Socialism/Marxism and balance.

[pErvinalia]

I'm pretty sure BG gets all this. His point about the rich "sitting on their money", while wrong, as you say, isn't property dismissed by saying they put it in savings accounts for reinvestment (or directly into share and other investments). The problem is that this approach to economic thinking (that Seth adopts) is that supply is what drives an economy, when it is patently obvious that demand drives an economy. Supply might top up a demand economy, but without demand, supply is pointless and a waste.

[piscator]

Wall Street was basically a nickle & dime operation built on high commissions and insider trading at the top until social safety nets and government war spending dramatically reduced the size of the $1/day class from about 70% of America to about 15%.
More money, more capital.

Stocks are loans to business, banks rent your savings to finance business. Bonds are loans to business or government. Rich people don't stuff $$ in mattresses either, they invest it at various levels of risk/return. Properly invested money is working money. It is in no way "Lost" to an economy.

[pErvinalia]

I understand all that, but investment "loans" are supply side. An economy is driven by demand.

[piscator]

Demand is largely and increasingly created.

[pErvinalia]

I agree to an extent. As I said, supply-side policies can top up demand-led growth. But they can't create the sort of demand that an economy needs to function properly.

[piscator]

On the whole, government policies don't create demand.

[pErvinalia]

Of course they do (well, they have here in Australia). That's how we escaped the GFC without even going into recession. The government pump primed the economy with a big investment in infrastructure, and also handing out cash to poorer Australians. The government can also affect demand through subsidising or penalising various things. And quite simply, if the government taxed the rich 1% more and gave all that to poor people, that would instantly create 1% of shitloads worth of demand. (minus whatever part of that 1% that said rich people would have spent in the local economy with that surplus money).

[pErvinalia]

Basically, a moral argument (like Seth tries) against redistribution can at least be attempted to be defended. But a factual economic argument can't. Providing handouts for the rich in the way of tax cuts and more direct welfare leads to a widening inequality gap, which has been shown to reduce overall economic growth.

[Blind groper]

The rich do 'sit on their money', at least to some extent. They do this by spending that money on things that suck up the money while not creating more. Large houses. Yachts. Memorials etc. When wealth is tied up in white elephants, it is not stimulating the economy.

Of course, this applies more to medium rich rather than ultra rich. The ultra rich do it too, but the percentage of their wealth tied up in 'white elephants' is less, and the percentage reinvested is more.

But the poor just keep the money moving.

[pErvinalia]

The rich do 'sit on their money', at least to some extent. They do this by spending that money on things that suck up the money while not creating more. Large houses. Yachts. Memorials etc. When wealth is tied up in white elephants, it is not stimulating the economy.

That's actually a fair point. Although, those things that they buy in-country do create demand at least.

[piscator]

Of course they do (well, they have here in Australia). That's how we escaped the GFC without even going into recession. The government pump primed the economy with a big investment in infrastructure, and also handing out cash to poorer Australians. The government can also affect demand through subsidising or penalising various things. And quite simply, if the government taxed the rich 1% more and gave all that to poor people, that would instantly create 1% of shitloads worth of demand. (minus whatever part of that 1% that said rich people would have spent in the local economy with that surplus money).

So you're talking about something like a US wartime economy where the government takes enough of people's $$ and time to propel its markets in a given direction, ie "The Greater Good™ "?

[pErvinalia]

That was one example that certainly grew your economy and generated a lot of employment and demand. If a strong economy is your metric for success (which it usually is for Seth and most people on the right, and a good chunk on the left), then why bag it? Unless you have an ideological objection to it, in which case you've got to provide strong reasoning to back up strong beliefs.

[Hermit]

A significant proportion of money is invested in quite unproductive ways. Hedge funds, futures trading, forex speculation and daytraders spring to mind. Attempting to corner the silver market is not particularly useful to the economy either. Even a lot of investment funds and unit trusts are basically just people taking bets on future trends of value on behalf of others who have lots of money but no interest in figuring the odds out for themselves. Vast amounts are tied up in casinos for the rich.

[piscator]

The rich do 'sit on their money', at least to some extent. They do this by spending that money on things that suck up the money while not creating more. Large houses. Yachts. Memorials etc. When wealth is tied up in white elephants, it is not stimulating the economy.

Of course, this applies more to medium rich rather than ultra rich. The ultra rich do it too, but the percentage of their wealth tied up in 'white elephants' is less, and the percentage reinvested is more.

But the poor just keep the money moving.

Don't know how it works in your country, but hiphop stars constitute but a vanishingly small percentage of rich people in America. Most $$ plays things closer to the vest.
Moreover, when your investments in things like land estate are self-sustaining, as are the antique furnishings and paintings on the walls, and you wear Brooks Bros and LL Bean and drive a Land Rover, your biggest costs are entertaining and raising your children. And you usually center most "lavish" entertaining around a charity, and the $10m-$20m it takes to get an average kid through Yale goes to support many worthy endeavors.
Most wealthy people "live on" a small fraction of the money they have at work in an economy at any given time.

[piscator]

That [wartime economy] was one example that certainly grew your economy and generated a lot of employment and demand. If a strong economy is your metric for success (which it usually is for Seth and most people on the right, and a good chunk on the left), then why bag it? Unless you have an ideological objection to it, in which case you've got to provide strong reasoning to back up strong beliefs.

Not really. You, however, have to provide a compelling reason for vast numbers of people to reject any status quo if you desire change in economic paradigm. It took a depression and a world war that time, and we only got in full war mode when we knew we were covered on the back end.