
Originally Posted by
Dragontalk
Let me explain why that's not possible. This will require some group-think -- that is, you need to extrapolate, not for moral purposes, but merely to understand the mechanics, from the individual to the collective, because economics involves collective forces and collective behavior.
An economy must produce wealth and distribute it to those who need and want it. If it fails to do either of those, it fails to do the other as well. If most people are making too little relative to the total amount of goods and services produced -- which means even $250k might be "too little," depending -- then a portion of those goods will sit in warehouses, unsold and unsellable. Production will then be cut back. There is no point in producing goods that can't be sold.
When the relative wealth of the mega-rich -- the degree to which they are richer than the rest of us -- comes from the production and sale of goods and services, then it comes from the gap between the total sale value of what is produced, and the income received by everyone else. That is to say, if the total value of what is produced is $100 trillion, and the aggregate income of the non-rich is, say, $50 trillion, then the mega-rich rake in the other $50 trillion. But the problem is that $50 trillion in total income can't purchase $100 trillion in goods and services, so that scale of economic production can't be kept up. The economy goes into recession and production is cut back.
It doesn't matter how huge the economy becomes or how comfortable an income is being provided to the non-rich, if it isn't to the point where the gap between the rich and the non-rich is much narrower than it is today, the ratio of goods produced to consumer demand will be too high and it won't all balance. And the economy will fail. We've seen example of this again and again. It's not an accident that the amount of income hogged by the top 1% reached its peak of 24% twice in this country: in 1929 and in 2008.
However, I'll say this: a massive welfare state in which people receive truly generous welfare payments but in which corporations remain privately owned could work. However, such a society would require very high taxes on the rich to make it work in terms of the federal budget -- so that way, too, the income gap would narrow. And the question is whether it could work politically. All it took was the passing from power of the generation that, in their youth, supported FDR, for the post-war prosperity to be reversed and a return to the old economy to happen, with all its dire consequences. As long as there is an owner class, there will be a vested interest in an economy that doesn't work. Because I have the feeling that a contracted economy of which they take the lion's share would suit a lot of these folks just fine.
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