gets longer and more unequal. That’s what’s happening.

Trickle down theory is fairy dust. (But it drives a lot of government policy.) To a large extent, very wealthy people invest in things that bring no benefit for the working poor: paintings, jewelry, real estate.

What’s the alternative? Well there’s a new idea called the Winner Take All theory which says in this competitive society people have an intense drive to win. And the prize for rising to the top is that you grab it all – or a huge percentage – then the losers divide up what’s left.

A winner-take-all society has a different shape. A tall pyramid.

That shape is more accurate, because currently the top 1% of our population actually owns 40% of the wealth. This means a sharp inequality.

So are the rich getting richer at the expense of the poor?taxes

The Left is naturally opposed to laissez faire (free market) economics because it produces big wealth only for some people. What it always produces is inequality. The Left doesn’t like hierarchy (inequality) anyway, and the inequality creates great pain for the people who are left behind. The Right actually encourages social inequality. Some of them say it makes the economy run better.

There’s a statistic which population experts now use called the Gini Index. It shows how unequal a society is. It runs on a scale from 0 (perfect equality) to 1 (perfect inequality) and in the U.S. it has been increasing steadily, and it stood at 0.47 in 2011. If the Gini Index gets high, it predicts social unrest.

And there’s some new scientific research comparing nations. It shows that the more social inequality in a country, the shorter the life expectancies. For everybody. Naturally, the Right is vigorously ignoring that research. But it’s your health. That research is the single biggest threat to free market economics. More here.

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October 1, 2013 Posted by | Uncategorized | 72 Comments