Wealth distribution

[Seamus Fermanagh]

The noted Commie pinkos from Google explain why stagnating and falling incomes for the middle-and-lower tier people are a bad thing all around.

The stagnation in middle-class wages is not just a middle-class problem. It's an economic problem. And it's one of the main reasons that global economic growth is so lousy.

Why do stagnant middle-class wages hurt the economy?

Because the middle-class folks whose wages are stagnant are the global economy's biggest spenders.

And when they don't have money to spend, their lack of spending hurts not just them but all the companies that depend on them for revenue.

Including, Schmidt pointed out, Google.

Put differently, one company's expenses (wages) are another company's revenues. So, collectively, when companies are cutting wages, they're also cutting their own future revenue growth.

Right now, companies are so focused on cutting wages — by paying their employees as little as possible and replacing them with technology whenever possible — that wages as a percent of the economy are now near an all-time low (see chart below). And this weakness in wages is the big reason demand in the economy is so weak.

Looked at from this perspective, ruthless cost-cutting with employees is just another variant of the Tragedy of the Commons.

The tragedy of the commons is an economics theory [...] according to which the depletion of a shared resource by individuals, acting independently and rationally according to each one's self-interest, act contrary to the group's long-term best interests by depleting the common resource.

Or to put it even more bluntly, when a Walmart executive complains that his customers have no money, he is whining about a mess he helped create.

Good points. The problem is that so many folks fixate on wealth distribution through taxation as THE answer to this, but it is a lousy choice -- too many ways to cheat existing tax systems exist and many such taxation schemes end up punishing innovation and success.

SO.....what are some concepts that MIGHT work?