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

To: Joe Btfsplk who wrote (766672)	1/29/2014 1:37:53 PM
From: combjelly	Read Replies (1) \| Respond to of 1576108

I agree that he is smarter than you. But that is a pretty low bar. First, you assume that wealth is fixed in amount. You assume that if Smith becomes richer, her additional wealth necessarily means that other people have become correspondingly poorer. This is a straw man argument. This was never my position, and is a position that is rarely taken by anyone who knows anything about economics. Economics is a system for allocating goods and services. By its nature, there is usually more demand than supply. So far, the most robust systems revolve around free and fair markets where everyone gets a shot. However, concentrating wealth means that the markets become less and less fair and eventually are no longer are free. This is basic stuff by the way, goes back to Adam Smith. Look at our economy, the lion share of productivity gains have gone to the investor class, not the workers. Our economy is consumer-driven, which is characteristic of a developed economy. The wealthy are not efficient consumers, most of their wealth is invested and what consuming they do is mainly high-margin, luxury goods which have a low monetary velocity. Now investment is good, but it is not an unbounded good. Just like in other parts of the economy, when you have too many dollars chasing too few good investment opportunities, then by default more and more of those dollars go into poor quality investment opportunities. And that leads to bubbles and those generally lead to crashes. We've had 2 since the turn of the century, so this should be obvious. The first was the tech bubble. Fortunately that only affected a small part of the economy and the damage was small. But the Great Bellyflop was very, very different. It caused a crisis in the financial system and those can be very difficult to recover from. Just ask the Japanese. So there has to be a balance between consumption and investment. The past 3 decades the focus has been solely on investment and that has led to more and more wealth being concentrated in fewer and fewer hands, a decline in socio-economic mobility,the decline of the middle class and an economy that is becoming more and more dysfunctional. The long term consequences are severe. Locking the vast majority of Americans out of improvements in the economy destabilizes the system. That invites a rise in populism, and that can go bad in so many ways. It can be a force for positive change, but it has the seeds of revolutionary change. It is not something to be toyed with.