Although a little number heavy, it shows that when poor people get a dollar, they tend to spend $1.28 (poor Americans are funny like that, spending more than what they have). When a rich person gets a dollar, just over three quarters of it gets spent.
What happens to the rest of the money? Here things get a little more complicated. There's no guarantee that money saved by the wealthy will go towards useful business investment. CDO's, for example, don't really fuel much business growth, since they're mostly bets on other securities. The market for them in 2006 was 2 trillion dollars. Stocks and bonds bought in secondary markets don't directly help businesses either, since the money is moved from one investor to another. It's usually people like Goldman making all the real money. Almost all stock trading through formal exchanges are considered "secondary" exchanges.
And if money saved goes to a business, there's no guarantee that it will be spent on real investment. Companies are currently sitting on 1 trillion dollars in cash, and they have little plans to hire. On the other hand, these same companies are seeing record profits. Reducing unemployment is not their concern, nor should it be.
There's a balance to be struck. For all of the hysteria surrounding the debate over wealth redistribution, no one (other than a few on the Right oddly) ever mentions a communist-style universal equality (although most communist societies, in particular China, and incredibily inequal, but whatever). Extreme inequality ruins people's incentives to work hard just as effectively as extreme equality. Mother Jones' set of charts talks about the income distribution that Americans consider reasonable, and it's clear that a system where 10 percent of the people own 90 percent of the wealth is not what they want.
When the economics are sound, real data supports the theory and it follows the confirmed desires of the American people, there is little room to argue against having more redistribution of income.
What happens to the rest of the money? Here things get a little more complicated. There's no guarantee that money saved by the wealthy will go towards useful business investment. CDO's, for example, don't really fuel much business growth, since they're mostly bets on other securities. The market for them in 2006 was 2 trillion dollars. Stocks and bonds bought in secondary markets don't directly help businesses either, since the money is moved from one investor to another. It's usually people like Goldman making all the real money. Almost all stock trading through formal exchanges are considered "secondary" exchanges.
And if money saved goes to a business, there's no guarantee that it will be spent on real investment. Companies are currently sitting on 1 trillion dollars in cash, and they have little plans to hire. On the other hand, these same companies are seeing record profits. Reducing unemployment is not their concern, nor should it be.
There's a balance to be struck. For all of the hysteria surrounding the debate over wealth redistribution, no one (other than a few on the Right oddly) ever mentions a communist-style universal equality (although most communist societies, in particular China, and incredibily inequal, but whatever). Extreme inequality ruins people's incentives to work hard just as effectively as extreme equality. Mother Jones' set of charts talks about the income distribution that Americans consider reasonable, and it's clear that a system where 10 percent of the people own 90 percent of the wealth is not what they want.
When the economics are sound, real data supports the theory and it follows the confirmed desires of the American people, there is little room to argue against having more redistribution of income.
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