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> when landlords receive higher rent, that money is either being re-invested or spent on "real, useful products" in the end. This is simply untrue. Wealthy peo

> when landlords receive higher rent, that money is either being re-invested or spent on "real, useful products" in the end. This is simply untrue. Wealthy people do not eventually hit zero on their balance sheets, they typically keep the wealth, invest it by gambling in the market, and pass it on to their children who also do not spend it all. Spending is the key to economic growth and wealthy people absolutely do not spend as much as poorer people on real goods. The economy is always better off with wider distribution of wealth.

smallgovt 8y ago
Can you expand on this? Wealthy people may not hit zero on their balance sheets, but isn't investing their capital in corporations a form of spending? That is, it enables the corporation to make capital expenditures to produce goods and services that will in turn be purchased. As long as wealthy people continue investing their capital, it should be healthy for the economy?
- camelNotation 8y ago
  Yes, there is a balance that has to be struck between how much of your economy is investment and how much is spending on real goods because they are symbiotic. The problem is that when inequality rises too high, you end up with too much money being invested and those investment returns either slowing down or being artificially accelerated by gaming the market other ways (think the 2008 collapse).
crazygringo 8y ago
> they typically keep the wealth By investing it. And even the small proportion being kept as cash in the bank is invested by the bank. > invest it by gambling in the market If they're investing well, then they're directing that capital to productive uses, helping to produce goods that people buy. If they're investing badly by "gambling" then they will quickly lose their money to good investors who will direct it to productive uses, producing goods that people buy. > and pass it on to their children Regardless of your views on an inheritence tax (I personally favor it), what is not spent will continue to be invested, and the same arguments above apply. This is all just Econ 101.
- camelNotation 8y ago
  If every single dollar in the economy is invested and nothing is spent on real products, it's fake money and will inevitably collapse. Investment is not wrong in itself, but investment that is out of balance with spending on real goods is crippling because the real goods are where the rubber meets the road on investment returns. That is what happens when only a few people have all the cash and the rest are just barely getting by. You aren't maximizing growth and, as a consequence, your nation will lose power in the global market.

smallgovt 8y ago

Can you expand on this? Wealthy people may not hit zero on their balance sheets, but isn't investing their capital in corporations a form of spending? That is, it enables the corporation to make capital expenditures to produce goods and services that will in turn be purchased. As long as wealthy people continue investing their capital, it should be healthy for the economy?

camelNotation 8y ago
Yes, there is a balance that has to be struck between how much of your economy is investment and how much is spending on real goods because they are symbiotic. The problem is that when inequality rises too high, you end up with too much money being invested and those investment returns either slowing down or being artificially accelerated by gaming the market other ways (think the 2008 collapse).

crazygringo 8y ago

> they typically keep the wealth By investing it. And even the small proportion being kept as cash in the bank is invested by the bank. > invest it by gambling in the market If they're investing well, then they're directing that capital to productive uses, helping to produce goods that people buy. If they're investing badly by "gambling" then they will quickly lose their money to good investors who will direct it to productive uses, producing goods that people buy. > and pass it on to their children Regardless of your views on an inheritence tax (I personally favor it), what is not spent will continue to be invested, and the same arguments above apply. This is all just Econ 101.

camelNotation 8y ago
If every single dollar in the economy is invested and nothing is spent on real products, it's fake money and will inevitably collapse. Investment is not wrong in itself, but investment that is out of balance with spending on real goods is crippling because the real goods are where the rubber meets the road on investment returns. That is what happens when only a few people have all the cash and the rest are just barely getting by. You aren't maximizing growth and, as a consequence, your nation will lose power in the global market.