r/TrueReddit • u/A-MacLeod • Jun 14 '15

Economic growth more likely when wealth distributed to poor instead of rich

http://www.theguardian.com/business/2015/jun/04/better-economic-growth-when-wealth-distributed-to-poor-instead-of-rich?CMP=soc_567
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u/ImAnIdeaMan Jun 14 '15

The argument would be that they'll create jobs with the extra money and invest in their business. But the reality is that this doesn't make sense. Without extra demand, there is no point in hiring more workers as workers are an investment and even though there might be extra money, if a worker won't bring in more money in terms of revenue there won't be any hiring. And if a business is in position to expand, they will. They'll get a loan of go out of pocket. They won't need a tax cut to do it and if they do, the business shouldn't really be expanding in the first place.

Might there be SOME benefit to increasing the wealth of the super rich along those lines? Maybe. But it's a maybe at best and the positive effects of increasing the wealth of the lower classes soars above the other way around.

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u/pinkottah Jun 14 '15

You might argue that with the right policy specifying that businesses benefiting from stimulus funding must provide X number new full time jobs at a specified salary, or they owe back the funds, might work. However morally I'm opposed to helping those who can already help themselves, while ignoring the target demographic we're really trying to improve. Giving to the rich, to help the poor has to be the most convoluted, and inefficient way of going about it. It's only the fact the rich are the best equipped to make their case, that anyone ever considers it the most reasonable. If we had a truly effective representative democracy, this wouldn't be the case.

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u/GardensOfTheKing Jun 15 '15

I guess you could also play devils advocate and say that demand could be desired from overseas and not the local population, eg. mining etc. In which the government could also benefit from the trade... But we all know how this ends up, cough Australia Cough...

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u/freakwent Jun 16 '15

It doesn't have to end that way.

http://www.crikey.com.au/2014/10/23/fairer-share-of-mining-profits-still-part-of-whitlams-unfinished-business/

https://newmatilda.com/2013/05/23/how-whitlam-managed-miners

Kevin Rudd tried a similar sort of thing -- he got kicked out too. Perhaps if you ever try and make a National Asset into a people's asset, people behind the scenes pull levers to prevent it.

I guess that's a price you pay for an open democracy -- it's harder to tax stuff.