Both Robert and Jacob brought to my attention this article in the New York Times.
The American Middle Class Is No Longer the World’s Richest
Jacob responds here:
THE REASON FOR AMERICA’S ECONOMIC DECLINE
Robert would challenge Jacob’s assertion:
“Let’s assume that everyone saves $10,000 out of his $40,000 income. Everyone puts his $10,000 into the bank. The banks lend all those savings to companies, which use the money to invest in better tools and equipment. Those tools and equipment make workers more productive. More productivity means higher profits for the firms. Higher profits lead to higher wages.”
by saying something like:
— More productivity means higher profits for the firms. Due to greater market power and greater political influence causing a rigged economic system, the wealthy keep a greater portion of the higher profits, and thus income inequality increases –.
Jacob also says:
“the government, through the income tax and IRS, seizes the $10,000 that people would have put into savings. Thus, those savings never get put into the bank, which means that they’re not available for companies to borrow, which means that better tools and equipment don’t come into existence, which means that firms don’t become more productive, which means that real wage rates don’t rise.”
Robert would say something like:
— The Federal Reserve puts money in the banks so there is no shortage of investment capital for firms to borrow for better tools and equipment – interest rates are now very low, and inflation (as measured by the Federal Reserve) has not reached their target value. —
Robert would say that income inequality is bad because
(1.) It is unfair.
(2.) It is politically unstable. The masses will eventually revolt, so it is in the best interest of the rich to use their political power to raise taxes for redistributing their wealth because if they don’t, due to envy and/or desperation, the masses will take it.