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RE: Why inequality is growing so extreme and how Alaska points the way to the solution
As an economist you should know that when inequality grows too large, it begins to inhibit growth. Think of it this way. Maximum inequality is one person who owns all the money and a billion people with absolutely nothing. What's the economy look like? No one has any money. There's no spending. There's a complete lack of demand. On the other end, yes, zero inequality also inhibits growth. We want some inequality, but not too much. As with many things, there's a kind of Goldilocks zone. We want to stay inside of that zone for maximum growth/prosperity.
There's no need to think about all the people having nothing since every year all people have more and more.
It's not a problem that when you are able to buy second car another person is able to buy a new island. Because he doesn't need a new island and for that reason huge capitals are spent to make our life even better and to make you able to buy more and more things you do not need ;)
So far, universal basic income pilots have shown that people will not suddenly stop working if they have enough money to live, though. We could, in fact, increase the productivity of society by erasing the amount of time wasted for survival in poverty, while still rewarding workers that work harder/smarter or sacrifices more for their efforts.
That would be a much more meritocratic society where everyone has close to the same opportunity, compared to one where too many people struggle with poverty from the time they're born.... while some are spoonfed w/ gold gilded spoon since even before they were born.
The theory of motivation would explain the observation in the basic income pilots, that there are many forms of motivation and that survival need not be the only source of motivation we care about. The idea that we need to rely on survival as the primary motivation for production, should be left to the ancient primitive societies where resources were so scarce.
The very root source of all motivation is really the pursuit of happiness and the avoidance of suffering. Stagnation is suffering, which means people will have the motivation to do things to get out of stagnation. Earning more money to build a better life, creating things, making others happy, contributing to society tends to be a source of happiness, no matter how much money that one has, which would also be healthy sources of motivation. That's partly due to the fact that whenever people have more, the new situation will become the 'norm' that they could use to compare their future circumstances/goals to. People tend to want more from their life, and they would be better able to do that when we empower them with the basic resources they need to survive.
Living in poverty is a full-time job, and it is a waste of manpower/labor hours. Give people in poverty their cheap basic necessities, out of our abundance of resources, and aid them so that they can find a better job that contributes more to society. Everyone else would be better off, crime will drop, everyone would be better educated, productivity would increase, the economy would thrive, innovation will flourish, and so on.
Right now, anti-welfare people would rather keep people homeless even if it cost 3 times as much than housing them. These people, instead, have to waste time surviving being homeless.... while taxpayers waste 3 times as much money being ideological extremists rather than being helpful.
Fiscal responsibility supports the right kind of welfare. One aspect of the right kind of welfare is about ensuring that everyone that could be productive is capable of being productive and that they not forced to waste their time on unproductive things all due to the stress of needing to survive. It is even better when doing so is actually so much cheaper than the cost of leaving people to suffer.
That's only relevant when everyone is able to buy a second car, though. Inequality is currently so extreme that some people cannot even afford to go to doctors, dentists, or even to not be homeless. While some people die homeless, we have people that worry about whether they can afford to buy the right kind of island for themselves.
Currently, the upper class just trade money between themselves as the majority of profits goes to the top. What enriches everyone is when consumers on the lowest end spend their money to smaller businesses, creating demand that further create more incentives to supply goods.
When a few corporations own most of the economy, with the profit going to the rich for them to send money between themselves, then the majority of that money will continue to stagnate at the very top... without helping the economy. They won't help society.
Here's a relevant example, "On average, 48 percent of each purchase at local independent businesses was recirculated locally, compared to less than 14 percent of purchases at chain stores." http://www.economicsonline.co.uk/Managing_the_economy/The_multiplier_effect.html
If all the businesses that exist in a country are replaced with chain stores, then local economy will fall apart. That's what happens with extreme inequality in our current system.
I could write "when one person is able to buy another piece of cheese, another will buy a new car" (in my childhood I was grown up in a family where another piece of cheese was a problem).
But that's why I understand the great motivation of a person to have money when you really do not. Money should not be granted because we still need other people doing service for us. We cannot afford to get rid of humans now in the hospitals, in the restaurants and so on. I need doctors and I know that we will have at best 1000 doctors by heart in the whole world if others will have basic income.
Hard work, hard knowledge can be got right now only with a great motivation of people to get money for living together with profession. So this world (when robots can not supply me with everything I need yet) needs to have poor people.
But to get the life with robots for everything everybody needs to earn money to buy them even when they will appear. That's the best way not to destroy our civilization since we didn't cross the line yet not to need humans.
Are you not aware that personal consumption expenditures have been on the decline this entire century so far? In fact one of the reasons retail is dying is not just Amazon, it's a lack of spending money. Wages have been stagnant for decades while the cost of basic needs have been going up. As a result people have less money to shop with, and subsequently economic growth has been slowing.
You should do some reading up on this. It's pretty much already the new consensus that inequality has grown to extreme and is holding back the economy. We are looking at a growing crisis of demand, not supply.
Compare the prices of mobile phone 20 years ago and now and you will see that prices for electronics decline all the time.
Compare how your parents live and how you spend your time and you will understand that people are living better and better. In my childhood an automatical washing machine was a dream, we spent half saturday for washing almost manually since washing machine had to be taken care of all the time. To get any information we had to go to the library, to watch a movie we first had to find it on the TV program.
Maybe you think that change of life could be made for ordinary people by other poors but in fact not. All the R&D, all inventions now need plenty of money and to have those plenty of money for inventions we need those people judging what kind of island will suit them better. Those daddies should have real spare money to search for ways to live forever since this task is presumed to be never solved.
Government R&D is based on government income from tax, and everyone participates in that. That's not based on some rich people's whim.
The cellphones you just mentioned is largely the results of government funding. Government funding is based on the economic system, which would thrive more when the money circulates better between the people and the government in a more equal society.
The internet, GPS, infant formulas, vaccines, touch screen, wind energy, etc are invented thanks to government funding.
https://www.jpl.nasa.gov/infographics/infographic.view.php?id=11358