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A company's income comes from people spending and consuming. The propensity to consume of owners is less than workers. The more you invest in machinery and lay
by neilwilson 3y ago
A company's income comes from people spending and consuming. The propensity to consume of owners is less than workers.
The more you invest in machinery and lay off workers, the fewer people you have with income they want to spend, and that's when the prices plummets.
- mitthrowaway2 3y agoIt depends what business you're in. If you're a company making yachts, supercars, or private jets, then owners consume much more than workers. As wealth shifts to fewer hands, companies making mass-market goods are forced to drop prices, squeezing their margins and forcing consolidation and further automation, as the buying power of the customer base disappears. Investment capital shifts into the luxury sector where demand is growing, and prices and production quantities increase. More and more of the economy gets dedicated to serving the needs of the wealthy (which is essentially what what it means for the rich to get richer).