Robert Reich has some new "inequality" material for us:
“Unless more of the gains are shared, the economy will not work. It will become so top-heavy that it can’t sustain itself because there will not be enough purchasing power in the middle class and among the poor. We need candidates to be bold and specific as to what needs to be done.”In real life, the "economy" is nothing but an abstraction composed of millions and billions of individual exchanges.
In other words (A) exchanges something with (B) and both value what they receive more than what they give away. Everyone "gains," and nothing needs to be "shared".
Sure, you can share whatever you want voluntarily, but Reich's use of the word "share" is as a euphemism. It sounds much better than "steal and redistribute".
Left free, the "economy" can "sustain itself" without the guidance of the professors.
The problems begin when an outsider obstructs the exchange between (A) and (B) in some way. It is the outsider that tilts the tables so that some gain, while others lose. With those kinds of powers, the outsider becomes very popular. Now everyone wants to gain the friendship of the outsider.
The outsider takes donations for its friendship.
Eventually, the outsider gets so big, that what used to be an "economy" of millions of peaceful exchanges turns into a big pile of planned chaos.
Ultimately, it is the outsider that becomes so "top-heavy" that it croaks. History's graveyard is filled with outsiders.
(A) and (B) keep trading though, and forever will, no matter how many outsiders come along.
Chris Rossini is author of Set Money Free: What Every American Needs To Know About The Federal Reserve. Follow @chrisrossini on Twitter.
Voluntary exchange is a positive sum game (win-win). Introduce violence and you have a zero sum game (win-lose).
ReplyDeleteWhen the outsider (the leech) becomes too big, doesn't this also cause the host to die as well?
ReplyDeleteThat's a great point. The way I think of it is that the life of the host changes drastically. All the prior illusions come crumbling down.
DeleteBut humans are still here and still trading. So markets have outlasted every government that has tried to mess with it.
Typical liberal leader as exemplified by Hugo Chavez: Spread the wealth, except for himself as he died a billionaire.
ReplyDeleteThis fall Reich is teaching 1 course which meets for 2 hrs 1 day/wk. The man's salary is $243K/yr, much higher than the avg US CEO salary of $178K/yr. In addition to his salary he's on the lecture circuit charging $40K per 1hr speech.
The Castro bros are reported to have millions in the coffee business. Obama is worth millions and wants to take money from middle class Joe the Plumber. These spread the wealth guys are so anxious to spread other peoples wealth, usually garnering a sizable fee during the distribution.
Socialism for thee, not for me.
---"Unless more of the gains are shared, the economy will not work."---
ReplyDeleteYet another dimwitted liberal dipping his toe in the waters of economic knowledge and saying 'Brrr!"
The "gains" are always subjective. He is talking about financial profits, of course, except he equivocates to sound more righteous.
---"It will become so top-heavy that it can’t sustain itself because there will not be enough purchasing power in the middle class and among the poor."---
This is nothing more than rehashed Marxian twaddle, the same claptrap repeated by Picketty. George Reisman already tackled the notion of infinite capital accumulation in his blog.
---" We need candidates to be bold and specific as to what needs to be done"--
Translating Idiot to English: "We need dictators!"
EAT THE RICH!!!
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