[quote=FlyerInHi]Flyer, that’s a feature of capitalism as described by Thomas Pikety in his book.
The New Deal gave the vast majority of Americans opportunities to move up the social ladder. But as capital and establisment become ensconced, then the wealth gap widens. Think back of how you grew up and the exposure to different social economic classes. There weren’t any gated communities or vast housing tracts where all the houses are worth about the same like there are now.
If we believe that the wealth gap is a problem, then only a new New Deal will solve the problem.[/quote]
You keep making this claim that the new deal solved the problem and that a another new deal will solve the problem now but there’s no real evidence that it solved the wealth gap issue. The stock market crash of 1929, World War II, the 2001 stock market crash all did more to solve the wealth gap problem than the new deal ever did.
Suppose for a moment that increasing various taxes was indeed the solution. Increase capital gains taxes, create higher marginal income tax rates, add financial transaction taxes, something of this nature will solve the problem. I think this is what most of you are proposing to solve the wealth gap. You may indeed need some of these proposal to keep it from growing too fast again in the future.
Now think about what holders of wealth are going to do if there’s a serious discussion about this and there’s government in place that might actually act down this path. Well the logical thing to do would be sell assets at the current lower tax rates in an effort to beat facing those higher taxes. It would also be logical to deploy less capital into production/investment at least until you figure out exactly what the ramifications of these proposed tax increases are. Those dynamics would change the supply demand equation in the stock market and bond market. That change has a reasonably decent chance of creating a stock market/bond market crash which would solve the problem to begin with.
Honestly how many jobs are lost if AMZN stock trades at a P/E of 10 instead of a P/E of 1000. Jeff Bezos wealth is effected a great deal, people that are heavily invested in AMZN lose a tremendous amount of wealth as well, but I don’t think that breaks the main street economy. It does help with the wealth gap though.
I honestly don’t see a solution that keeps asset prices high yet also shrinks the wealth gap. That’s what everyone wants to do. They want their 401K to grow at 8-10% but they also want the wealth gap to shrink. Obviously that cant’ happen if wages and the GDP are growing at 2 to 3% per year. Therefore why overthink it. Just wait for the next crash and then don’t so anything about it when it happens. Don’t attempt to reflate it again with Negative Interest Rate policy or some other crazy scheme.