Let the Good Times Roll! Or, Tonight We're Gonna Party Like It's 1929

[Lawrence of Arabia]

actually, severe income inequality probably hinders technological growth because a) people cannot afford to buy the new stuff and b) theres a reason why severe income inequality exists, its a symptome of problem, probably institutional as well as not so well functioning markets

by severe income inequality, im not talking about USA or europe, but in many developing countries (latin america for example) where income inequality is even greater than in the US.

thats the interesting thing to note, that income inequality is greatest in poor countries, some speculate growth decreases inequality.

[Vanguard]

Vanguard, it's this simple: a zero-sum game is one in which any benefit by one participant is exactly matched by an equal loss by another. Thus the sum of the scores at the end is the same as at the beginning. This is obviously not true of a free market, because transactions occur which make both parties better off - and, in fact everyone else.

Lol. Who said I'm opposed to free markets? I'm very much in favor of them.

Unfortunately Free markets are only "free" when there is a certain parity among the market participants. If a millionaire and a pauper with only $10 go to an auction, then the millionaire can win every auction for $11.

Is that a free, fair market? Yes? Well then, suppose two millionaires go to an auction and the bidding goes up to $50,000 on an item that the millionaire would have paid $11 in the other auction.

Is that still a free, fair market? Free for whom? The seller of the item? The winning millionaire? Who?

[LordShiva]

Originally posted by Lawrence of Arabia
some speculate growth decreases inequality.

QFT. Inequality is self-correcting as long as the government stays out of the way.

[Kidlicious]

Originally posted by Vanguard


Alright, if food is plentiful then why does someone who earns minimum wage have to spend 40% of his income on it? Why isn't it 10%? Or 5%? Or some trivial amount?

Food is not "plentiful". In theory, the economy should grow exactly enough food to feed everyone and no more. Growing more food then we need would be a waste of money.

Obviously reality is rather more complicated than this. Growing food industrially generates economies of scale that allow competitive strategies to dominate food production and pricing. So it can be profitable to make more food than you can sell in an attempt to drive other producers out of business.

But that is really beside the point. The key point is that food production is an economic activity. It behaves more or less like any other economic activity. I will return to the question of food production later, once I have answered another part of your post.



There is always some resource that is in limited supply. Frequently that limiting resource will be labour. But in our modern economy, oil, energy and certain commodities can also sometimes limit production of both food and luxury items.

But whatever that limiting resource happens to be, it will be subject to bids from people who want to make food and from people who want to make Greyhound-skin tuxedos. If the people who want to make Greyhound-skin tuxedos can sell their product for 100 times as much profit as people who want to make food, then clearly most of the limiting resources will go to them.

When people become rich, they simply have more money to bid against you for limited resources.



Now that we have established this, let's apply it to the question of food production:

I said before that the economy should grow exactly enough food to feed everyone and no more.

But this not really true, is it? The economy will only grow this amount of food if it is the most profitable way to use the labor it takes to farm it. If it is more profitable to use that labor to build McMansions, then the economy will build McMansions. Which means that the economy will grow less than enough food to feed everyone as soon as that is the most profitable path.

Rising income inequality makes it much more profitable to make stuff for the rich than the poor. This raises the possibility of mass hunger coming about almost instantly if a price spike should turn thin food profit margins negative.

Indeed, when the rich consume things that the poor can't afford it helps the economy along and makes things better for the poor.

Only if it decreases the rich person's share of the economy and increases the poor person's share. Otherwise it doesn't help. It just increases the economy's incentive to make more of that stuff that the poor can't afford.

The problem with your theory is that the price of inputs (labor, oil etc.) won't decrease if the income distribution were more equal. In fact the price of inputs might increase. Do you think wages and the price of oil are going to come down with a more equal distribution of income?

[Kidlicious]

Originally posted by LordShiva


QFT. Inequality is self-correcting as long as the government stays out of the way.

Man you live in a serious la la land.

[Kuciwalker]

Originally posted by Vanguard
Lol. Who said I'm opposed to free markets? I'm very much in favor of them.

Unfortunately Free markets are only "free" when there is a certain parity among the market participants. If a millionaire and a pauper with only $10 go to an auction, then the millionaire can win every auction for $11.

Is that a free, fair market? Yes? Well then, suppose two millionaires go to an auction and the bidding goes up to $50,000 on an item that the millionaire would have paid $11 in the other auction.

Is that still a free, fair market? Free for whom? The seller of the item? The winning millionaire? Who?

You obviously don't understand the word "free."

[Kidlicious]

Originally posted by LordShiva


Over time, pretty much.

Eventually you have to sell.

[LordShiva]

Originally posted by Kidicious
Eventually you have to sell.

That's true. It's why Warren Buffet isn't one of the richest men on earth.

[Kuciwalker]

[Kuciwalker]

I see a trend.

[Kidlicious]

Oh dear LS,

Do you keep your stocks until you make a profit off of them? Do you never sell for a loss? Is that the investment strategy that you are recommending?

[Vanguard]

You obviously don't understand the word "free."

Oh, what a cutting reply. That really showed me.

[LordShiva]

Originally posted by Kidicious
Do you keep your stocks until you make a profit off of them? Do you never sell for a loss? Is that the investment strategy that you are recommending?

You don't really understand stocks, do you?

[Kuciwalker]

Originally posted by Vanguard
Oh, what a cutting reply. That really showed me.

Dude, I don't have to show you. Even the commies here know you're a joke.

[Kidlicious]

Originally posted by LordShiva


You don't really understand stocks, do you?

So that is your strategy. You just hold on to your stocks no matter what? Never sell for loss?