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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: i-node who wrote (153230)	10/13/2002 12:25:33 PM
From: Dan3	Read Replies (1) \| Respond to of 1585168

Re: Example: In Arkansas, the children of families making less than That sounds like a bad law. There are certainly many bad laws. And there is nothing inherently better about people without money than people with money. But there is a ton of evidence that when wealth is either too concentrated, or too dispersed, economic growth slows or stops. Very generally, when wealth is too dispersed, (caused by taxes on the wealthy being too high) you see insufficient capital investment, too much demand for the available capital plant, and inflation. Companies are making money, but capital is too scarce, making it too expensive to support appropraite investment. When wealth is too concentrated, (taxes on the poor too high) there is insufficient demand. Interest rates are low, and capital is plentiful and cheap, but there is no incentive to put that capital to work, since there is insufficient final demand. Our tax structure has a pretty much controlling effect on where the the national income goes (to the degree that anything does). When the nation's income is diverted to the wealthiest quintile, more of it can be made available for investment (since those individuals will have more discretionary income that they can invest in capital goods). When the nation's income is diverted to the other 80% of the population, for whom there is pretty much no such thing as dicretionary income, less is available for investment but final demand is much stronger. There has been a steady erosion of the income share of the lower 80% of the nation's households during the past 25 years, which accelerated in mid 90's (your "contract with America" changes in the laws went into effect) and were exacerbated by Bush's recent cuts. We probably had too little concentration of income in the mid 70's, leading to insufficient investment despite good final demand. We almost certainly have too much concentration of income now, leading to falling demand, deflation, and no opportunities for investment, despite a glut of available capital. Consider the summary on page 25 of this collection of national income statistics from Census and come to your own conclusions. census.gov