The rich get richer and the poor get poorer. Is this a coincidence?
The heart of conservative economics is the idea that rich people’s wealth eventually benefits everybody. Rich people begin businesses, hire the poor people 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 picture here of the shape of society as roughly like a diamond, with most people in the middle class. And as the rich get richer, the top of the shape 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 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 get richer at the expense of the poor?
The Left is naturally opposed to laissez faire (free market) economics because it produces wealth only for some people. What it always produces in inequality. The Left doesn’t like hierarchy (inequality) anyway, and the inequality creates great pain for the people 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 stood at 0.47 in 2005. If the Gini Index gets high, it predicts social unrest.
And there’s some new scientific research showing the more social inequality in a country, the lower the life expectancies. For everybody. Naturally, the Right is vigorously ignoring that research. But it’s your health. It is the single biggest threat to free market economics.
More here.
8 Comments »
Leave a comment
| Next »
-
Archives
- June 2008 (10)
-
Categories
-
RSS
Entries RSS
Comments RSS
There is a difference between correlation and causation. You’re assuming the latter derives from the former (as does the article you link to).
Comment by Isaac Freeman | June 13, 2008
Rich people begin businesses? The statement itself is inherently ridiculous and proves you know absolutely nothing about the poor.
What about drug dealers, pimps and hookers? Even illegal businesses are still businesses, providing a supply to meet a demand. Besides, almost all large businesses started out as small businesses. Sam Walton was not wealthy when he opened the first Wal-Mart. Ray Croc was not wealthy when he bought the McDonald’s franchise.
All over America, poor people launch businesses either through small business loans or by pooling their resources together with other poor people and entering a joint enterprise.
One of the ways the poorer get poorer is by enrolling in government welfare programs which only give recipients enough to survive on, and often require the recipients to attend appointments with case workers, attend various meaningless workshop or perform a certain numbers of hours of labor, thus prohibiting them from finding any real employment. Welfare is the biggest scam ever. It keeps poor people poorer, and the fact that you liberals even champion this cause makes me wonder if you guys even care about poor people at all.
Your idiotic rant about rich people starting businesses most likely comes from Karl Marx, who never took into account the capitalist as worker, meaning the capitalist who actually work the hardest and the most hours at his own capitalist enterprise. I doubt whether you’ve ever met a poor person in your entire life, other than the maid who probably cleans your ivory tower.
Comment by I'm Not The Only One | June 14, 2008
Cronyism is nothing new. It’s just the rate of speed with which we either do or do not “get” the information.
It is the degrees to which we are all mislead, manipulated and financially drained.
Of course the rich get richer.
Of course the poor get poorer.
When we begin to learn exact figures about all of the misadventures of the Bush Administration, it will undoubtedly be too late to retrieve anything, from the individual, to state, to nation, to international economy.
It’s what we DON’T know and DON’T do that’s going to “sink the sub”.
Comment by Anonymous | June 18, 2008
The only reason homeless people are the way they are is because they don’t know how to make money. In America you either work and get paid, or you sit on the street and hassle passersby for change. Homeless people should not be sympathized with unless they have clearly observable mental or physical disabilities. The government’s place in society is to ensure the safety of its citizens, not to redistribute wealth. You’re ideas might be accepted in Europe, but not around here.
Comment by America's Voice | June 21, 2008
“America’s Voice”
Ah, modern-day social Darwinism. This ideology just gets more and more charming every time it comes out of a Facist’s mouth.
Comment by Gregory | June 21, 2008
Re: i’m not the only one that said…
Yes you’re right, of course, poor people start businesses. (I have personal experience, I started two of my own).
Startup businesses have a very high rate of failure. I remember a Business 101 professor saying that as a rule of thumb, 50% of new businesses fail in the first year, 90% fail in five years, depending on the industry (startup restaurants and boutiques, for instance, have an especially short lifespan), franchised startups have better chances.
The main reason is undercapitalization. It takes money to make money. If you can’t start with a big splash, the chances of survival are slender. There are exceptions, but statistics show most launches never become big enough to hire employees for long. So they don’t really deliver trickle-down.
When wealthy people launch new businesses they have better chances, but they may employ workers at minumum wage, so likewise, a very thin trickle-down.
Pimps, hookers and pushers? Give me a break. That’s a Wild West economy with short life expectancies for all and neither is it easy money.
There’s a nice description in Levitt and Dubner’s book Freakonomics (link below) where some economists actually went out and studied a subculture of crack dealers on the south city streets and find that once again, it’s the same old story: A very few at the top of the entrepreneurial pyramid have swagger; they are making good money. Meanwhile the more numerous middle level pushers are making just enough to get by. They also have to pay the man upstairs for the right to a corner on the busy sidewalk. But the majority of these hustlers are small timers and wannabes making so little they are still living with their parents: they are actually paying the man at the top for the priviledge of waiting in line to eventually be granted sidewalk territory (they make rank when somebody higher gets shot.)
It’s just another free-market business hierarchy; the rich and the poor.
It’s all in this:
http://www.amazon.com/Freakonomics-Revised-Expanded-Economist-Everything/dp/0061234001/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1214106728&sr=1-1
Comment by leftblog | June 22, 2008
Well, actually, if you examine wealth over time, not just in an individual’s life time, the “poor” now are far more wealthy than the rich of long ago. So, bit by bit, global wealth and prosperity has indeed increased, dragging the bottom up along with the top and middle. Of course, that is not terribly comforting to someone at the bottom. Still, no matter how hard we try, we cannot force an equality of riches, especially if you expand the definition of riches to include looks, health, artistic or athletic talent, even happiness. We can’t even make sure everyone has the same number of days in their lives!
And to the fellow who mentioned “social Darwinism…” all that tinkering with the social order is a progressive idea, not a conservative idea.
Does every discussion of wealth and society have to end up with someone calling someone else a fascist? How about a moratorium on that word in the political arena?
Comment by Nancy | June 24, 2008
Another reason small businesses fail so often is government regulation. They have to pay unemployment insurance, social security taxes, keep very detailed records for tax reasons (much more detailed than they would have to without income tax forms), and deal with libraries of regulatory codes which large businesses are easily able to hire lawyers to deal with.
Comment by SaulOhio | June 26, 2008