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[quote=livinincali][quote=harvey][quote=livinincali] Would that have impacted some people in the middle and upper middle class. Yeah it would, but it would have hit those at the top harder than those in the middle.[/quote]
[quote]You’re probably happy that you 401K more than doubled from some hypothetical 100K to 250K but Bill Gates went from 30 billion to over 75 billion at the same time.[/quote]
Your second point completely refutes the first.
When Bill Gates only has “only” $30 billion, he still has incredible power, more net worth than literally millions of people combined, and tremendous opportunity to make more. He can take all sorts of risks, make all sorts of investments (and has access to the choice ones.)
When someone else who is Bill Gate’s age only has $100K, they are essentially trapped, unable to do anything but earn wages to get by and have almost no realistic opportunity to grow their wealth. If they have $250K, they may at least have a few more options.
There are reasons that “the rich get richer.” Making everybody poorer doesn’t change those reasons, it actually makes them more pronounced.
And of course there’s the fact that most of the very wealthy made their wealth long before any bailouts. Sorry, bailouts have nothing to do with the wealth gap. If anything they probably diminished it.[/quote]
Just do the math. If you the average paycheck to paycheck american with a net worth of $20K of saving who cares what happens to the stock market. Say the top 10% have a net worth of $1 million with 50% of that in stocks. So the wealth gap is a ratio of 50/1 or $980K. Say the stock market gets cut by 50%. Now the wealth gap is 750/20 = 37.5/1 or $730K. The wealth gap just shrunk right.
Or just look at this chart. Notice the time frames when wealth inequality shrunk a lot. What happened during those times?
[/quote]Livinincali is absolutely correct. Let’s not forget that the bailouts consist of far, far more than TARP or any other “official” bailout programs. Keeping interest rates at/below zero and QE (we’ve effectively had negative interest rates for a large part of the post-recession period, and money has lost purchasing power over these same years) have bailed out asset holders at the expense of people who live on a fixed income, which includes workers. Take into consideration that many working people are earning the same or less — nominally — than they were in 2008/2009, and it’s easy to see how they’ve been losing while the rich have been gaining. They are more economically vulnerable than they were prior to the recession, too, as their jobs are often temporary (more contractors, more temps, and more 1099ers, etc.), and benefits have been reduced in many cases.
If you look at the history of wealth/income gaps and tax policies, you’ll see that low tax rates for the wealthy (less steeply progressive rates and/or lower rates on unearned income) tend to occur just before, and during, periods of growing wealth/income disparities. The times when wealth/income inequality peaks is usually right before a major recession. Whether it’s causative is up for debate, but I certainly believe there is a relationship there.
Money flows from the bottom up. It always has, and always will. If a significant enough portion of the income from the top flows back toward the bottom — from where it will flow back up — then money velocity is increased. If money is hoarded at the top, money velocity will decrease. Since consumption makes up such a large percentage of our economy, it’s imperative that we put as much money as possible into the greatest number of hands where it will continue to circulate through the economy.
Money sitting at the top often doesn’t benefit the economy, especially if it is used for speculation (as opposed to real investing, where productive capacity is increased) or if it’s simply being hoarded (though savings are made available for businesses to borrow and grow productive capacity, which is generally good for the economy). Speculation is zero-sum, and so much of today’s wealth is being used for speculation instead of growing the economy or consumption which drives economic stability/growth as demand is maintained or is increased.
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