Monday, February 13, 2012

A Hypothesis to Compete with "Trickle Down"

The Government has made the rich richer, and what has trickled down is greed and debt, leading to economic crises.
Source: "Mind-Blowing Charts from the Senates Income Inequality Hearing," Mother Jones
Republicans suggest that the very rich, if they keep more income, will invest in job creating businesses and the benefits will trickle down.

Here is another hypothesis. The rich, as they get much richer invest in conspicuous consumption. It is the desire for more and better that trickles down. However, the rich will put a large part of their money to earning more money. They have done so by loaning money at high rates. Thus we have seen credit card debt, student debt, and other kinds of debt increase especially in the early years of the last decade. Indeed, we saw a huge increase in sub-prime mortgages as people were encouraged to buy houses (at inflated prices) that they could not afford. The result was a crash of the housing bubble, a crisis in the financial market, and the Great Recession!

Do you doubt that government policy has favored the rich. Check this out:
Source: "Mind-Blowing Charts from the Senates Income Inequality Hearing,Mother Jones

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