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View Diary: Wealth Condensation: Why the Rich Get Richer (172 comments)

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  •  Good luck with that (7+ / 0-)

    I already have a tv, and no plans to buy another one for a long, long time.

    But again, if no one buys consumer goods, sales go down, and investments suffer.

    A big problem is that when severe wealth inequality exists, there simply isn't enough money in circulation to support demand. Consider the CEO who makes 1,000 times the salary of the average worker. He can afford to buy 1,000 middle class houses, but will he? No. He might buy a dozen mansions, but, expensive as they are, do they add up to the cost of 1,000 middle class houses? It's not just houses, but the furniture and appliances to furnish them. That CEO might buy a dozen tvs for each of his dozen mansions, but that still doesn't come anywhere close to adding up to 1,000. It gets even worse when that CEO takes 1,000 times the pay of an average worker for making decisions that eliminate thousands of jobs. In order to sell things, you need workers who are paid enough to buy them. We've all seen videos of robots on the line building cars. Ever seen a robot roll into a showroom and buy one?

    Again, without enough buyers who are willing and able to buy consumer goods, your investments are worthless. That was the lesson of 1929, but, sadly, it was a lesson lost on the vast majority.

    Al Qeada is a faith-based initiative.

    by drewfromct on Sun Sep 25, 2011 at 06:54:33 AM PDT

    [ Parent ]

    •  Excessive wealth inequality suppresses trade (3+ / 0-)
      Recommended by:
      drewfromct, swellsman, Calamity Jean

      In conditions of extreme wealth inequality,  trade will decrease. The wealthy don't buy much because they are few in number and quickly acquire everything they need, and don't sell much because they don't need the money. The poor don't have anything to sell, and don't buy because they don't have the money.

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