A note for me to remember some dumb economics: Stiglitz on inequality
This claim is based on the crazy argument that people don't spend all of their money. It is almost as if wealthy people are digging a hole in their back yard and burying the money there. But wealthy people's money doesn't just disappear. If they put it in the bank, it is loaned out to others.
“What sustains the American economy is consumption, and the people at the top spend on consumption a smaller fraction than those at the bottom. In fact, those at the bottom have to — to get by — spend about basically 100 percent. So when you move money from the bottom and the middle to the top, overall spending gets constrained, and that weakens the economy,” economist Joseph Stiglitz said on MSNBC's "Up with Chris Hayes" . . .
Labels: Economics, inequality, Joe Stiglitz, keynesianism
posted by John Lott at 3:46 AM
3 Comments:
So Stiglitz remembers consumption and forgets investment. Hard to take him seriously.
Not to mention the claim is utter drivel. If the claims by the anti-capitalists were stacked to gether you'd have "the rich keep getting more of the money" followed by "and they don't spend it, and that weakens the economy."
Anyone can read a GDP chart and see that hasn't happened.
It's the old "marginal propensity to consume" argument from my college economics textbook. Samuelson was wrong when he wrote it, and the argument hasn't improved in the sixty years since I read it. What ever happened to "conspicuous consumption" on the part of the rich?
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